"We will never commit ourselves fully to projects that cannot guarantee investment returns and that do not add to the shareholder value of the company," Leonid Rozhetskin, deputy chairman of Norilsk's management board, was quoted by Interfax as saying.
Nakety-Bogota is thought to have the potential to produce 50,000 metric tons of nickel and 35,000 tons of cobalt per year for 75 years and it would cost some $800 million to develop, according to the Canadian-Australian company Argosy Minerals Inc., which holds development rights to the Nakety and Bogota mines.
Norilsk Nickel declined to discuss the specifics of the abandoned project, citing confidentiality clauses in the three-way contract it signed in October with New Caledonia's Societe des Mines de la Tontouta and Argosy's subsidiary, Balzan Investments. The agreement gave Norilsk the right to terminate its participation at any time.
The agreement envisaged Norilsk performing a $15 million feasibility study by the end of 2003 in return for a 45 percent interest in the project. Argosy had also offered Norilsk the right to a majority stake by guaranteeing project financing and reimbursing Argosy for a set amount of previous expenditures.
Norilsk has already invested $7.5 million in the project, Rozhetskin said.
Late Thursday, Argosy's board issued a brief progress report criticizing Norilsk's pace in carrying out the work. "Progress on the bankable feasibility study by Norilsk has been slow and in Argosy's opinion is now behind schedule," Argosy said.
When contacted by telephone Friday, a spokesman in Argosy's Canadian office said the company had just heard of Norilsk's withdrawal and was not ready to comment.
Vladimir Titkov, who tracks Norilsk for Renaissance Capital, applauded the company's move, saying the economics of the project were not impressive and that it seemed the New Caledonian government had not fully committed itself to making the project a success.
Norilsk said it was interested in looking at other projects in New Caledonia, as well as laterite mining in Indonesia and Australia.
Laterite ore lies closer to the surface and contains cobalt as well as nickel, but is more difficult and expensive to process.
About 60 percent of the world's production involves sulfide ores, while about 70 percent of the world's ore is laterite, said Norilsk spokesman Anatoly Komrakov. "We consider it important and the future of mining," he said.
New Caledonia is thought to have 25 percent of the world's laterite deposits.
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