(ATF) Russia has committed a $600 million investment in a gold refinery in Kyrgyzstan, lifting hopes in the poverty-stricken Central Asian republic and challenging China for influence.
The plant at Jerooy – operated by Russia’s Alliance Group – had been expected to go on line last year, but was attacked during unrest that saw the government toppled and populist Sadyr Japarov emerge as leader.
Arson attacks cost the Russian company more than $10 million in damages and delaying production. The firm holds nearly 90 tonnes of gold and 25 tonnes of silver.
The unrest hit the Kyrgyz mining industry hard, with the important Bozymchak mine, owned by Kazakhstan’s KAZ Minerals, also halting production between October and late December 2020.
Russia and China have competed for influence with European and North American countries in Kyrgyzstan, but the local economy relies on gold and other mining.
Putin watched the opening of the gold processing plant at the Jerooy mine in northwestern Kyrgyzstan via video link on March 17.
Gold is expected to do well in 2021, according to analysts, with the London Bullion Market Association expecting an 11.5% price rise on average.
“We're seeing strong sales of coins and bullion in the US,” said Yao Wenyu, senior commodities strategist at ING. “In the traditional physical consumption market, gold is still a premium in both India and China.”
While gold has faced strong headwinds amid rising real yields, which has seen ETF investors trim their exposure, the metal rose 0.6% to $1,744.42 per ounce on March 17.
The rise came in the wake of the US Federal Reserve making no changes to the benchmark interest rate with the target standing at 0.0%-0.25%.
“Gold needs to break back above $1,765 in order to start attracting fresh fund buying and momentum,” Steen Jakobsen, Saxo Bank’s chief investment officer, said.
With reporting by Agence France-Presse