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Is Russia running out of gold? Polyus CEO gives 20-year warning

Kitco News

(Kitco News) If no new deposits are added, Russia will deplete its existing gold resources in just 20 years, warned the CEO of Russia's largest gold producer Polyus, Pavel Grachev.

There is a risk that Russia's gold mining industry will face a shortage of reserves, which is why the miners need to step up investments into exploration, Grachev told in an interview.

"If the trend is not reversed, the industry may face a structural shortage of raw materials during the next decade or two," he said on Monday.

Polyus' own resources will last another 37 years, Grachev added.

According to the gold miner's data, Russia's current gold deposits are equal to about 8,000 metric tons, and annual production is now at about 330 tons.

Alarming is the rate of depletion of the mineral resource base in Russia, which fell from 62% to just 30% over the past few years, Grachev added. And with gold specifically, the industry is seeing a decrease in the actual metal content in the ore.

Grachev called for more investments in geological exploration as he cited a lack of new resources and some legal restrictions.

Some of the answers to the resource depletion problem would be increasing private investment in geological prospecting and simplifying the circulation of search licenses.

Grachev added that junior miners in Australia and Canada make about 75% of new discoveries.

"This is a venture, so they can have several dozen licenses in their work at the same time. But in Russia, it is possible to sell a deposit only through the sale of a legal entity - the owner of the license. Dozens of licenses mean dozens of legal entities with all the attendant difficulties that hinder the creation of a market for search licenses," Grachev said.

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