Russian gold producers are on the verge of a major crisis due to sanctions. Gold miners are asking the state to intervene in the situation and provide assistance to the industry – for example, by starting purchases for the state reserve. Kommersant writes about this with reference to market participants.
Industry representatives note that problems with the sale of Russian gold abroad began even before the official discussion of sanctions against Russian gold at the level of foreign states. Russian refineries (treatment) plants have lost the status of "reliable supplier" for the world's largest trading hub – London. After that, they immediately began to have problems with the sale of products.
“We no longer ship to organized international markets in London, New York and Tokyo. Now the ban is becoming official and included in the sanctions package. As a result, Russian exporters are left only to supply to unorganized international markets, where we have visited over the past three months and seen discounts, country risks, various tariff barriers and non-tariff restrictions,” says Sergei Kashuba, chairman of the Union of Gold Producers.
In addition to international unorganized trading, Russia still has a domestic market, where, due to an excess supply, gold is forced to be sold at a discount. Moreover, even the Central Bank buys gold with discounts from Russian companies. Kashuba calls on the authorities to stop this practice and move on to purposeful purchases of gold by the authorities in reserves, but not at discount prices, but at world prices.
“It is necessary to purchase the entire volume that will remain after the purchases of the industry in the face of the jewelry industry and the population. It’s better for the sovereign’s egg now to grow than to diverge around the world with discounts, ”Kashuba insists.
The Association of Subsoil Users of the Magadan Region even revealed the size of the discount for the authorities on Russian gold: according to their data, the Central Bank buys the precious metal on average 15% cheaper than the market value, Russian banks also beat similar prices for themselves, taking advantage of the excess supply and stopping exports.
Russia's share in the world gold market is estimated at about 8.5%, ranking third after China and Australia. Experts are confident that the rejection of Russian gold will lead to the same thing that is happening on the oil market now – an increase in prices against the backdrop of a decrease in supply. In 2021, Russia exported 302.2 tons of gold worth $17.4 billion.
A ban on Russian gold imports is likely to appear in the next package of sanctions. All members of the G7 countries announced their intention to abandon the precious metal from Russia, moreover, all EU countries intend to approve the ban. The deprivation of the status of a “bona fide supplier” led to a drop in exports from Russia even before the sanctions, and those parties that did reach customers were subjected to close scrutiny by law enforcement agencies.