By Yuliya Fedorinova and Andrey Lemeshko
Russian gold output rose a surprise 8 percent in the first quarter as a weak ruble spurred mining of the metal, priced in dollars in world markets, and investment in refining scrap.
The country produced 50.8 metric tons in the first three months, including refined scrap, up from 47 tons a year earlier, the Union of Gold Producers of Russia said Monday. The lobby had predicted last year that output would slow in 2016.
“The figures are surprising,” Dmitry Kolomytsyn, Commodity Strategist at Sberbank CIB, said by phone. “The major part of the growth was due to increased output of refined gold scrap, meaning jewelers invested in refining in an attempt to benefit from the rising gold price and weakening ruble.”
Russian gold mining hit a record in 2014 after growing 6 percent to 8 percent annually for several years. Sergey Kashuba, head of the industry lobby, said in December that output could be flat or rise just 1 percent in 2016. In the first quarter, mining grew 5 percent to 37.5 tons and production from scrap rose 40 percent to 9 tons, the group’s data showed.
The union doesn’t so far plan to change its forecast for the full year, Kashuba said. Companies may have decided to benefit from the weak ruble in the first quarter to boost output before the currency began to strengthen later this year, he said by e-mail. Miners typically sell gold to local banks for rubles at a level linked to dollar prices.
The ruble touched a record low in January before becoming the best-performing currency among emerging markets this year with a 13 percent gain. Gold is up 21 percent in 2016.
Mining grew at projects such as Pavlik, developed by Arlan LLC in the Magadan region, billionaire Viktor Vekselberg Renova group’s development on Kamchatka, some Polyus PJSC fields and at Polymetal International Plc, according to the gold union.