Major Russian gold miner opts for exports versus imports as local banks buy gold at discount


(Kitco News) Russia’s second-largest gold producer Polymetal prefers to sell its gold abroad since Russian local banks buy the precious metal at a discount.

In light of Western sanctions imposed on Russia after its invasion of Ukraine in February, Polymetal’s options of selling its gold are limited. The miner has been targeting non-sanctioned banks, Bloomberg reported, citing the company’s CEO Vitaly Nesis as saying during an investor call Monday.

However, those local banks purchase the yellow metal at a discount price compared to the international pricing. The local banks that Polymetal usually sold to in the past were state-run banks, including Sberbank PJS, VTB Bank PJSC and Bank Otkritie.

Due to sanctions, the miner cannot sell its gold to those institutions anymore. And Russia’s central bank, which has re-started its official purchases of locally-produced gold, is not projected to buy as much as before, Bloomberg reported.

This is why the miner is looking into selling its gold internationally, despite the price discount described as small.

“Our strategy is to sell as much as possible for export,” Nesis said.

Polymetal is listed on the London Stock Exchange, the Moscow Stock Exchange, and Kazakhstan’s Astana International Exchange.

The Kazakhstan side of the business remains unaffected, Nesis added. This was the first call with investors since Russia invaded Ukraine on February 24.



Polymetal reported strong production results for the first quarter of the year and said it was on track to produce 1.7 million ounces in 2022. The Q1 revenue was up 4% year-over-year at $616 million, but production was down by 6% to 372,000 ounces.

The miner cited “devastating war in Ukraine and immense sanctions” as putting “tremendous pressure” on the company during the first quarter.

“The Board and management continue to actively explore options to adjust company asset ownership structure to preserve shareholder value and address the needs of other stakeholders,” Nesis said in a statement.

Earlier, there was some confusion about the price used by Russia’s central bank when it re-started its gold purchases after a two-year hiatus.

At the end of March, Russia’s central bank resumed its gold purchases from local banks and said that it would be buying the precious metal at a fixed price of 5,000 roubles between March 28 and June 30. This was around $52 per gram at the time and below the market value of around $68.

Then in April, the country’s central bank announced that it would stop buying gold at a fixed price from local banks starting April 8 and continue its purchases at a “negotiated price.”

The country’s central bank cited a “significant change in market conditions.” “From April 8, 2022, the purchase of gold by the Bank of Russia will be carried out at a negotiated price,” the statement said.


Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.



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Divyansh Singh

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