Russia on track to become world’s top gold producer by 2029
Despite the challenges caused by the covid-19 pandemic, Russia is still hopeful that it will be ranked as the world’s top gold producer by 2029, achieving an average annual growth of 3.7% y-o-y between 2020 and 2029.
This forecast was presented in a report by Fitch Solutions Country Risk & Industry Research, whose experts believe that strong domestic gold demand in the short to medium term will support rising gold production in Russia.
Despite a 900-strong coronavirus outbreak at Polyus Gold’s Olympiada mine in the Krasnoyarsk region of eastern Siberia, one of the largest operations on the planet in 2019, producing 1389.2 koz of gold, most of the mines have remained virus-free and operational to date .
Thus there is limited downside risk to the current gold production forecast for 2020, but at the same time other forces are at play for the Russian gold industry.
“The expansion of US sanctions and the tensions between the two countries have led the Russian central bank to increase its gold reserves,” the analysis said. “In addition, the Libyan Stabilization Act is expected to be passed by the Foreign Ministry Committee in early August, imposing additional sanctions on Russia for its alleged role in escalating the civil war in Libya. The bill would allow the Trump administration to freeze funds in American banks, block access to US dollar-denominated assets, and thereby sustain increased domestic demand for Russian gold. “
palladium
On palladium, Fitch says production in Russia is on track to expand in 2020 as the sector has not faced disruptions related to the Covid-19 pandemic.
“Indeed, Russian palladium producers will benefit from supply disruptions in external markets such as South Africa,” the report said. “Top manufacturer Norilsk Nickel will continue to lead the automotive catalytic converter market thanks to its smooth operating capacity and position as a low cost manufacturer. On April 30, the company confirmed that its FY 2020 production projections will be maintained and expected to produce 2.65 to 2.78 ounces of palladium. “
According to Fitch, given that most of South Africa’s palladium mines continue to operate below capacity as lockdown restrictions are gradually lifted, production in the country is expected to shrink by 8.7% this year, while Russian palladium production is expected to register a 2.5 % growth
