Russia's Lake Baikal Threatened by Zinc Mine

Olga Petrova, PlanetArk 10 Sep 08;

LAKE BAIKAL, Russia - Green trees sway on the hilly Russian horizon, rainbows pierce Lake Baikal's grey waters and waves pound a pathless shore.

The stark beauty of the world's deepest and oldest lake is under threat, ecologists say, because it lies downstream from a rich source of zinc.

The proximity has opened up a debate in this resource-rich nation, pitting industrialists and job-hungry officials in Siberia against ecologists and government agencies in Moscow.

Experts say the Kholodninskoye deposit, which sits in a watershed flowing straight into Baikal, is the planet's third largest lead and zinc field.

Zinc is used in the production of galvanised steel, the automobile industry, household batteries, vitamin supplements, fireworks and as a compound in some cosmetics.

MBC Resources, a subsidiary of Russia's privately owned Metropol group, has a licence to develop Kholodninskoye, which has an estimated 13.3 million tonnes of zinc and 2 million tonnes of lead. It has drafted a plan to develop the field and other metals in the region at an estimated cost of US$4 billion.

But ecologists in Buryatia region in Siberia, where Baikal lies, say development would despoil the biggest freshwater mass on earth -- already threatened by tourism and other industries.

"For us right now, this is problem number one," said Sergey Shapkhayev, director of the Buryat/Baikal Land Use Programme in Ulan Ude.

"The geo-hydrological structure there is very complex, lots of underground springs, subsoil water at different temperatures that would increase tailings volumes into the lake," he said.

Tailings are unrecoverable mining waste discharged as slurry.

In July, Russia's Natural Resources Ministry proposed a ban on developing half of the Kholodninskoye deposit, saying mining would damage the lake, considered a national ecological reserve.

The government of Buryatia, which borders some 60 percent of the lake, hopes development will bring investment and jobs to the region, and has strongly opposed the proposed ban.


RICH RESOURCE

At its deepest, Baikal is 1,637 metres and it is some 25 million years old. It holds about one fifth of the world's freshwater and is around 9,200 km (5,717 miles) east of Moscow.

The shoreline runs along an ancient rift valley for about 2,100 km (1,305 miles), roughly the distance from Moscow to Duesseldorf, Germany.

Buryatia authorities are keen to promote Baikal, which is home to some of the world's rarest types of fish and plants, as a tourist destination. But it also wants mining development.

Buryatia President Vyacheslav Nagovitsyn, appointed in 2007 by then President Vladimir Putin, served as a crew member on a highly publicised but ultimately unsuccessful submarine dive in July, aimed at reaching the bottom of Baikal.

The dive was financed by Mikhail Slipenchuk, Metropol's general director. He says not developing the zinc and lead deposits would constitute a missed opportunity for Russia, already flush with cash from an energy and commodities boom.

"This is 20 percent of Russia's (zinc) reserves. If we cross it off the list, Russia will be the poorer for it," he said.

However, zinc prices have been sliding on weak demand and global oversupply, with some analysts predicting little relief into 2010.

The metal is one of the worst performers in the metals complex this year. In August, it dropped to its lowest level since November 2005 and is now trading around US$1,745 a tonne, down almost 25 percent this year.

Zinc stocks at the London Metal Exchange have jumped 80 percent this year to 160,000 tonnes, and a Reuters survey of analysts showed an expected surplus of about 281,250 tonnes this year, growing to 328,758 tonnes in 2009.

The industry has seen mine closures and output cuts as energy, labour and equipment costs rise -- raising questions about the ultimate profitability of the Kholodninskoye project.

Undeterred, MBC recently signed a memorandum with Rusinvestpartner, a joint venture of state conglomerate Russian Technologies and metals-to-oil firm Renova, under which Rusinvestpartner said it intended to buy stakes in projects to develop Kholodninskoye and another lead and zinc deposit nearby.

Even if the ban on development does not proceed, there is clean-up work to be done before any mining gets underway.


SOVIET LEGACY

Buryatia's Natural Resource Ministry said in July that MBC would have to spend 2 billion roubles (US$85 million) on cleanup of tailings plumes caused by Soviet-era prospecting.

Slipenchuk says the company will fund the clean-up but wants this to be written into the licensing agreement.

He said Soviet test shafts sent tailings-laced underground water into the nearby Kholodnaya river which feeds Baikal.

"Either we spend several hundred million dollars setting the Kholodninskoye deposit aside as a nature reserve, or we tighten regulations in the licensing agreement to make the holder responsible for these deficiencies," Slipenchuk said.

Baikal is such a powerful symbol of ecological purity for Russians that in 2006, Putin ordered a giant oil pipeline to be routed away from the lake, citing great risk to the environment.

But in spite of this, ecologist Shapkhayev said unregulated logging and careless tourism construction were already causing damage, that would only be intensified by mining.

"Russian ministries think, mistakenly, that up to 2 million tourists will come here, and that they need to build five-star hotels, mountain ski resorts ... and they dole out a large share of federal money for building the infrastructure," he said.

Shapkhayev said only around 20,000 tourists -- half from abroad -- come to Baikal annually. Construction firms pop up seasonally to build poorly constructed lodgings with federal money, then disappear without paying their workers.

"Until we come to terms with corruption, those kinds of problems will happen more and more often," he said. (Writing by Chris Baldwin, editing by Jon Boyle and Clar Ni Chonghaile)