Russia » Economics
Author`s name Ольга Савка

President Putin stakes high on Russian gold

World prices on gold have reached their maximum during the recent 18 years

President Putin made a stop in the Russian city of Magadan on his way to Moscow from Japan. The Magadan region used to be Russia's leading gold-mining area, although it still plays a highly important role in the gold industry of Russia. Putin conducted a special session in the city, at which he set out a great interest in the development of the gold-mining industry. Putin also agreed upon the concept to increase the share of Russian gold in the nation's system of gold and forex reserves. gold

Russia ranks second on the list of gold-rich states after the South African Republic and takes the fifth place on the volume of global gold-mining, following the South African Republic, the USA, Australia and China. Explored gold fields in Russia contain over 7,000 tons of the precious metal. Russian gold-mining enterprises extracted 158.83 tons last year, whereas the production volume in 2005 totaled 180.5 tons. Specialists say, however, that the overall gold production in Russia may drop by ten tons this year in comparison with 2004.

The company Polyus is considered Russia's major gold-mining enterprise, which deals with a quarter of the national entire gold industry. The new development strategy of the company stipulates a considerable increase in production in five years – from 35 to 140 tons.

When the Russian economy was experiencing a state of deep crisis in the beginning of the 1990s, the gold industry was suffering severe problems as well. Production volumes were decreasing, gold-mining companies and their shares were involved in fraudulent activities, etc. The situation started improving after the ruble devaluation in August of 1998, which eventually resulted in growing investments. The state, however, was not paying much attention to all of the above-mentioned transformations in the gold industry.

Nowadays, when world prices on gold have reached their maximum during the recent 18 years, and neared the level of $500 per troy ounce, the Russian government decided to act more actively in the national gold industry.

”I believe that the role of the state in this field should be rather significant,” President Putin said in the beginning of the above-mentioned meeting in Magadan. “Our country possesses considerable and unique gold reserves. The exploration data received during the recent years proved the existence of several other extensive gold fields. Positive tendencies inside and outside the industry make for the successful development of those large gold deposits. The growing economic attraction of the industry gave an impetus to the inflow of investment resources from other fields of the national economy: from the oil complex, non-ferrous metallurgy and diamond-mining enterprises. There have been quite positive conditions created for the current investment trend to continue. I would like to listen to adequate suggestions from the Ministry for Natural Resources,” Vladimir Putin said during his speech.

The president's call to increase the role of the state in the field of geological survey sounded in response to complaints from the Magadan region governor, Nikolay Dudov. The governor claimed that there was a serious gap between the extraction of gold and the replenishment of its balance reserves. Conducting a geological survey is not profitable for Russian gold-mining companies at present; enterprises were forced to develop their production with the help of the data obtained during the Soviet period.

The development of the gold-mining production used to be one of the key activities for the mining industry in the USSR. The vast majority of gold fields, which Russian companies use now, were explored during the Soviet era.

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