Russian gold producers (Polyus, Highland Gold, Petropavlovsk, Nordgold and Polymetal) have faced problems with exporting gold. The sanctions imposed because of the war in Ukraine, coupled with internal restrictions, have led to a situation where Russian companies cannot sell gold abroad and are forced to accumulate bullion within the country. It is reported by RBC with reference to representatives of the largest gold miners in Russia.
Information about the problems of Russian companies was confirmed to the publication by the Union of Gold Producers of Russia. Internal difficulties are due to the regulations of the Eurasian Economic Commission (EEC, the economic body of the Eurasian Economic Union), which prohibits the supply of precious metal at below market prices in order to avoid unfair competition and excessive dumping by market players.
In accordance with the regulations, the sale of Russian companies is blocked by the Federal Assay Office, which is responsible for monitoring and controlling sales of precious metals. The problem is that no one is ready to buy Russian gold without discounts now: after the London Precious Metals Market Association (LBMA) deprived Russian gold of the Good Delivery (reliable supplier) status, cooperation with Russian companies began to be refused all over the world. London is traditionally the largest trading platform for precious metals, the deprivation of the status closed the Western markets, and the sanctions against Russian gold , coupled with sanctions against Russian banks, finally destroyed the chains of sales of Russian gold that had been built for years.
Before the sanctions, the issue of supplies did not arise before the gold miners, because they were handled by Russian banks, which resold it abroad. The resale was mainly carried out by the largest state and private banks, which, due to the war, fell under sanctions and lost the opportunity to sell Russian gold to foreign markets (Sberbank, VTB, Sovcombank, Rosselkhozbank, Gazprombank, etc.). Now, Russian companies have only sales opportunities in Asian and Middle Eastern markets, but they are ready to buy Russian gold only at a discount of 5-7% from London quotes (now around $1,714 per ounce), and because of the sanctions, companies have to establish supply chains.
The head of the Union of Gold Producers of Russia, Sergey Kashuba, told the publication that the authorities are aware of the problem and that the Ministry of Finance and the Ministry of Industry and Trade are currently trying to find a solution. This information was also confirmed to the publication by a representative of the Ministry of Industry and Trade. At the moment, two possible solutions are being considered: to change the requirements of the EEC by amending them, or to add a clause to the current rules to allow the supply of gold at prices predetermined in the contract.
Up to this point, the only sales market is domestic Russia, which is obviously overflowing with Russian-made gold right now. Another option is to sell gold to the reserves of the Bank of Russia, which, however, is ready to buy bullion at an even greater discount: the discount required by the regulator is 15-17%. Difficulties with the supply of gold have already led to a large-scale crisis within the industry, Russian companies have previously turned to the government for help with a request to assist and help companies. However, so far the government has not provided any serious support measures.