Russia’s gold miners seek to expand

Leading gold mining companies in Russia have ambitious plans to expand both reserves and production.

According to the Russian Gold Industrialists’ Union, 2008 will be the year in which gold production is turned around, after five consecutive years of decline.

With plans to raise output to 225 tonnes by 2015, Kinross Gold Corp of Canada, which is developing the Kupol mine in the Chukotka region, will make up a significant proportion of the increase.

Currently Russia accounts for around 6.6% of world gold output, ranking it fifth in terms of world production.

Last year production is estimated to have dropped by up to 3.0 tonnes, from 164.3 tonnes in 2006.

The country has reserves second only to South Africa’s but its gold-mining sector is fragmented, comprising around 600 companies, many of which are very small.

Its biggest gold miner is Polyus Gold, which accounts for around 23% of the country’s production and plans to triple output by 2015. Peter Hambro Mining is Russia’s second-largest gold miner by output.

Rising gold prices are now turning investors’ interests towards Russia, which holds its most lucrative deposit of the metal in remote parts of Siberia and in the Far East of the country, although much of the Russia’s gold potential lies in fields yet to be fully explored.