An article in Mining Journal about Russian-Chinese cooperation on Gold Market, Статья в Mining Journal по вопросам российско-китайского сотрудничества на рынке золота

   Russia and China appear to have forged closer gold-sector links through a formal co-operation agreement signed in Moscow by the Union of Gold Producers of Russia (UGPR) and China Gold Association (CGA). The two groups together speak for about 740 tonnes of global gold output.

   A spokesperson for the UGPR told Mining Journal the organisations’ alliance would “support their members in more efficient mutual co-operation, joint development and growth”.

   This could translate into increased sharing of information on regulations and regulatory change, exploration, mining and service-sector opportunities, and investor matchmaking. Russia is turning increasingly to non-Western gold industry investment due to sanctions and other factors limiting the flow of FDI.

   “We plan to arrange together things like road shows to each other, joint seminars and conferences, joint information sources, and so on,” the spokesperson said.

   “Further joint development of [the] gold mining sectors of both countries” could come about through joint ventures, and broader “country-to-country” investments.

   “There are also a few special interests like hard refractory ores and concentrates from Russian Far East to ship for further treatment in China and so on,” the UGPR spokesperson said.

   Gold-paving of the Silk Road Economic Belt – a bulwark of Chinese regional diplomacy and economic development – would see increased regional linking with neighbour countries to forge “mutually beneficial and broader co-operation with Russian and Chinese partners”.

   “From a gold mining prospective [our] prime interest is Mongolia, Kazakhstan, Kyrgyzstan, Tajikistan and maybe Iran, and increasing the cross-border exchange of competencies and capabilities for companies in this sector in those countries,” the UGPR spokesperson said.

   “Sometimes well-developed companies are in one country, large greenfield deposits which need further development are in another one, treatment facilities for the concentrates from those deposits exist in a third one, and finance is available in a different one,” he said.

   “This is why some broader co-operation would seem to be more efficient and fruitful for each of the countries.”

   The US Geological Survey (USGS) said in a January 2015 update China’s 2014 mine production was about 450t of gold, making it the clear leader among global gold-producing countries. Chinese gold consumption topped 880t, down 24.7% from the 2013 level.

   Australia was ranked second in the USGS publication with 270t, but the 245t total for Russia (up 27% year-on-year) was more than 40t less than the Russian gold union’s estimate (288.5t). This total exceeded the UGPR’s early forecast of 275t for the year.

   The China Gold Association is said to represent about 520 Chinese gold producers which together account for most of the country’s gold output.

   The UGPR spokesperson said gold production in both countries had grown steadily in the past five years.

   “They are also two of the top three countries with the largest reserves explored to date in the world and with vast potential for further exploration,” he said.

   “The new agreement is signed for first time … and is considered to be the first step in further joint development of the gold mining sectors in both countries.”
Sergei Kashuba, chairman of UGPR, said late last year Russia gold-sector deal volume involving Chinese interests had been low despite the entry of Chinese companies as far back as 2005.

   “The Russia-Chinese cooperation in the mining industry only gains momentum, and is not systematic, despite the fact that the Chinese investors are almost 10 years on the Russian market”, he said.

   “Chinese are not fast with their investments in new countries and regions. They make it very carefully, after the thorough study of the local legislation. They are supported by the government, which provides state guarantees, supports Chinese embassies and trade representatives. They have limits in the volumes of foreign investments in the mining industry”.

   “The problem is that the process became more difficult … [because] the first wave of investments was completed and there were some non-returns on the invested funds, which forced them becoming more careful.”

   Kashuba acknowledged the biggest obstacle for Chinese investors was the 50t cap on gold reserves for “strategic deposits” and limited foreign ownership of Russian companies. Chinese investors wanted full or 51% control of assets, the right to export all or at least half of raw materials to China for further processing, Chinese staff at Russia-Chinese joint ventures, and use of Chinese mining equipment in operations.

   Mining-journal.com