Norilsk Nickel is to launch a new underground nickel mine in the north west Kola peninsula.

The Russian pgm giant says it will be looking to boost its nickel output with the new facility, as it aims to ramp up annual production from 239,000 in 2003 to more than 245,000 this year.

Kola Mining and Metals, Norilsk's Kola-based arm, is running the Tsentralny open pit mine, along with two underground mines, Kaula-Kotselvaara and Severny.

The Tsentralny mine is now accounting for less and less of the total Kola output, with officials planning to close it completely by 2009 and turn to the underground Severny-Gluboky mine in its place.

"The official launch of the Severny-Gluboky mine is scheduled for November 1st," a Norilsk spokesman told Reuters.

"The implementation of the Severny-Gluboky mine project . . . will make it possible to raise nickel output volumes from (Kola's) own raw materials by 27-30 per cent by 2010, when the mine reaches its design capacity," Norilsk added.

The project is tipped to cost around $430 million, but the company says it is confident of delivering a profitable resource once it is up and running.

The new mine is not expected to have much effect on platinum and palladium output, as grades of PGM in the deposit are thought to be very low.