Support Russia Insider - Go Ad-Free!

Russia & China Pen Gold Exploration Deal

The agreement will see the Natalka facility in Kolyma, Magadan, in the Russian Far East, become one of the largest gold mines in the world with an expected output of 15 tonnes of gold per annum. 


This post first appeared on Russia Insider


China and Russia are hopeful of enriching themselves following an agreement between China National Gold Group Corporation (CNGC) and Russia's Polyus Gold International Ltd. to step up gold exploration efforts in the Far East. 

The agreement was announced on Monday, with the companies saying they plan to cooperate in mineral resource exploration, technical exchanges and materials supply, The Siberian Times reported

CNGC is a centrally state owned Chinese gold corporation primarily engaged in the mining and refining of gold, silver, copper, and molybdenum, and in the retail of custom-designed gold and silver bars. Polyus Gold is the largest gold producer in Russia and one of the world's top 10 gold miners.

As per the agreement, the two companies will work together at Natalka in Kolyma, in Russia's Magadan region. The agreement between the two mining firms, which was signed in the presence of Russia's President Vladimir Putin and Xi Jinping, the Chinese President, is one of many deals signed between China and Russia in energy, transportation, space, finance and media exchanges during President Xi Jinping's visit to Russia from May 8 to May 10.

It's envisaged that the Natalka mine will eventually become one of the largest gold mines in the world once it's operational, producing an estimated 15 tonnes of gold per annum. Officials said they hope construction of the mine will be completed by late 2016 or early 2017.

By pooling together resources, the two companies hope to conduct exploration of gold deposits at a much lower cost. 

"This platform will enable us to leverage off each other's expertise and pursue multiple business opportunities together," said Pavel Grachev, chief executive officer of Polyus Gold International, in a statement. "As Russia's largest gold producer and the lowest cost top 10 gold producer, Polyus Gold can provide CNG with an excellent foundation to build its business interests in Russia and the CIS region, and we look forward to a long mutually-beneficial relationship." 

Progress at the mine has been a long time coming, with construction facing a series of delays. Phase one of the mine's construction was initially expected to begin in December 2013, but work only began last summer. Earlier this year there was disappointment too, when auditors found that initial explorations had overstated the amount of gold reserves at the site by half, forcing engineers to focus on developing more economical ways of extracting and processing gold at the site. 

The deal comes at a time when both Russia and China are showing a voracious appetite for gold. Already two of the top gold-holding nations in the world, Russia was said to be the world's top gold buyer in 2014, according to Bloomberg. And it's shopping spree hasn't stopped there, with Russia's Central Bank believed to have bought a whopping 28 tonnes of gold last March alone. As for China, it hasn't disclosed its gold holdings since 2009, but Bloomberg believes the country could have tripled its reserves since April 2009 to some 3,510 tonnes, a number that would put it second only to the United States in its gold holdings. 

Image credit: Магадан via Flickr.com


Support Russia Insider - Go Ad-Free!

This post first appeared on Russia Insider

Anyone is free to republish, copy, and redistribute the text in this content (but not the images or videos) in any medium or format, with the right to remix, transform, and build upon it, even commercially, as long as they provide a backlink and credit to Russia Insider. It is not necessary to notify Russia Insider. Licensed Creative Commons


MORE: Business

Our commenting rules: You can say pretty much anything except the F word. If you are abusive, obscene, or a paid troll, we will ban you. Full statement from the Editor, Charles Bausman.