EDITOR NOTE: Occupying the receiving end of a weaponized dollar can be an economically crippling experience. As you may know, an economic sanction is nothing less than the monetary extension of warfare, and it’s meant to deal a punishing, painful, and destructive blow. Russia is one country on that end of the dollar’s assault, but the impact has been dulled as the country has found a way to circumvent American fiat with a superior monetary asset: gold. While gold production fell 5% across the globe in 2020, Russia tripled its gold production, yielding 331 tonnes. Compare that with China’s 368 tonnes, also produced last year. At its current rate, Russia is poised to surpass China in gold production, making it one of the largest producers in the world. In the history of money, gold has never lost a war against paper. And as the world de-dollarizes amidst the greenback’s self-destructive policies, and as China strikes deep, raiding America’s hegemonic territories across the globe, you can bet that gold will play a central part in defeating the dollar and preserving the wealth of those holding the yellow metal.
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.
Originally posted on RealNoeVremya