Russia's Arctic miners seek share of metals wealth

By Robin Paxton

TALNAKH, Russia (Reuters) - Half a kilometer beneath the frozen tundra, Alexander Borodai chips a sparkling rock from the wall.

Never before has the ore been so valuable, as demand from China pushes up prices for the 14 different metals it contains.

"Nickel is practically a precious metal now," said Borodai, the 55-year-old chief engineer of the Komsomolsky mine.

Miners here work 7-hour shifts in an underground complex bigger than the entire Moscow Metro system.

Once a day, ore is blasted from the rock-face before being collected by trucks and hoisted to the surface.

Talnakh, population nearly 60,000, was founded in 1966 when the first ore was mined at Mayak -- meaning lighthouse -- a mine that is still working.

The ore from Talnakh feeds metals smelters in Norilsk, the first of which were built by Gulag prisoners in the 1930s.

Miners here no longer command the relatively high salaries of Soviet times for living where temperatures drop 50 degrees Celsius below zero. They have just received their first wage rise in six years as their employer, Norilsk Nickel, tries to stem an exodus of skilled workers.

Paint, once bright pink and peach, flakes from cracked apartment blocks where a mural declares Talnakh the "Ore Capital of Russia." Snow cleared from the road reach second-storey windows. Arctic winds deliver smoke from the chimneys of Norilsk's smelters 30 kilometers (20 miles) away.

Still, some things have improved from Soviet days. A cafe that was once a modest canteen now serves imported beer to miners playing pool. Lou Reed's "Perfect Day" plays on the stereo.

"Something needs to be done to attract people here. People need to see that wages are high and that the standard of life is good," said Marina Ilina, a waitress.

Hambi Kozhiyev, who oversees 2,000 miners as director of Norilsk Nickel's Talnakh mining division, said the average monthly wage rose 25 percent this month to $2,000.

This is nearly five times Russia's average wage of 11,659 rubles ($448) per month, although products delivered to the Arctic are also more expensive than elsewhere in Russia.

About 60 to 70 percent of a miner's salary is fixed, with the remainder made up of bonuses attached to overall production.

Norilsk, the world's largest nickel and palladium miner, plans to process 30 percent more ore by 2011 to keep metal output at current levels as the ore's yield decreases.