Russia's Polymetal may invest in rare earth project to tap electric vehicle demand

MOSCOW (Reuters) - Russia's Polymetal <POLYP.L> will consider investing in the country's largest rare earth project Tomtor, which is being developed by the gold and silver producer's top shareholder, chief executive Vitaly Nesis said on Wednesday.

Polymetal, in which Vitaly's brother and Russian businessman Alexander Nesis holds the largest stake, said in August that it was considering acquiring minority stakes in domestic rare earth minerals projects, tapping into growing demand for commodities used in the production of electric cars.

Polymetal's board of directors will consider investing in the Tomtor in the eastern Siberian region of Yakutia in December, Vitaly Nesis, Polymetal's CEO, told reporters on the sidelines of a conference in Moscow.

"We are likely to be talking about a small investment," he said.

Polymetal previously advised on the development of technology for the project, but has said that it has no plans to change its main profile from being one of Russia's largest producers of precious metals.

The world's main reserves of rare-earths, used in the production of a wide range of high-tech goods from mobile phones to electric cars, are currently concentrated in China.

"Tomtor is a world-class deposit," Vitaly Nesis said, adding that the company did not like other rare earth projects it had been looking at.

Alexander Nesis owns 75% of the project, with the remaining 25% held by Cyprus-based Zaltama Holding Ltd. Until recently, Zaltama was owned by Russian state conglomerate Rostec. Rostec withdrew from the project in August but did not say who the new owner was.

The project is expected to start production in 2022 and build a plant with capacity of up to 160,000 tonnes of ore per year by 2024.

(Reporting by Anastasia Lyrchikova and Gleb Stolyarov; writing by Polina Devitt; editing by Kirsten Donovan)