Russia’s largest gold producer, Polyus, announced that the cost of developing the massive Sukhoi Log gold deposit in Siberia has nearly doubled to $6 billion, largely due to Western sanctions.
Polyus, which aims to begin full operations at Sukhoi Log in 2029, expects the project to help it double its annual gold output to 6 million ounces by 2030. This would propel the company from fourth to second place in global gold production, behind only US-based Newmont. “On top of Polyus, we are adding another Polyus,” said Petr Prokuda, Polyus’ vice president for economics, finance and strategy.
The Sukhoi Log deposit is estimated to hold 43.5 million ounces of gold, making it the world’s largest undeveloped gold project by reserves. Polyus plans to build a gold processing plant with a total capacity of 34 million tonnes of ore per year, slated to begin operation in 2028-2029.
Despite these ambitious plans, Western sanctions have severely impacted Polyus and other Russian miners. These sanctions, which cut access to critical equipment and forced Russian companies to turn to alternative suppliers, have pushed the estimated cost of Sukhoi Log’s development from $3.3 billion to $6 billion. In addition, Russian gold exports were banned by the US, UK, and EU in 2022, further complicating the mining sector’s operations.
Polyus still expects Sukhoi Log to produce 2.3-2.8 million ounces of gold annually, with other new projects expected to boost overall production by 600,000-700,000 ounces.
Despite the challenges, Polyus has remained resilient, with gold prices surging over 29% this year, fueled by central bank interest rate cuts and rising geopolitical tensions. Polyus produced 2.9 million ounces of gold in 2023 and expects 2024 output to range between 2.75 million and 2.85 million ounces.
