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Gold requires incentives and support

How to equip the gold mining industry of Yakutia, argues Mikhail Brook

How things are going in the gold industry in Yakutia and what steps need to be taken to improve it - in an interview with EastRussia with the third-generation Aldan gold miner, Chairman of the Union of Gold Producers of the Sakha Republic (Yakutia), Director General of Southern Yakutia Development Corporation, JSC Mikhail Brook.

Gold requires incentives and support
- Mikhail Lvovich, at the Interregional Forum of Gold Producers of Yakutia held in April, delegates decided to create the Union of Gold Producers of the Republic of Sakha (Yakutia). You are elected its chairman, with which we sincerely congratulate you. What are the goals and objectives of the new organization and you personally?
- Thank you! In the gold industry not only in Yakutia, but also in the whole country, a lot of problems have hindered its development. To wait, that once all by itself will be arranged for the better - strategy losing. It is necessary to actively join the process to those who know the situation from within.

Some of the gold mining enterprises of the republic, mainly processing placer deposits, are currently cutting production volumes due to a lack of opportunity to increase the mineral resource base and because of the low economic efficiency of mining existing reserves.

On the other hand, the gold mining industry of Yakutia has a great development potential. Besides, I think that the precious metals market is favorable for today, it allows the enterprise with adequate management and owners to work profitably and successfully develop.

It is necessary to form a medium for communication between gold miners in order to jointly defend interests, build relations with supervisory authorities, and financial institutions.

The purpose of the Union is the formation of a professional community that will help to establish relations between gold miners and external contractors, as well as initiate the introduction of amendments to a number of laws. Such steps will help improve the situation in the industry throughout the Far East.

- What problems, in your opinion, are the most relevant?
- Among the most acute problems, I would mention the lag in the development of transport and energy infrastructure in the region, the remoteness of the most promising deposits of ore and placer gold from transport communications, the deterioration of mining and geological conditions of deposits, and the decline in the quality of reserves.

The development of mining companies is hampered by the imperfection of legislation in the sphere of subsoil use and the licensing system, the corruption of the departmental licensing system, and high interest rates on attracted loans.

Therefore, today it is important to unite forces and initiate the introduction of amendments and additions to a number of federal and regional laws and regulations, such as the Law on Subsoil and the Law on Precious Metals and Precious Stones.

Another sore point is the tariffs for electricity, rail transportation, prices for goods and services of natural monopolists. They do not contribute to the development of the mining business, especially small and medium.

Let's take the current taxation system. It does not stimulate owners to introduce the latest technologies, rational use of natural resources, including the development of small, medium and technogenic gold deposits. Mining enterprises in this area, in addition to general taxes, are burdened with additional fees and charges.

EastRussia Help
In April, the labor artel for the extraction of gold by Voldemar Bertin, endowed with the official mandate of the authorities, set off from Yakutsk in search of gold-bearing deposits in the upper reaches of Aldan. In June of the same year, the search engines went to the Mikhail Zarabukin prospecting artel, who had already found a large deposit of loose gold in the area of ​​the “Invisible” key and worked there with his people. From this meeting begins the countdown of industrial gold mining in the Republic of Sakha (Yakutia), and the Aldan gold-bearing region soon appears on the maps of mineral resources, the pioneer of which historians rightly consider M. Tarabukin.
In Soviet times in Yakutia received up to 35 tons of precious metal. However, during the years of reforms in the gold mining industry, its potential has been lost, production volumes have been steadily declining. In the industry, a lot of problems have accumulated. These are high tariffs for energy, and the imperfection of the legislative basis for subsoil use, and backward infrastructure, and in some cases, its complete absence.

In 2016, the Republic of Sakha (Yakutia) with the extraction of 23,653 tons of gold took the fifth place in the list of gold mining regions of Russia. According to experts, the scale of the raw material base is such that it is possible to ensure production at the level of 40 tons of gold per year when solving a number of problems. The current situation in the world precious metals market and the price forecast for the next five years are encouraging.

What can be changed in the current tax system?
- We are preparing proposals that relate to the need to take into account the taxation of geological and economic features of subsoil use in the Far North, the remoteness and inaccessibility of subsoil use facilities, and the features of mining technogenic reserves.

There are proposals to write off on the cost of production and to exempt companies from taxes (for example, to provide tax holidays) for spending on R & D, create favorable conditions for attracting foreign investments to the domestic innovation sphere.

How do you see legislative initiatives to introduce amendments and additions to the current Law on Subsoil»?
- In order to stimulate the systemic geological study of the subsoil and the reproduction of the mineral resource base of ore and loose gold, it is necessary to enshrine in the Subsoil Law the basic principles, concepts, goals, objectives, powers and responsibilities of the relevant entities and parties in this area, the methodology determination of geological, economic and cost estimates of subsoil plots by types of minerals and reasonable determination of the size of the starting payment for the use of subsoil.

There is a need to clearly formulate the requirements for the content, procedure and timing of consideration and approval of technical projects for the development of subsoil resources, to delineate the functions of control and supervisory bodies when implementing them, the timing of issuance and issuance of title documents.

It is also required to provide a reliable protection against corruption of the system of licensing of mineral resources, including its organizational aspects. In particular, we are talking about reducing the number of organizations that coordinate permits for the right to use subsoil resources.

It is necessary to develop proposals for improving the state system of licensing, streamlining the procedures for organizing and holding auctions for obtaining the right to use subsoil in terms of recognizing the winner of the auction of one participant in the absence of applications from other participants. This will simplify the provision of technogenic placers for use and the renewal of licenses.

At the legislative level, it is necessary to stimulate investments by investors and subsoil users in geological exploration, creation of junior geological companies specializing in the discovery of new deposits of gold and other minerals.

- What other laws and regulations regulating the activities of miners require changes?
- Amendments must also be made to the Land, Forest and Urban Codes. This, for example, will help to remove administrative barriers when issuing permits and project documentation for the construction and operation of parametric, prospecting and exploration wells, capital construction facilities and auxiliary mining facilities.

If we talk about regional standards, then there are already certain steps on our part. We have taken the initiative to add to the order of the Ministry of Industry and Geology of the Republic of Sakha (Yakutia) from 21.03.2017. "On the Commission for the Determination of Quotas for the Extraction of Mineral Raw Materials of Enterprises Conducting Mineral Mining in the Territory of the Republic of Sakha" On the free sale of gold.

- To what extent do gold-mining enterprises require state support?
Due to high interest rates on loans and lack of available funds, the volume of geological exploration has decreased in recent years. From the state, market participants expect the creation of effective mechanisms to attract investment in the industry, as well as providing benefits to enterprises conducting geological exploration. At the same time, the share of expenses for geological survey work and prognostic mineralogical research should be increased in the structure of state financing for geological exploration, creating the basis for the preparation of an exploration reserve for solid minerals.

Enterprises supporting new promising fields in remote regions of the Far North, where they have to build up expensive infrastructure, need state support.

- What do you think situation is With the training of personnel for the industry?
- The system of training mountain specialists requires profound reform today. Their shortcoming negatively affects the development and safety of mining operations. I consider the right steps to create the Aldan educational and industrial cluster on the basis of the Aldan Polytechnic College. Let me remind you that the cluster includes Aldanzoloto GRK and PJSC Seligdar, as well as Neryungri Polytechnic College.

Another urgent task is to preserve the existing personnel, to rely on local professionals with experience in the field of exploration and mining of precious metals. At our long distances, problems with logistics, in severe climatic conditions, taking into account that any geological information is never complete, the preservation of experienced personnel and the preparation of a worthy shift is one of the determining factors of success.

- How representative is the Union of Gold Producers of the Republic of Sakha (Yakutia)?
- The formation of the composition has just begun. Today it is - roughly, 50 organizations. The core of the Union will be small enterprises that have less resources to lobby for their interests and uphold their rights. On our official website, the creation of which we have started, all participants will be represented.

How do you plan to build relationships with the Union of gold producers of Russia and the Union of Russian prospectors?
- Our organization is called upon to solve problems both at the regional level and at the federal level. This, first of all, participation in the preparation of the legislative framework relating to precious metals, the decision at the level of federal authorities of the issues of mining, production, protection and sale of precious metals. The unification of efforts will only benefit all gold producers, from Chukotka to the Murmansk region. Our goals coincide. And we are ready to work together.

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