A Shannon-based drilling equipment manufacturer, Boart Longyear, has signed a €2.6 million contract with the world's largest nickel and palladium mining company, the Russian company, Norilsk Nickel, to supply machine tools over the next 18 months.

Mr Martin Burke, secretary of Boart Longyear, said the contract represented almost 10 per cent of the company's turnover and the rock drilling tools would be sent in five ships to the Siberia-based mining company which is also one of the world's largest producers of copper, platinum and cobalt.

Mr Kevin McLoughlin, the manager of the Moscow office for Enterprise Ireland, said the contract was a milestone in the level of business reached with Norilsk. Enterprise Ireland and Boart invited a delegation from Norilsk to the Republic to sign the contract in the presence of the Taoiseach, Mr Ahern. A presentation was made to Norilsk by ESB International which hopes to win a contract to provide and manage electricity to the Siberian mining city of the same name which is the biggest north of the Arctic Circle and is closely associated with the mining company. It is four hours flying time from Moscow. Norilsk is also interested in doing business with Irish software companies, Mr Burke said.

Boart Longyear, a subsidiary of Anglo American, employs 200 people in Shannon manufacturing steel rock drilling tools which are then coated with tungsten carbide, "the second hardest known substance known to man", according to Mr Burke. It was the first time that a contract of this size for mining equipment has been signed in Ireland.

"We first did business in the early eighties but it was always through a third party. In the past six years, we have dealt directly with Norilsk."

Boart Longyear, which has been based in Shannon for the past 40 years, supplies the Lisheen, Gortdrum and Tara mines in the Republic and exports to more than 50 countries. Norilsk Nickel has more than 100,000 employees and has known reserves which will last about 50 years in its mining area, Mr Burke added.

The mining company announced last month that it planned a $200 million issue of equity linked notes as a first step in attracting $1 billion of investment which will form part of a $3.5 billion development programme.

--(Additional reporting by Reuters)