Oct. 20 – Canadian Kinross Gold Corp suggests Moscow should ease its subsoil legislation in order to triple the current investment in geological explorations for gold to US$1.6 billion a year.
Tye Burt, president and CEO of Kinross, the largest foreign investor in Russia’s gold sector, presented proposals on Monday within the framework of a meeting of the advisory council chaired by Prime Minister Vladimir Putin.
“The opportunity is very large and I believe that it is a matter of time that major exploration companies follow us into Russia,” Burt told Reuters Insider television.
For the last five years, Russia was spending US$471 million a year on geological exploration on the average, taking sixth place in the world after Peru. The head of the list, Canada, spent on average US$1.8 billion a year, Kinross has counted.
Under the current Russian subsoil legislation, each deposit containing enough gold or copper to merit major investment (in particular more than 10 tons of copper, and 700 tons of gold) are considered strategic, and foreigners are barred from controlling them.
“Russia has an unparalleled opportunity to significantly increase domestic exploration and mining investment, as well as the potential to become a world center for mining finance,” the paper Kinross handed to the government said.
Burt said to encourage an increase in foreign investment the government should ensure miners would get a fair chance to develop a deposit discovered under exploration license.
Kinross also suggested that Russia should provide tax incentives to investors, switching from revenue and royalty-based taxation to profit-based taxes.
Another step should be reducing the amount of government permits required for ownership of strategic deposits. On average, in other countries around the world, to start operating the mine requires you to spend six years on the agreement and obtaining all permits.
“In Russia, the federal and regional governments do not operate in a quick example,” Tye Burt says in an interview with Russian daily Vedomosti.
“Kinross proposals are realistic. Their implementation will attract foreign investment in geological explorations in Russia, which are too risky under the current legislation,” Evgenie Ivanov, Polyus Gold chief executive, said to Vedomosti.
Toronto-based Kinross has operated in Russia for more than 15 years, is developing the Kupol and Dvoinoye deposits in Russia’s Northern Chukotka Peninsula, and has so far invested over US$2.2 billion in them.
Burt said Kinross planned to invest US$350 million in its two Russian projects in the next two and a half years and to start the Dvoinoye mine by the middle of 2015.
“We are spending aggressively on exploration in the area around Kupol and around Dvoinoye. We have an exploration budget of approximately US$20 million annually,” he added.