More gold in Caucasia: study

Several countries in Central Asia have the potential to become major gold producers, according to a report by the London-based World Gold Council.

The report, titled The Golden Road: The Importance of Gold Mining in the C.I.S. and Eastern Europe, predicts gold mining will increase considerably in some of the former Soviet republics in Central Asia.

The Kyrgyz Republic, the Russian Federation and Uzbekistan are already among the world’s top 20 gold producing countries, with gold accounting for more than a third of the Kyrgyz Republic’s exports and 6% of Uzbekistan’s.

Russia, now the world’s sixth-largest gold producer, has the potential to double its output over the next five years to 300 tonnes annually. The country has more than 1,000 tonnes of gold in low-grade resources in Siberia. Far Eastern deposits identified by Russian geologists are estimated to contain roughly 650 tonnes of the yellow metal.

Extractive industries already play a major role in several economies in Central Asia, accounting for 30-50% of total output. Some of these countries are among the poorest in the world, with annual incomes sometimes below US$500 per person. The report points out that the development of these countries will depend largely on realizing the potential of their natural resources, including gold.

New mine development in central Asia has been held back by lack of foreign investment, owing to an unfavourable investment climate. Efforts are being made to improve the business environment, and more realistic privatization rules are being put in place. However, several gold mining developments were halted when the price of the yellow metal fell in the late 1990s.

The countries covered in the report produced 285 tonnes of gold in 2000, equal to 11% of global production.

The report was prepared by Dr. Mina Toksoz, an economist who worked for the Economic Intelligence Unit from 1985 to 1997 and, more recently, in the London banking and securities industry. It is the fourth and final in a series examining the importance of gold mining in different areas of the world.