Shares of Russia-focused miners collapse on Ukraine invasion

Shares in mining companies with operations in Russia were among the first to feel the impact of Moscow’s wide-ranging attack on Ukraine on Thursday, while oil topped US$105 a barrel and investors rushed to buy gold and other safe havens.

The local exchange suspended trading in all markets following President Vladimir Putin’s announcement of a military operation against Ukraine. Once it resumed, the share prices of companies nosedived as investors braced for the toughest round of Western sanctions yet, wiping out as much as US$259 billion in stock-market value.

Alrosa (MCX: ALRS), the world’s top diamond producer by output, lost more than 40% mid-morning, closing 33.7% lower compared to its price on February 23.

Gold miner Polymetal (LSE: POLY; MCX: POLY) experienced massive loses in all the bourses it trades, finishing the day 35% lower in Moscow. It posted the largest fall  in the FTSE 100 index, losing over 46% of its share value to £594 mid-afternoon. That’s below a four-year low of the £605 a share it hit in October 2018. 

Polymetal put out a press release indicating that targeted sanctions on the company remained “unlikely.”

“The scope and impact of new potential sanctions (and any potential counter-sanctions) is yet unknown, however they might affect key Russian financial institutions as well as mining companies,” the miner acknowledged.

“Contingency planning has been initiated proactively to ensure business continuity, including selection of key equipment suppliers, liquidity management, debt portfolio diversification and securing sales channels,” it added.

Shares in London-based gold producer Petropavlovsk (LSE: POG) were trading near a three-year low by mid-afternoon at £9.43 per piece.

These are some of the first images of Russian troops entering Ukraine, verified by The New York Times.

Footage captured by security cameras at a border crossing on Thursday morning shows Russian military vehicles entering from Crimea. https://t.co/iAaop3QWru pic.twitter.com/U9gt81z6GR

— The New York Times (@nytimes) February 24, 2022

Shares in other Russian miners, including potash producer Uralkali (MICEX: URKA) and Gazprom (MCX: GAZP), the country’s biggest stock by market capitalization, also collapsed on Thursday as the ruble hit its lowest ever level against the U.S. dollar.

News of Russia’s actions led to sharp declines on stock markets across Europe, with the U.K.’s FTSE 100 index down more than 3% and Germany’s Dax index falling more than 4.5%. Earlier, stocks in Asia also collapsed.

The price of gold – which is considered a haven asset in times of uncertainty – jumped more than 1.7% to its highest since early January 2021.

Canadian senior miner Kinross Gold (TSX: K; NYSE: KGC) was falling slightly this morning in New York, even though it had said on Wednesday that its assets in Russia’s Far East, about 7,000 km from Ukraine, were operating normally.

Russia is responsible for a third of Europe’s natural gas and about 10% of global oil production. With both Ukraine and Russia also big crop producers, wheat and corn prices surged over 5%.