Russia may face with shortage of gold and strategic commercial minerals during next 20 years
Russia may face with a shortage of gold and some other strategic commercial minerals during the next 20 years, which is mainly due to the decline of the volume of exploration works in the country in recent years.
In the case of gold, the predicted growth of gold production in Russia up to 350 tonnes per year may result in the gradual depletion of gold reserves in Russia already by 2035, taking into account even projected resources.
This will be mainly due to lack of attention to the technological aspects of gold production in Russia, as well as the reduction of exploration works in recent years, because of the economic crisis in the country.
In the case of production methods, due to poor technologies, the losses of gold during ore processing usually reach 27%.
At the beginning of 2014 there were 5935 gold fields in Russia, including 515 primary and 5420 placer gold mines, while their total reserves are estimated at 12,900 tonnes.
During the period of 1991-2014 gold mining in Russia was mostly focused on the best primary gold mines that were initially during the Soviet period, paying insufficient attention to the development of new gold mines.
Get our daily investorintel update
In the meantime, the Russian government is aware of the current situation in the industry and is considering measures of its solution. One of the most important measures will involve the attraction of foreign investors to the domestic gold mining.
At present the share of local companies with foreign interest, involved in gold mining in Russia, is equivalent to 59.7% of the overal gold production in the country and, according to state plans, these figures should significantly increase during the next several years.
In addition to the attraction of foreigners, as part of the state plans, is also the establishment of a special federal fund of reserve subsoil areas, (which is expected to be comprised of Russia’s richest reserves of solid minerals) and will ensure the country’s independence in the global minerals’ industry in the near future.
In the meantime, according to data of the Russian Accounts Chamber, (the parliamentary body of the financial control in Russia), gold is expected to be not a single strategic metal, which shortage may take place in Russia during the next several years.
The complex situation is also observed in the case of alluvial diamonds, which national reserves are estimated for only 17 years and other platinoids (7.5 years).
At present the Russian state balance of strategic minerals is comprised of 150 items of solid commercial minerals, the reserves of only 60 of which have increased or have remained unchanged for the last several years.
At the same time the growth of reserves observed only in the case of 19 minerals. The decline of production is currently observed in the case of 44 minerals, with the biggest decline in the case of manganese (-100%), chromium (-28%) and tin (-35%).
The current complex situation in the Russian industry of solid minerals is fully logical, as, due to the collapse of the USSR, the volume of state investments in the industry has significantly declined. The situation is aggravated by the current economic crisis in Russia, which has also resulted in the reduction of investment attractiveness of the industry.
During the period of 2002-2012 the volume of state investments in the development of the Russian national base of solid minerals was only in the range of RUB18-20 billion (US$400 million) per year, which is a small amount compared with the volume of funding during the Soviet times.
Eugene Gerden is an international free-lance writer, based in St. Petersburg, who specializes on writing in the field of mining, metals and rare earth metals. ... <Read more about Eugene Gerden>