Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Fuel Crisis in Gold-Rich Magadan

The vast and gold-rich Magadan region, eight time zones from Moscow, is in the grips of an economic crisis that has brought it to "the edge of despair," two politicians from the region said Friday.


"Magadan is rolling downhill like a snowball, creating a catastrophic situation," warned Mikhail Shlyapin, a Federation Council deputy from Magadan.


Speaking at a press conference with a deputy and journalist from the region, Mikhail Gorbunov, Shlyapin told reporters the Siberian mining region is threatened by an acute fuel shortage.


Miners are threatening to strike in the middle of March, the two men said, telegrams to Moscow say the region is "on the edge of despair," Magadan port is virtually closed and production is grinding to a halt.


All of this is occurring in one of the coldest places on earth, with winter temperatures of minus 50 degrees Celsius.


The tale is becoming a familiar one across a whole swath of Northern Russia from the Magadan region, which almost touches the tip of Alaska, to the mining regions of Kuzbass and Vorkuta thousands of kilometers to the west. In response, the State Duma has tabled a motion to discuss the acute situation in the north of the country.


But in Magadan the extra twist to the story is that this is one of Russia's gold mines -- literally so, because the vast region contains 30 percent of Russia's gold as well as 60 percent of its silver.


So why the crisis?


Shlyapin and Gorbunov named a number of culprits. The banks, who are crippling production by lending money at interest rates of more than 400 percent. A poor infrastructure, which means that the region does not have a railway for import and export, and a privatization process which has only led to falling production.


And of course he pointed to the central governmen, which owes the region more than 100 billion rubles -- although Magadan owes nearly as much itself.


But neither man could fully explain, despite persistent probing by journalists, why the local authorities had failed to make use of their natural wealth.


"To be extracting gold and living in poverty is quite absurd," Shlyapin admitted.