GOLD MINERS IN THE URALS WERE ON THE VERGE OF BANKRUPTCY

The difficult economic situation has affected the activities of Russian prospectors. Sales channels were closed due to international sanctions, and the value of precious metals on the market decreased. Credit institutions also increase the discount when buying mined gold. In these conditions, the heads of gold mining companies are increasingly thinking about possible bankruptcy.

According to the Pravda-UrFO Internet portal, many gold mining enterprises are beginning to refuse to develop deposits where a low content of precious metals has been found. The publication refers to the words of Farit Nabiullin, who heads the Berezovsky Mine. The organization, located in the Sverdlovsk region, found itself in a pre-bankruptcy situation.

According to the director, the Central Bank has repeatedly increased the previous bank discount (0.05-0.07%) to 15%. The strengthening of the ruble also brought losses of up to 35%. The company is trying to increase production and find new sales channels. But it is not easy to do this, the company stumbles upon problems in trade even with neighboring countries.

In particular, as Nabiullin notes, neighboring Kazakhstan refuses to purchase gold produced in the Urals. 

Other Asian countries (Kyrgyzstan, Uzbekistan), although ready to purchase Russian precious metals, do not have sufficient financial capacity for this.

The price of gold has dropped by almost a third over the past couple of years. At the beginning of 2021, a troy ounce of precious metal was estimated at 142 thousand rubles. By the beginning of this year, the price was only 134 thousand. Currently, gold is already trading at a price of 3.1-3.2 thousand per gram.

According to the Union of Gold Producers of the Urals, a risky situation is typical for all companies operating in the market. Banks set a discount when buying at 20%. At the same time, the cost of the extracted precious metal at mines like Berezovsky is about 2 thousand rubles per gram. 

There is a loss of profitability in the economic activity of the enterprise.

Another problem shared with the publication by the artel of prospectors "Farta", also working in the Urals, is the risk of losing licenses for the development of sites. The company must comply with the quotas set for the year, which is almost impossible in conditions of growing cost. There are financial difficulties when buying machinery and equipment.

Gold miners count on the state's assistance in allocating funds for pumping mine waters, maintaining geological exploration activities. At the moment, the region helps only by 30%, sources say. At the same time, the tax burden on gold mining increased 3.5 times in 2020-2022. If the situation does not change, the industry will face a wave of bankruptcies, experts say.