AUGUST 4 - 10 // COPYRIGHT 1997 THE ST PETERSBURG TIMES
Yeltsin Decree Ends State Precious Metals Monopoly
By Sujata Rao
STAFF WRITER
MOSCOW - President Boris Yeltsin has signed a decree eliminating the government's precious metals export
monopoly, allowing banks to export gold and silver bullion that could stimulate investment in the troubled
mining sector by early 1998, analysts predicted.
Yeltsin's order, signed Thursday, follows a series of measures taken by the government and the Central Bank to
loosen the state's monopoly on the domestic precious metals market.
Banks, however, have pressed for export licenses and have refused to accept anything less.
"We have waited more than a year for this order," said Pavel Khoroshev, head of the precious metals department
at Bank Rossiisky Kredit.
He said earlier liberalization attempts, including the scrapping of state prices for bullion, had not satisfied the
banks. Khoroshev said the first fruits of the decree will be visible as early as 1998, as new capital flows into
existing and new mining projects.
He said banks will finally be able to attract international investors to Russia's gold industry by offering the metal
as collateral, adding that his bank is already in touch with prospective investors.
Grant Sinitsyn, a metals analyst with the United City Bank, said the decree is "good news" for the gold mining
industry, which is pressed for working capital as well as investments.
"Not being able to export has been one of the biggest hurdles in the way of attracting any kinds of investments,"
said Sinitsyn. "[The decree] opens up all kinds of investment opportunities as now producers will have more
options before them."
Russia holds the world's third-largest untapped reserves of gold but has dropped to sixth place in terms of output
because of lack of investments in the sector. Output, which stood at 160 metric tons in the late 1980s, is expected
to fall to 80 tons this year, according to the Union of Gold Producers.
The biggest hurdle to investments in gold mining has been the rule that producers sell their output to the
government, which often lacks money to pay for shipments. So far only one investor, U.S. company Cyprus
Amax, is allowed to export its output directly.
Cyprus Amax spokesman Michael Round said the liberalization would "positively affect" investments and
exploration projects in the sector, including any future projects his company would undertake in Russia.
One analyst, however, said the government evidently plans to keep playing a role in the market as the decree
requires that all sales be licensed by the Foreign Trade Ministry.
"This is a step toward liberalization; progressive, but not quite there," said Alexander Kursky, a Duma
Manufacturing Committee official.
Christopher Stobbart, a specialist with the CRU Consultancy in London, said the decree is unlikely to affect
international gold prices, which are at an all-time low. Russia accounts for just 10 percent of the world's gold
output, he said. |
