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Krastsvetmet on its recent development and Update of Russian Gold market

Mr.Sergei Belove

 

1.     Krastsvetmet is a fully integrated highly technology oriented refinery in the world. Can you share the broad spectrum of technology that your company has developed for refining primary gold ores and secondary gold bearing materials including electronic scrap?

As an original refining technology developer since 1943, we have gathered immense experience in hydro-, pyro- and electrometallurgy.

72% of Russian gold production or 234 tons is refined at Krastsvetmet. The core refining technology for mined gold applied at Krastsvetmet is hydro-chlorination, where chlorine gas selectively converts gold into solution and silver precipitates as silver chloride. Gold then is precipitated with a self-developed binary precipitation agent that has an increased yield and lead-time against traditional SMBS. Silver is then recovered by electrolysis.

Jewelry scrap is treated within a dedicated refining route, where the upgraded aqua-regia dissolution is applied. This process benefits from traditional aqua-regia in lead-time, chemical consumption and yield.

Electronic scrap in Russia is mostly collected and exported. Despite 65% idle capacities of the Russian refineries, automatic sampling lines for such kind of materials are not constructed yet.

 

2.     Krastsvetmet is accredited by LBMA, LPPM, SGE and DMCC. As a refinery does your company support artisanal and small gold mining (ASGM) sector? Would you like to share some of your programs in this?

Russian gold mining sector is crystal clear and transparent. ASGM is illegal and only being discussed at government as a trial project for limited areas of Russia, where gold can be mined by individual entrepreneurs. Now all mining companies are licenses by the Ministry of resources and environment and regulated by the Ministry of Finance and Gokhran of Russia. Being presented on international gold-dore market only since 12% import customs duty abolishment in 2017, Russian companies do not source much internationally being consciously compliant with OECD and LBMA regulations on responsible sourcing.     

3.     It's nice to see the jewellery division in a refinery. What is Krastsvetmet value preposition to  customers in jewellery? 

2019 is 25th anniversary for the Krastsvetmet jewelry division. Today, Krastsvetmet is the Russian leader in the production of gold chains and the only manufacturer of machine-made platinum chains. Totally, 8 tons of jewelry were produced and sold in 2018, where 3.9 t (+ 47% in comparison with 2017) are gold chains.

Our range of chains of different alloys, colors, samples, coatings is the widest among Russian manufacturers.  As a center of expertise, we share our knowledge, business analytics, marketing & fashion trends with our customers. Its relevant to teach our partners how to help customers choose a chain or bracelet. Hearing our consumers is another significant instrument helping product development. Online jewelry store has become a new channel of communication, here we promptly introduce wide range of products, news and promotions, as well as receive feedback.

 

4.     Krastsvetmet offers a host of products for industrial applications including reference material. Share some details in the products and services that your company offers for industrial segment

Industrial appliances are produced since 2004 in wide range: catalytic systems for nitrogen industry, equipment and materials for the composite and glass industries, precious metals calibrating reference materials (CRM), chemical compounds and products used in medicine, electronics and other industries. Importantly, that Krastsvetmet is the only company in Russia that produces all three pharmaceutical platinum compounds for the treatment of oncological diseases.

We are providing complex solutions for nitrogen producers with 55% domestic (Russia & CIS) and 9% world shares of catalytic systems. Being an international partner of LBMA, standard gold reference materials of our production are being distributed among Good Delivery list participants.

5.     How has been the gold market in Russia this year? Can you share some details in Russian gold production, exports and domestic consumption? Any comment on government gold buying programs?

Following the results of 2018, Russia set a new gold production record of 314 t, against 308 t in 2017.

For the sixth consecutive year, our country has taken an honorable 3rd place in the world after China and Australia.

           

 

 

 

 

 

 

 

 

Looking at domestic consumption, Central Bank traditionally acquired a large share (86%) of gold production. The jewelry and technical industries consumed around 23 t (7%) of gold last year.

By contrast, the export of gold bullions from Russia decreased by more than three times in 2018, amounting to 17 t, against 56 t in 2017. However, this fact is not associated with weak demand from the international market that is constant for any available volumes, meaning the choice of Russian companies for more favorable pricing in the domestic market.

Currently, 11 companies are entitled to refine precious metals in Russia. Six of them, including Krastsvetmet, have LBMA Good Delivery status. Total gold refining capacities in Russia is estimated at 900t, where around 65% are idle and can be loaded with international materials.

Fine gold is not imported to Russia due to a 12% import customs duty. Nevertheless, import duties on mined gold are temporary abolished until June 30, 2020 with a possible extension for another 3 years. Russian refineries are willing to enter international markets of mined gold and remain open for cooperation with potential suppliers. To ensure our competitiveness, constant legislative work is being done to reduce the time of import customs procedures, to simplify the procedures for controlling import goods, and to abolish 20% VAT rate paid when importing goods.

Turning to 2019, we expect growth in mined gold production by new record of 300 t.

6.     Over the years, do you see any change in the demand for gold from Russian retail customers? If so, can you provide some details?

Russian jewelry market has been going through difficult times recent years. There is a steady tendency for reducing the weight of gold products. In 2018, the average weight was 1.8 grams, which has decreased to 1.5 grams in the first half of this year Over the past 12 years, weight of gold chain reduced by 50%. The reasons are:  tripled gold price over the past decade influencing the cost of the final product; at the same time, people's debt is growing, inevitably affecting consumer behavior. To maintain sales, manufacturers are forced to produce more and more lightweight products in pieces, while the lighter the products, the higher the unit production costs.

Consumer behavior has also changed - precious metal products are less and less perceived as a financial tool, this is more an opportunity to tell about yourself. For us, chain is the base on which the product is created. That is why Krastsvetmet see more opportunities for development in this situation - both its own production and for the transformation of the industry as a whole. The creation of new colors and alloys, fashionable images based on chains, and radically new approach to jewelry sales. Product interpretations can be the most incredible.

 

7.     Krastsvetmet is a major player in PGMs. Any recent developments in technology or product development in PGMs that you would like to share?

Since 2016, when the first in Russia R&D Center as a part of Krastsvetmet was launched, the development of our new products and new refining technologies became a constantly going process. Nowadays customized R&D provides client tailored solutions and broader range of services including IP sharing and an access to R&D infrastructure.

Recently technology updates includes: Upgraded aqua-regia dissolution for gold-silver materials, improved lead-time, chemicals consumption and yield; Chemical Pd reduction. Improved environmental approach against traditional calcination; New Rh plating solution. Improved production technique with shorter lead-time. Industrial appliances division of Krastsvetmet introduced 17 new PGM containing products in 2018.

 

Disclaimer: Views are personal and not the views of the publisher.