Gold output in the former Soviet Union was never as high as some western analysts had estimated. Once hard information became available in the early 1990s, for the first time in nearly 60 years, it turned out Soviet production peaked at 289 tonnes (9.3 million oz) in 1989 and had never been at the 300-400 tonnes (9.6-12.9 million oz) level sometimes suggested.

The output of Russia alone was around 150-160 tonnes (4.8-5.1 million oz). The other serious producer was Uzbekistan at just over 60 tonnes (1.9 million oz), mostly generated by the Muruntau mine.

The Russian gold industry, fragmented into over 200 artels or co-operatives working placer deposits scattered all across Siberia east of the Urals up to the Kamchatka peninsula, was badly under-capitalised, lacking modern equipment and, by the mid-1990s, even lacking payment for the gold produced.

New technology, such as heap leaching, which has become fundamental to opening up surface deposits in the United States and Australia, was of little use in the permafrost of Siberia.

Western capital and know-how is badly needed to modernise the industry. Gold reserves in Russia are substantial, but finding the means of tapping them is hard. Many mining companies from North America and Australia have looked, but decided to wait until the Russian economy has stabilised and the political, legal and tax position of foreign investors is confirmed.

The most significant investment so far has been by Canada's Kinross Gold which has a 55% stake in the Omolon Gold Mining Company for whom it operates the Kubaka open-pit mine. Output at Kubaka was 13.5 tonnes (0.43 million oz) in 2001, but the mine is nearing depletion; in addition, the owners are currently embroiled in a bitter payment dispute. Another Canadian company, High River Gold, has a majority stake in the Buryatzoloto Joint Stock Company which operates the Zun-Holba and Irokinda mines in Siberia. Buryatzoloto's production reached 4.8 tonnes (0.15 million oz) in 2001. Bema Gold, also from Canada, has a 79% share in the Omsukchansk Mining Geological Company, which is operating the Julietta gold-silver mine where production commenced in September 2001. Julietta is expected to produce 3.1 tonnes (0.1 million oz) per year during the first four years of production.

Meanwhile the bulk of production still comes from the placer artels. According to a new estimate by Russia's Bank Zenit, one of the banks increasingly involved in gold mine finance and marketing, there are 566 gold producers in Russia. Of these the majority, 389 operations, produce less than 100 kilos (3,215 oz) annually, while 99 producers have 100-300 kilos (3,215-9,645 oz) and a further 62 producers manage 300-1,000 kilos (9,645-32,150 oz). Only 16 producers achieve output of over 1,000 kilos (32,150 oz) annually. The highly fragmented character of the industry means that official statistics of production, put at 145-150 tonnes (4.6-4.8 million oz) in 2001 may be an under-estimate. GFMS' estimate of total Russian production in 2001 is 165.1 tonnes (5.31 million oz).

The potential is for higher output by 2005 or 2010 if President Putin can put the economy on a firmer footing and clarify laws for foreign investors.

See also: Russia Mining Introduction