New industrial projects put on hold
The collapse of the credit markets and the rapidly falling raw material prices will make investors put a number of new industrial projects on hold. That could hit the Barents Region especially hard.
Over the last few weeks, oil prices have plummeted from more than 140 USD per barrel to less than 70. Meanwhile, prices on metals like nickel have gone from its high of more than 50.000 USD per ton to about 12.000 USD.
Analyst Terje Fatnes from the SEB Enskilda now says to E24.no that an oil price under 70 USD will hamper the oil companies’ eagerness to invest in new projects. At the same time, it is getting increasingly complicated for companies to get credits for the projects.
Investors leaving Barents Region?
This development is likely to hit the Barents Region especially hard. A number of huge regional projects within oil, gas, mining and metallurgy, as well as infrastructure are under planning, many of them highly complex and cost-demanding.
The oil companies’ interest in exploration activities in the Barents Sea could cool and the development of projects like the Shtokman field could be postponed. Alone in Murmansk Oblast, there are several major projects in the pipeline, not only offshore hydrocarbon projects, but also within port and infrastructure development, mining and processing.
Murmansk Oblast
As BarentsObserver previously has reported, a new titan and magnetite processing plant is be built south of Murmansk near Verkhnetulomsk. The plant is to start production within five years, and operated for at least 20 years. In the area of Umbozero in the southern part of the peninsula, apatite ore from the “Olenii Ruchey” will be processed with a new plant. In addition, the Kola Mining Company has announced that drilling has started at its enormous Tsaga Platinum Group Metals prospect in the central parts of the peninsula. The Tsaga property covers two percent of the entire peninsula and the mining company has identified a potential zone of sulfide mineralization. Also mining giant Barrick is planning to develop its Federova Tundra project, located south of the Tsaga Platinum Group Metals prospect.
Norway, Finland
Likewise, several investors in northern Norway and Finland might now reconsider their plans. In the Norwegian border town of Kirkenes, the Tschudi Shipping company is preparing for the reopening of the Sydvaranger iron mines. Oil company ENI is planning the development of the “Goliat” offshore oil field.
In Finland, several major mining projects are under development and planning. Among them are the both a new gold mine and two major nickel projects.
The fate of several of the projects might now be uncertain. With that uncertainty follows also a potential more cool political interest in the region.
