GeneralBusiness News

Gold production in Russia may reach its peak in 2030, and then go down. Such an assessment is contained in the report of the Central Research Geological Exploration Institute of Non-Ferrous and Precious Metals (TsNIGRI) subordinate to Rosnedra. Vedomosti got acquainted with the document.

The report describes three scenarios. The basic involves the production of gold in the fields being developed, being prepared for development and being explored. With its implementation, the annual volume of gold production in Russia will reach 600 tons by 2030. In a progressive scenario involving the involvement in industrial development, including forecasted resources and reserves from the undistributed fund, production will exceed 700 tons.

Since 2022, statistics on gold production in Russia have not been published. In 2021, according to the Union of Gold Producers, production decreased by 0.2% year-on-year and amounted to 330.9 tons. The total output of gold, taking into account the production from secondary raw materials, amounted to 363.5 tons (-0.1%). The Ministry of Finance provides slightly different data: in 2021, 313.8 tons of gold were produced in Russia (+1.7% by 2020), and taking into account recycling – 346.4 tons (+1.8%).

TsNIGRI explains the forecast of a decline in gold production in Russia after 2030 by a limited increase in metal reserves at gold deposits, weak involvement in the industrial development of new gold reserves at complex deposits (also contain reserves of copper, nickel, etc.) and a general deterioration in the structure of reserves, namely, a decrease in the total reserves of the share of reserves of industrial categories (ABC1).

The report also considers the third scenario – conservative, in which new projects in the Russian Federation will not be launched at all. In this case, the peak of production will be reached already in 2024, predicts TsNIGRI.

In 2005-2022, the main contribution to the reproduction of gold reserves was provided mainly by three «Polyus» deposits – Natalkinskoye, Sukhoi Log and Olympiadinskoye, experts of the institute write. Their contribution to the increase was 40% (4,268 tons), including 44% (3,211 tons) in ABC1 categories. In 2023, according to the State Commission on Reserves, the Olympiadinsky field again recorded an increase in reserves by 449.2 tons, including by 185.2 tons in industrial categories.

But the share of industrial categories of stocks in the total volume is decreasing. According to TsNIGRI, by the end of 2022, the share of reserves of ABC1 categories in gold deposits decreased to 56% from a maximum of 67% in 2008, in complex deposits the indicator decreased to 59% (from 72% in 2006). The increase in complex deposits is mainly accounted for by new projects whose reserves are not yet they're getting used to it.

In 2023-2024, in both scenarios – basic and progressive – gold production is expected to increase, the report says. The organization does not provide absolute figures for these years. By 2040, gold production in Russia will fall below 400 tons in the baseline scenario and below 500 tons in the progressive one. If the baseline scenario is implemented, the reserves of the distributed subsoil fund, according to the TsNIGRI, will halve to 7,147 tons by 2040.

A representative of the Ministry of Natural Resources told Vedomosti that the state program "Reproduction and Use of Natural Resources" and the federal project "Geology: the Revival of a Legend" have been developed and are in operation to replenish and develop the mineral resource base of Russia. The President of the country Vladimir Putin instructed to allocate special programs in the federal project – the Far Eastern and Siberian ones, in order to increase the geological study of the regions, the interlocutor recalls. It is planned that by 2030, the geological study of the Far East will increase on average from 35 to 65%, the representative of the Ministry of Natural Resources explained. According to expert estimates, an increase in gold reserves of 570 tons is expected, he noted.

Vedomosti sent requests to the Ministry of Industry and Trade and the largest gold mining companies.

The editor-in-chief of the magazine "Gold and Technologies" Mikhail Leskov explains that the estimates of the production of TsNIGRI are based on the size of the "write-off of gold reserves in the subsurface" (take into account the loss of reserves in the mining process. – "Vedomosti"). If we talk directly about the volume of metal production, which the companies reflect in the reports, the indicator by 2030 may be about 500-550 million tons per year, he predicts. Nevertheless, production of 600-700 tons per year is also potentially achievable in the medium term – within 7-10 years, the expert believes.

According to TsNIGRI, the share of reserves of ABC1 categories in gold deposits decreased by the end of 2022 from a maximum of 67% in 2008 to 56%. In complex deposits, the indicator decreased to 59% (from 72% in 2006).

According to Leskov, in 2023 production will show a slight increase to the level of last year and will amount to 335-337 tons. In 2022, according to his estimates, production amounted to 330.6 tons against 333.4 tons a year earlier (-0.8%).

According to National Rating Agency (NRA) estimates, gold production including scrap processing in Russia in 2022 amounted to 371 tons. By the end of 2023, an increase to 390 tons is likely, and in 2024, an output of 400 tons is possible, says Sergey Grishunin, managing director of the NRA rating service. According to his estimates, about 85% of these volumes are directly extracted from the subsurface (i.e. 315, 331.5 and 340 tons, respectively.–"Vedomosti").

But the increase in precious metal production to 600 tons, according to Grishunin, may lead to the collapse of the world gold market, since the global production volume has been at the level of 3650 tons for several years. The price of gold on November 23, according to the Comex commodity exchange (USA), was $1992 per troy ounce. Since the beginning of 2023, the metal has risen in price by 9%.

The level of gold production in 2024 will depend on the world gold price, the discount rate of the Central Bank, the ruble exchange rate, the cost of energy resources, etc., Leskov notes. The expert predicts relatively stable production volumes up to and including 2025 and some acceleration of production growth rates after 2026-2027. The increase in production is likely to continue after 2030, Leskov believes.

TsNIGRI in its estimates relies on already known objects and gold reserves, while significant reserves of metal, he emphasizes, can still be put on balance, because now exploration work is being carried out at "numerous new facilities". Production volumes in the country are growing even in placer deposits, despite the reduction in the share of placer gold in the overall production structure, he points out.

Leskov adds that in order to maintain production, the state must ensure the liquidity of gold in the domestic market, stimulating the growth of demand for it from both organizations and individuals. Predictable tariffs and domestic prices for gold and energy are also important for the industry, at least for the period of 5-7 years necessary for production planning, he says.

According to the expert, in 2022, the cost of gold production in Russia increased by 25-30%, which "equalized the industry with the global average." According to the assessment of the Union of Gold Producers, in 2021, the cost of gold production in Russia was 2600-3200 rubles. for 1 year.

In addition, in order to maintain production volumes and growth rates, coordinated intensification and improvement of the efficiency of geological exploration in the country is necessary, including through the support of juniors, adds Leskov. Grishunin agrees that in order to replenish gold reserves, it is necessary to develop the junior companies sector in Russia. Also, according to him, it is advisable to increase government spending on exploration. The expert estimates the necessary additional amount of financing at 15-25 billion rubles per year.

Source: https://www.vedomosti.ru/business/articles/2023/11/24/1007446-eksperti-prognoziruyut-na-2030-god-pik-dobichi-zolota-v-rossii?utm_campaign=newspaper_24_11_2023&utm_medium=email&utm_source=vedomosti