Almost 200 t of gold 'mothballed' due to dormant licenses in Magadan Region - governor

BLAGOVESCHENSK. June 14 (Interfax) - The authorities of Magadan Region plan to crack down on "dormant licenses" for mineral resources due to which 182 tonnes of gold are now "mothballed," Governor Sergei Nosov said.

"There must be strict control over the implementation of investment agreements with resource users. Its absence has led 178 of 549 operating licenses, almost a third, being so-called dormant licenses," Nosov said in the regional legislature.

As a result, "182.3 tonnes of commercial gold reserves, including 19 tonnes of placer gold, is 'mothballed,' while regulatory agencies are not working on taking away such violators' licenses," he said.

The regional government estimates that this has cost the region's budget about 5 billion rubles in lost revenue. It has formed an interagency commission for the protection of the environment, environmental safety and combatting illegal mining of precious metals in the region.

The regional mineral resource department said that this refers to commercial reserves in the distributed stock of mineral resources.

"Licenses have various durations, these are the data at the moment. As for mining plans in 2024, they are about 59 tonnes for gold and 580 tonnes for silver," the head of the mineral resource department, Igor Pritolyuk told Interfax.

Nosov said a fifth of small miners, or 26 out of 144, did not officially begin operations in 2023 for various reasons, which led to a drop in placer gold production. This was partly because finding new equipment suppliers, organizing equipment maintenance processes and establishing new channels for selling precious metals took time and money.

"As a result, placer gold mining fell by 3.2 tonnes. The situation was exacerbated by the drop in prices for precious metals right until October 2023, which led to metal being held back at enterprises," Nosov said.

It was reported earlier that Magadan Region mined 48 tonnes of gold in 2023, 6.7% less than in 2022. The government said Polyus Magadan reduced output by 2.2 tonnes in line with its production program. Silver mining in the region fell 29.4% to 527 tonnes in 2023.

Russian President Vladimir Putin signed amendments to the law on mineral resources in December that are intended to put an end to "dormant" license for geological exploration. Under the changes, which go into effect on September 1, 2024, payments for mineral resources will increase multiple times if exploration of a property is delayed.

The typical duration of licenses for geological exploration is now five years, but in some regions and the continental shelf it is seven and ten years, respectively. Licenses can be extended to complete exploration and some companies take advantage of this to drag out the work. As a result, tiny payments are made for resource use.