LAWRIE WILLIAMS: Russia’s largest gold miners sees H1 gold output rise substantially
As a potential indicator that Russian gold output may still be on the rise, the nation’s second largest gold producer, Polymetal, and last year the world’s 18th largest gold miner by production, reports that first half 2018 gold output has risen by 15%. The No 1 Russian gold miner, Polyus Gold, has also seen a big rise in output in H1. Russia is currently the world’s third biggest national gold producer (272 tonnes in 2017 according to consultancy Metals Focus) and is vying with Australia for the No. 2 spot. With Chinese output falling – down 7.9% in H1 (see: China’s H1 gold output falls 7.9%, but demand rises) both Russia and Australia may be closing the gap, but still have a long way to go before matching China’s output.
Altogether Polymetal, which also mines silver, copper and zinc, produced 19.8 tonnes of gold equivalent in H1 of which gold amounted to 13.872 tonnes according to a report from Russian mining news aggregator Rusmininfo. With some other Russian gold miners also seeing increased H1 gold output we expect the country’s overall gold production to increase again in the full 2018 year – one of the reasons peak gold may not quite be with us yet. However Q2 figures now coming out from some of the biggest North American headquartered mining companies (notably Barrick Gold, Agnico Eagle and Goldcorp so far) do seem to be suggesting something of a gold output downturn among some of the world’s largest Western-based gold miners.
But back to Polymetal. The miner is increasing gold output while reducing its silver production as the Dukat mine – one of the world’s largest silver producers – works slightly lower grades. The company should see further expansion of its gold output in H2, but primarily from its new Kyzyl mine in Kazakhstan which produced its first concentrate in June, a month ahead of schedule. Kyzyl is projected to produce 2.6 tonnes of gold this year, rising to 8.7 tonnes in 2019 and over 10 tonnes a year thereafter. This big new mine will presumably enable Kazakhstan to further increase its central bank gold reserves as the country, like Russia, currently buys in most of its domestic production to boost gold holdings in its forex reserves.
Polymetal is thus heading towards annual production of some 48 tonnes of gold equivalent. Meanwhile Russia’s No.1 producer, Polyus Gold, has also reportedly seen a strong output advance of 18% in H1 2018 with production put at around 34.5 tonnes of gold for the half year and with both Polymetal and Polyus seeing strong gold production increases a recent forecast that Russian gold production is likely to rise by around 3% this year looks distinctly conservative. Given information received to date the country looks like it could be heading towards an annual gold output level of around 300 tonnes in 2018 – thus closing the gap with China.
26 Jul 2018