EDITOR: | September 23rd, 2015 | 3 Comments

Russian gold producers plan to resume their domestic projects

| September 23, 2015 | 3 Comments

russian-goldAmid the ongoing recovery of the Russian economy from the economic crisis, caused by Western sanctions and devaluation of the national currency – the ruble; leading Russian gold producers plan to resume their domestic projects and their implementation which was suspended last year.

For example, Rostec, a Russian state corporation, specializing in the development, production and export of hi-tech industrial products for civil and defense sectors, plans to invest up to 96 billion rubles (US$2 billion) in the development of Sukhoi Log gold field, the largest undeveloped gold field in Russia and the world’s third largest, in terms of reserves, which is located in the Irkutsk region, a Russian region, located in southeastern Siberia in the basins of Angara River, Lena, and Nizhnyaya Tunguska Rivers.

Total reserves of the field are estimated at 125 million ounces. The development of the field is expected to be started in the middle of 2016.

As part of the plans of Rostec, the volume of production at the field is expected to reach 1.5-2 million ounces a year.

The field has the potential for the increase of its resource base.

More than 80% of the field reserves can be developed in the most economical way. The duration of mine development is 33 years.

It is planned that the project will be implemented by Rostec in cooperation with some leading Russian gold mining companies.

To date, an interest for the participation in the project has already been expressed by such leading Russian gold mining companies as Polyus Gold, owned by a Russian billionaire Suleiman Kerimov and GV Gold, which is controlled by the top management of Lanta-Bank, one of Russia’s largest banks.

In the case of Polyus Gold, Russia’s largest gold producer, the company has recently announced its plans to resume the development of the Natalka gold field in the Magadan region.

Pavel Grachev, CEO of Polyus Gold, said that the company plans to start the development of the field in the second half of 2017. The volume of investments in the project is estimated at US$1.5 billion.

At the same time, in addition to Polyus Gold, another large-scale project in the field of gold mining in Russia may soon be launched by Roman Abramovich, which plans to invest up to US$350 million in the development Peschanka mine, which is a gold field, located in the Baimskoy ore zone of the Chukotka region of Russia, which gold reserves are estimated at 233,7 tonnes.

Under the terms of the project, which is will be implemented by the Abramovich’s Millhouse subsidiary, the company plans to establish the Baimsky mining and processing complex. At the same time total resource potential of the area is estimated 31.7 million tons of copper and about 2,000 tonnes of gold.

In the meantime, according to an official spokesman of Denis Manturov, Russia’s Ministry of Industry and Trade, amid the current low global gold prices, which is currently less than US$1100 per ounce, the new projects could be unprofitable for their developers.

Manturov’s spokesman has also added that due to the decline of global gold prices and Western sanctions, the Russian government has not ruled out the possibility of the allocation of special subsidies for the leading domestic gold mining companies.

The latest initiative has already been welcomed by producers.

According to Sergey Ermolenko, CEO of Petropavlovsk, one of Russia’s largest gold producers in the Far East, Western sanctions have negativelly affected the Russian gold mining industry and resulted in a shortage of production technologies and the growth of production costs.

The volume of gold production in Russia in the first six months of 2015 totaled 114.6 tonnes, which is by 0.5% more than in the same period of last year, according to recent statements of Sergey Kaszuba, Chairman of the Russian Union of Gold Producers of Russia.

In 2014 gold production in Russia increased by 13.8%, compared to 2013, up to 290.034 tons.

Eugene Gerden


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>

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  • Robin Bromby

    In my new e-book, “Gold Always Wins”, there is a passage which gives this excellent report some historical perspective:

    “In 1930 the Soviet Union was stepping up gold exploration (and would use Gulag prisoners to mine much of it). Tsarist Russia had been big into gold mining but, after the 1917 Communist revolution, the precious metal was initially considered just another manifestation of detested capitalism. Indeed, in 1921 Lenin proclaimed: ‘When we are victorious on a world-wide scale we will make public toilets out of gold on the streets of the world’s largest cities’. He was not proposing the equivalent of burning $100 bills as a demonstration of wealth destruction; no, Lenin thought gold would become worthless and there would be no better use for it than giving a bit of glint and gleam to public conveniences. According to Nikita Khrushchev’s memoirs, Lenin had argued that, at a certain stage of human society’s development, gold would lose its value. In the meantime, Lenin said to keep the gold; when full communism had been established, gold would no longer be a means of exchange and the metal could be used to decorate public toilets.
    It took just six years for that attitude to go out the window in the Union of Socialist Soviet Republics. By 1927 Joseph Stalin was pushing expansion of gold mining in order to pay for imports needed for his industrialization program, and to help pay off Soviet debts. A slump in soft commodities meant Russian export income from timber and grain had collapsed. And, by 1943, The Economist was quoting a leading Soviet government figure, Alexander Serebrovsky, arguing for a return to the gold standard — by which time, the magazine reported, the U.S.S.R was the second largest gold producer in the world. (Serebrovsky would four years later fall a victim of the purges, being shot on the trumped up charge of sending gold bars to Leon Trotsky, Stalin’s arch-enemy.)
    Indeed, in 1934 Serebrovsky, who had been charged by Stalin with the task of reviving gold production, vowed that the U.S.S.R would soon overtake the Transvaal as a producer, making it the largest in the world.”

    September 23, 2015 - 8:31 PM

  • Alex

    Russian Bank from Sankt-Peterburg “Admiralteyskiy” which was closed by Central Russian Bank and get out licence had gold ingots in his basis .
    But when they was checked it was only metal ingots cover by gold calour.
    Interesting does other Bank has gold or not .

    September 24, 2015 - 4:37 AM

  • top secret

    If China backs its currencies with gold,the dollar will be worth less.

    June 20, 2017 - 3:41 PM

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