Russia on track to surpass China as largest gold producer
Last year, global gold production fell by 5%, while Russian companies including polymetallic miners continued expanding their operations and ramping gold output up. At this rate, Moscow is likely to outperform Beijing as the world’s top gold producer by the end of the 2020s.
Russia may surpass China to become the largest gold producer this decade, says S&P Global Platts citing Institute of Geotechnologies consultancy. Russia’s gold production has tripled over the last 20 years. In 2010-2019, it grew almost twice as fast as the global average. Last year, the country produced 331 tonnes and ranked second in terms of global gold output, while China’s output declined by 3,8% year on year to 368 tonnes.
If the current growth trajectory continues, Russia may become the world leader in gold mining as soon as this decade, considers the consultancy. It expects production growth to be at 0-2% per year in the short term and accelerate by 2025 due to the launch or expansion of several large production facilities that are currently in the investment stage. The sector is relatively consolidated: among 520 gold miners operating in Russia in 2020, only ten accounted for 66% of the country’s gold output. Russian miners Polyus and Polymetal are also among the world’s top ten gold producers taking 4th and 9th place respectively.
More than two-thirds of Russian gold came from gold deposits, while polymetallic deposits provided about 12% of production last year. In recent years, the industry has seen the emergence of producers extracting gold as a by-product. Namely, Nornickel, UMMC and Russian Copper Company produced 22 tonnes of the precious metal in 2020 and made it to the Russian top 20. The main quantity of Russian gold comes from ore assets, although smaller Russian companies mine alluvial gold as well. A fairly significant share of alluvial gold in Russia’s output is a unique feature, says the consultancy adding that this ensures a consistent interest of new investors and creditors.
Last year’s price surge prompted many companies to process lower-grade ore, which is usually put aside in less favourable market conditions. However, it slowed down production growth or even decreased it for some miners. Although gold prices have declined this year, they remain at levels significantly higher than in 2019 motivating producers to continue processing low-grade ore, at least, in the short term. A potential decline in the global gold price is not expected to have a significant effect on the production of large Russian miners thanks to their relatively low operational costs. Furthermore, it may even stimulate them to ramp output up, believes the consultancy forecasting the country’s gold production to exceed 500 tonnes per year by the end of the decade.