Billionaire bets on Russian rare earths

Billionaire Alexander Nesis made a fortune from gold, silver and banking. His next target: producing rare-earth metals from material discarded as Russia developed an atomic bomb in the 1940s.

Nesis' ICT holding company is in a venture with state-owned Rostec to fast-track production of rare earths, using thorium-bearing concentrate kept stockpiled for more than 60 years. The partners also plan to bid for Tomtor in the Siberian republic of Yakutia, a deposit that has more than 150 million tonnes of ore containing rare earths and is among the largest in the world.

"Once we have the technology and the best deposit, we will have a competitive position in this segment," Nesis said. The cost of the project could reach about US$1 billion in the next five to six years, helping Russia develop its first production of rare earths, used in items from iPhones to hybrid cars.

Nesis has a net worth of US$3.3 billion, according to the Bloomberg Billionaires Index, including his stake in gold producer Polymetal International and, until July, Uralkali, the world's largest potash producer. Nesis disposed of the last of the 12 per cent stake he controlled in Uralkali just days before the Russian firm broke up a potash marketing partnership with Belarus, sending stock prices of producers around the world tumbling.

His bet on Uralkali was based on the expectation that its combination with rival Silvinit, completed in 2011, would deliver returns, Nesis said. "Once we saw that the value of the merger was realised in the share price, we started to sell."

Nesis' companies sold a third of the Uralkali holding in August 2012 and another third at the start of this year. The disposal of the rest was completed in July, including about 4 per cent sold by banks as arrangements Nesis put in place to hedge against a drop in the stock were triggered.