UST-NERA, YAKUTIA, RUSSIA – In winter it gets so cold that metal snaps. When the weather is warmer people make a living sifting the earth for fragments of gold in the Oymyakon district of Russia’s far eastern Yakutia region.
But the unusually rich deposits of the alluvial gold near the surface are running out and producers have had to switch to the more expensive process of digging mines to extract gold ore.
Production at the first two mines to be opened in the area since the fall of the Soviet Union will start soon. One is being launched by GV Gold, with U.S. fund BlackRock and the European Bank for Reconstruction and Development among its shareholders, and another by the locally-owned Yantar group.
As alluvial deposits disappear in other areas, producers are opening mines to help Russia keep its place as the world’s third biggest gold producer after China and Australia and ahead of the United States in fourth place.
“It is always hard to move away from old traditions but all regions nearby… have already gone through it,” said Elena Andreyeva, chief ore mining geologist at Yantar.
Global gold prices in London are now at around $1,285 per ounce, down by around a third from their peak in 2011. But Russia’s rouble currency has also fallen, making foreign investments more attractive in an area dependent on gold for the bulk of local revenues and that is a challenging place to work.
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