Sunday, 29 November 2020
Russian Gold Mining: A Booming Business

Russian Gold Mining: A Booming Business

Russia is a mining giant, accounting for just under 15% of total global mineral production and placing within the top 10 world producers of a diverse range of resources including coal, iron ore, gold, copper, uranium, aluminium, nickel, silver and cobalt. Whilst this diversification has been extremely important to the success and stability of the Russian mining sector, the growth of gold production has been particularly impressive.   

Since 1995, the Russian gold mining industry has almost doubled its volume of extraction and is third in the list of global gold producers after China and Australia. In the last 10 years, according to the Russian Union of Gold Producers, Russia mined 2,189 tonnes of gold and plans to increase the annual production to 400 tonnes by 2030. There is significant scope to do this, with estimated gold reserves exceeding 12.9 thousand tonnes (EY, 2015).

A multitude of reasons factor in to this astonishing rise to prominence of the Russian gold mining sector. Privatisation programs for many state-controlled local gold producers allowed some to grow into large companies that could compete on the global stage using modern production methods, whilst others were merged or acquired. The devaluation of Russia’s currency, the ruble, from 2008-09 made gold miners even more competitive compared to other world-leading producers. Meanwhile, major processing plants have been able extract higher amounts of gold from ore and have reduced waste, increasing productivity of the sector as well.

Russia have a number of major gold mining regions that are among the most prospective in the world. The Krasnoyarsk Territory in Central Russia is the largest and is home to two of Polyus Gold’s (Russia’s foremost gold producer) major operations – Olimpiada and Blagodatnoye. Olimpiada is the fourth biggest gold mine in the world, producing 760.1 thousand ounces (koz) in 2015 and has estimated proven and probable reserves of over 30 million ounces (Moz). Blagodatnoye started producing ore in 2010 and is located just 25km away from their flagship Olimpiada mine. It produced 425 koz in 2015 and has an astonishing processing capacity of 6 million tonnes per year (mtpa), the largest in Russia (Polyus Gold, 2016).  Krasnoyarsk also holds many of the Uzhuralzoloto Group of Companies’ assets.

The Chukotka region in far-east Russia contains Kinross Gold’s major Russian assets, the Dvoinoye/Kupol operations. Commercial production began at the Dvoinoye underground mine in 2013 and it has ramped up to produce 734 koz of gold in 2016.  The third most prominent mining area is the Amur region which has the Petropavlovsk mining company as the dominant player, operating the Pioneer mine and developing three other deposits – Albyn, Malomir and Pokrovskiy. The Magadan region is one of that fastest growing gold hubs in Russia, with Polyus Gold’s game-changing Natalka project currently in development, as well as having Polymetal’s Dukat and Omolon Hubs which produced 51.2 koz and 143.9 koz of gold in 2015 respectively. Irkutsk is another region of significant gold mining growth, containing Polyus Gold’s Verninskoe site and GV Gold’s flagship project. Other major players in the Russian gold space are Nordgold, Highland Gold Mining Ltd, Sovrudnik Ltd and Susmanzoloto.


Polyus Gold's Natalka site in Magadan

Challenges in the sector:

There are a range of problems that remain drags on Russian mining sector productivity. This includes:   

  • Quality of ores – despite the abundance of natural resources in Russia, the ores in their gold fields are significantly lower grade than other leading nations. This has added to the cost of production and processing for major miners.
  • Lack of infrastructure for major projects – in 2016, prominent mining CEOs in Russia spoke out about the lack of road and energy infrastructure impacting major operations and developments. In extreme cases, they cited that “a 70km trip can take days depending on the season” (SNL, 2016).  The government has responded to these issues and is now undertaking a considerable infrastructure program.  
  • Regulations and sanctions – these have made it difficult for local mining companies to access buyer networks and has created challenges for METS attempting to enter Russia. This has contributed to the sector becoming more short-term focused, trying to produce quick results with inadequate technologies and systems. However, USA sanctions have meant that Australian technologies and services have become more competitive and have been able to access gaps in the market. 
  • Comparative costs of Australian technologies – due to Russia’s proximity and close trading relations with China, they have been able to import cheap products for use in the mining sector. Whilst there has been a long-held view that miners are skeptical of spending on more expensive equipment, there is a growing acknowledgement that they need to bring their operations up to global standards. This has led to Australian software providers and manufacturers achieving success in Russia.
  • Bureaucracy and red tape – Russia is highly bureaucratic and has vastly different political and social policies to Australia. In order for market entry to be a success, Australian companies must find the right partner who is able to support their business and navigate through regulatory hurdles.


Opportunities for Australian METS:

Despite the challenges above, many of these in fact create opportunities for Australian companies to export their technology and assist with solving problems in Russia’s gold sector. It is important that Australian companies do their due diligence before exploring prospects in Russia. Setting up operations or exporting will involve a lot of time and resources, you must seek a local business partner and consult and communicate regularly with service providers already on the ground, such as Austrade.

The main opportunities in the Russian market can be categorised as follows:

  • Safety products – there has been a greater focus on safety following a recent decree of the Ministry of Mining and according to EY’s 2015 survey, this was the top focus for Russian miners.
  • Focus on modernising operations – over the last decade, attitudes have shifted with many major Russian miners due to rising costs and lagging productivity. Many local players are now seeking out technologies that can increase productivity and boost efficiency. This is a reason why Australian companies usually receive a good hearing in Russia and why many software providers have emerged in the market. This includes introducing WiFi, cables and other communications into open-pit and underground operations.
  • Energy efficiency - any measure that will reduce usage of fuels, power and other related consumables are of great interest.
  • Training – the sector currently faces a skills gap that isn’t being matched by local employees. This lack of technical knowledge provides opportunities for education and training providers, including training software platforms.

Austmine’s 2017 Russia Mining Mission:

The Russian mining market has frequently proved a lucrative one for Australian METS over the past years. Therefore, we will yet again be taking an Australian delegation to Russia in June 17-24 to visit major mine sites and meet with mining executives. This includes trips to GV Gold’s Irkutsk operations and Polyus Gold’s Verninskoe project, as well as participating in a Russian – Australian mining roundtable and VIP networking functions.

David Way, CEO of JKTech attended the 2016 Russia mission and provided this feedback: "I enjoyed the 2016 Russian mission. I learnt a great deal from the other participants attending, this was invaluable. When the mission wrapped up I was happy about the outcome in that I received very good interest but was left with the impression that the Russian market would be difficult to penetrate. However, in the 10 months following my visit, my company has done very well in selling software and products into the region. More than I could have imagined. We have been getting a lot of interest in our consulting services too and I believe it is only a matter of time until we break into this business in Russia."

Claire Tuder, CEO of MICROMINE also offered some advice after the Russia mission: “Business development in Russia is all about relationships and it can be quite hard to access, let alone engage, the right person. MICROMINE entered the Russian market in 2001. We spent a lot of time and money building our presence and now it is one of our strongest sales regions. The Austmine mission in 2016 was a good opportunity for me to visit many of our clients and develop our relationships further.”

If you would like more information on this mission, please see our mission page and contact to express your interest.

Additional Resources:

Russia Mining Market Webinar – 13 February, 2017

Russia and Chile – Where do the opportunities lie? – 30 May, 2016



Evgeni Khrustalev, Partner, Head of the Mining & Metals Group in the CIS, EY, “Overview of the Gold Mining Industry in Russia,” 2015,

Polyus Gold, 2016, Operating Mines,

SNL, “GV Gold says road, power infrastructure challenges holding up Tarynsky project,” September 2016,
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