Sanctions will double cost of Siberian gold deposit
Russia’s largest gold producer Polyus said on Tuesday that the cost of developing the giant Sukhoi Log gold deposit in Siberia had nearly doubled to $6 billion due to Western sanctions.
Polyus expects its flagship project in eastern Siberia, due to go into full operation in 2029, to help double its gold output to 6 million ounces by 2030. That would see the company leap to second from fourth in terms of global gold producers, behind only US-based Newmont.
Polyus expects to produce 2.3-2.8 million ounces of gold at Sukhoi Log each year, with two other new projects set to boost annual production by 600,000-700,000 ounces.
Western sanctions have cut many Russian industrial companies’ access to critical equipment and forced them to look to alternative import sources from countries like China.
Russia has a 9% share of global gold production, second only to China. All major Russian gold miners, including Polyus, are under Western sanctions and in 2022, the United States, Britain and the European Union banned imports of Russian gold.
Polyus has reevaluated its Sukhoi Log plans since 2022 as sanctions started to hit and foreign partners and suppliers left Russia. On Tuesday Polyus said it expected the project’s costs to reach $6 billion from $3.3 billion anticipated previously.
Polyus says the Sukhoi Log deposit is the world’s biggest greenfield project in terms of gold reserves, with an estimated 43.5 million ounces.
It said on Tuesday that it planned to build two lines of a gold processing plant with total capacity of 34 million tonnes of ore per year at a site in Irkutsk, with a start date in 2028-2029. Polyus produced 2.902 million ounces of gold in 2023 and sees 2024 production at 2.75-2.85 million ounces.
