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. Last Updated: 07/27/2016

Russia Plans to Revive Gold Industry, Market

Russian officials have outlined plans to fund a troubled gold sector and create a domestic market for the precious metal, issuing a range of securities that could be traded at home and swapped for gold.


The as-yet-unnamed securities, similar to gold warrants on sale in Western states, would be backed by producers and mining firms, officials said. Prices would be based on a domestic gold fixing price and the market would be open to all.


"The domestic market for gold was closed for a long time in Soviet and Russian days," Boris Pozdnyakov, deputy head of Russia's Precious Metals Committee, told a news conference Monday.


"The moment has come for us to look realistically at the situation and take measures needed so that a market can really work here."


Ideas discussed at a one-day gold industry conference in Moscow centered on the issue of the securities, the sale of which would help finance the development of the gold mining sector and allow production to rise.


Officials said it was hard to assess the capacity of a new domestic market but said the volume of securities being issued would be based on the needs of industry rather than the capacity of the market.


Russia, one of the world's biggest gold mining countries, produced almost 150 tons of gold last year. But firms face big problems this year amid shortages of cash and equipment and rising costs.


"Russia has adequate reserves of precious metals, in particular gold ... Our task is to facilitate the extraction of this gold, put Russia back on its old levels of one of the foremost gold producers in the world and increase gold extraction severalfold in the near future," Pozdnyakov said. Transactions in the planned securities and regular domestic gold fixing sessions are likely to be handled through the Moscow Clearing House, whose chairman, Ruslan Shamurin, said the new securities would not have a fixed redemption date, although there would be a date when redemption could start.


On redemption the securities, likely to be denominated in grams of gold, could be swapped for cash or -- if enough certificates were available -- for a standard gold bullion bar.


Final terms for participation by foreign investors and how these investors could liquidate their assets had not yet been worked out, he said.