Mining for Gold Amid Volcanic Wilds

ReutersRock towers off the coast of Kamchatka, where miners contend with volcanos, floods and derelict infrastructure.
PETROPAVLOVSK-KAMCHATSKY -- Gold miners on the Kamchatka Peninsula contend with volcanic eruptions, floods and poor infrastructure, but high metal prices mean the hard work pays off.

Unearthing the precious metal could also ease economic hardship in a remote region no longer propped up by Moscow, generating jobs and millions of tax dollars for the area.

"No doubt, the rise in gold and nickel prices is one of the reasons we can attract investment," says Viktor Lopatin, deputy head of the Kamchatka division of the state mining licensing agency.

But the region's remote location brings specific challenges.

"The infrastructure in Kamchatka makes it very difficult to mine. The main kind of transport is air transport -- planes and helicopters -- and the costs are very high," Lopatin said.

There are very few roads on the peninsula, which is home to fewer than 400,000 people.

Up to 2,500 people work in the exploration and mining of Kamchatka's mineral wealth. Platinum, copper, gold and nickel are extracted from its fiery earth. The region's only active gold mine, Oginskaya, employs 554 people. Numbers would swell if more mines were started, Lopatin says, adding that employing one new miner creates six or seven jobs for builders, drivers and service staff.

Gold has risen more than 50 percent in value in the last two years, hitting a 26-year peak last year and enticing miners to develop deposits across the world that would previously have been deemed uneconomic.

Kamchatka has about 200 tons of gold in proved and probable reserves, and Lopatin says there could potentially be three times as much in the ground. Only a tiny fraction is being extracted.

Kamchatka produced 1.2 tons of gold last year, 0.7 percent of the country's total.

This year, output is expected to rise to 2.5 tons as the operator, Kamgold -- run by Koryakgeoldobycha, part of UralPlatinum Group -- improves efficiency.

Lopatin estimates mining firms would potentially pay 120 million rubles ($4.64 million) in taxes per ton of gold, with 60 percent of that sum going into the regional budget.

Kamchatka's unique environment can be a curse when it comes to the nascent gold sector. The peninsula has as many as 29 active volcanoes -- their eruptions and frequent earthquakes can destroy roads and airport runways.

In warm months, it is forbidden to cross most rivers, which are important spawning areas for the region's most profitable resource, fish. Miners must wait for winter and stop working again when the ice melts in spring.

In the winter, miners often have to pave trails through 2 to 3 meters of snow. When this melts in spring, it floods the few existing roads.

Kamgold deputy director Valery Grigorenko agrees that gold mining in Kamchatka is difficult: "But where can you have it easier? Nowhere."

He adds that if all the correct procedures and techniques are observed, the difficulties can be overcome and harm to the environment avoided.

Environmentalists are less convinced.

"Gold mining is a way of making quick money," said the World Wildlife Fund's Kamchatka director, Laura Williams.

"It would jeopardize salmon-spawning areas and areas where eco-tourism could be promoted."