Russia could become the world’s third largest producer of gold within two years, according to figures from industry body the Russian Gold Industrialists’ Union. Gold production rose by 7 percent last year, to a total of 226 tons, putting Russia in fourth place behind the U.S., Australia and China, and if growth continues on the current trajectory, Russia will dislodge America to become the world’s number three gold producer by 2015.
Russia already buys more gold than any other country, beating fellow emerging economies including Brazil, India and China, which have all been stockpiling the precious metal. The commodity has seen a 400 percent price rise since 2000, with worried investors keen to flee to a safe haven since the financial crisis of 2008. With some signs of growth in the world economy, gold prices have been less strong this year, but Russian producers are betting on enough ongoing uncertainty to keep demand high in the months and years ahead.
Indeed, it seems that bad news for the world economy could well be good news for Russian gold producers: the increased demand for gold is driving up supply in the country’s mines. If times stay tough and investors stick with the commodity, gold production could continue to rise at 4-5 percent per year, propelling Russia up the rankings of the world’s gold producers.
With total gold resources second only to those of South Africa and a tenth of the world’s total estimated supply, the country is well-placed to meet the extra demand, although analysts see potential for consolidation within the market.
Speaking as the figures for 2012 production were announced, Sergei Kashuba, Chairman of the Russian Gold Industrialists’ Union, said, “during the coming 10 years the consolidation of Russia's five or six (largest) gold mining companies will continue. The process is inevitable, natural.”
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