Bloomberg News

Russian Gold Miners Want Higher Threshold for ‘Strategic’ Metal

September 30, 2010

Russia should raise its threshold for gold deposits classified as strategic to boost national reserves and production, mining executives said.

Russia passed a law two years ago that limits the holding of a foreign company in developments of Russia’s biggest deposits of oil, natural gas, gold and other minerals. Fields with more than 50 metric tons (1.6 million troy ounces) of gold are considered strategic, requiring extra government approvals.

The 50-ton cap “needs to be raised,” Petropavlovsk Plc (POG) Chief Executive Officer Pavel Maslovskiy said at a Minex conference in Moscow today. “It’s enough for about two years of production for an average company like us.”

Petropavlovsk, which produced 486,800 ounces of gold last year, targets output of 1 million ounces by 2013, he said.

The government should raise the threshold fivefold to 250 tons and make converting exploration licenses into production permits easier, OAO Polymetal Chief Executive Officer Vitaly Nesis said at the same conference. Fewer non-Russian miners operate in Russia than in West Africa, while the national gold resource base fell from 8,400 tons in 2006 to 7,900 tons last year, Nesis said.

Listed companies invested $3.6 billion in Russian gold production since 2007, Nesis said.

Petropavlovsk was the third biggest gold producer in Russia last year, after OAO Polyus Gold and Kinross Gold Corp.’s Kupol mine, according to the national Gold Producers’ Union.

To contact the reporters on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net, Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net

To contact the editors responsible for this story: Amanda Jordan in London at ajordan11@bloomberg.net, Claudia Carpenter at ccarpenter@bloomberg.net.


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