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(100% owned)


Kuranakh, 100% owned by IRC, is the Group’s first mining operation and is the first vertically integrated titano-magnetite operation in Russia, designed, built and managed by IRC. It is the largest employer in the region and a significant contributor to the local economy. Since its inception in 2010, it has been in operation for five years and each year beating its iron ore production targets.

The Kuranakh Mine is located in the Amur Region of the Russian Far East, located near the town of Olekma, a principal stop on the BAM Railway. The operation covers 85km 2 and comprises the Kuranakh and Saikta open-pit mines, The operation produces an iron ore concentrate with a 62.5% Fe quality content and an ilmenite concentrate with a 48% TiO2 quality content. The concentrates are directly loaded onto railcar wagons for transportation via the BAM and Trans Siberian Railways to customers in Russia and China and internationally via the Russian Pacific sea ports.

Kuranakh — Under Care & Maintenance

As announced in the last financial report, due to difficult operating environment, Kuranakh has been moved to care and maintenance status and involves only limited cost now and going forward in order to relief the Group’s cash flow. The Group has reduced the number of staff at Kuranakh to minimum levels for equipment maintenance and security. Certain personnel have been relocated to K&S where commercial production will soon commence. The only major non-operating cost that the site will bear is domestic property taxes however relief will be sought for these.


IRC complies with the ISO 140001: 2014 certification, a qualification which was achieved in 2012 and renewed in 2015. At the Kuranakh, for the first six months of 2016, the LTIFR was 5.1 (30 June 2015: 1.23). The LTIFR is a measure of the number of lost-time injuries per million hours worked, and as Kuranakh has been moved to care and maintenance, the numbers of hours worked at the mine has decreased significantly, leading to the increase of LTIFR in the first half of 2016. The actual number of injuries during the first six months of 2016 was in line with the same period last year.


    As Kuranakh has been moved to care and maintenance status, the production volume decreased considerably. During the first half of 2016, a total of c.53,000 m 3 of overburden was removed; and c.569,000 tonnes of ore was removed at Kuranakh mine. The Crushing and Screening Plant processed c.578,000 tonnes of ores, producing 290,394 tonnes of pre-concentrate at the average grade of 26.6% Fe and 7.9% TiO2. The ore stockpile after the announcement of production suspension at Kuranakh allowed a production of 188,111 tonnes of iron ore concentrate and 34,043 tonnes of ilmenite during the first half of 2016 (30 June 2015 production: 566,349 tonnes of iron ore concentrate; 95,702 tonnes of ilmenite).

Financial Performance

As Kuranakh has been moved to care and maintenance status, the last shipments of product were completed in the second quarter of 2016. For the first half of 2016, Kuranakh recorded a small amount of sales, totalled 219,352 tonnes of iron ore concentrates and 60,044 tonnes of ilmenite (30 June 2015 sales: 535,048 tonnes of iron ore concentrates; 110,568 tonnes of ilmenite). The average selling price for Kuranakh’s iron ore concentres and ilmenite were US$39 per tonne and US$117 per tonne respectively (30 June 2015: US$54 per tonne for iron ore and US$120 per tonne for ilmenite).

Nonetheless, due to the Group’s stringent effort of cost optimisation, with the aid of Russian Rouble depreciation, the cash costs per tonne of Kuranakh remains in line with the same period last year at US$55.0 (30 June 2015: US$53.4). For breakdown of cash cost, please refer to “Site Operating Expenses And Service Costs” under the Results of Operations section on page 5.

In light of Kuranakh being moved to care and maintenance status, the decrease in production and sales volume together with a lower average selling price, the segmental revenue decreased from US$42.0 million in first half of 2015 to US$15.6 million in 2016. The negative segmental EBITDA was US$2.2 million for the first half of 2016 (30 June 2015: negative EBITDA of US$1.4 million).

The table below summarises the key cash cost components of iron ore concentrate on a per ton basis:

Mining 5.4 11.4
Processing 12.3 11.3
Transportation to plant 3.8 5.5
Production overheads, site
administration and related costs
14.4 13.2
Transportation to customers 17.8 20.7
Movements in inventories and
finished goods
20.1 2.3
Contribution from sales
of ilmenite* and others
(18.8) (11.0)
Net cash cost 55.0 53.4

* net of tariff and other railway charges for ilmenite

Chemical Compositions of Kuranakh Concentrates

Chemical Composition of Kuranakh Ilmenite Concentrate

Kuranakh Mineral Resources & Ore Reserves Summary