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Home > Top Stories > Russian gold miners dig for ways to overcome Ukraine impact

Russian gold miners dig for ways to overcome Ukraine impact

Published by Jessica Weisman-Pitts

Posted on March 30, 2022

3 min read

Last updated: January 20, 2026

Gold ingot being cast at a plant, symbolizing Russian gold mining amid sanctions - Global Banking & Finance Review — An ingot of 99.99% pure gold is cast at the Krastsvetmet non-ferrous metals plant, illustrating the impact of ongoing sanctions on Russian gold miners like Polymetal and Petropavlovsk. This image highlights the challenges they face in selling gold and restructuring debts amidst increased operational costs.

By Yadarisa Shabong

(Reuters) -Russian gold miners Polymetal and Petropavlovsk warned on Wednesday of increasing hurdles in doing business, including higher operating costs and continued challenges repaying loans to sanctioned banks.

Petropavlovsk said it was in early talks with its main lender, the sanctioned Russian bank Gazprombank, to restructure its debt after being unable to make repayments. It has also been unable to sell its gold.

The company, whose top investor is Russian billionaire Sergey Sudarikov, said any restructuring of its debt would have to be within the limitations of the sanctions.

A spokesman for Petropavlovsk said it was in talks with Gazprombank and its advisers and that it was too early to comment on the way forward.

Meanwhile, Polymetal said some gold projects were facing delays of between three months to a year. The company is also cutting some exploration budgets as it faces higher costs after being forced to change freight service providers.

But demand for gold in Russia has been boosted by local retail investment, it said in a statement.

There has been a surge in interest in gold and buying physical gold over the past four weeks in Russia because of the sanctions. The removal of value-added tax this month on purchases of the yellow precious metal has further bolstered demand, a spokesperson added.

Western sanctions on Russian entities in response to its invasion of Ukraine have disrupted several businesses and livelihoods in Russia and pose a challenge to non-sanctioned Russian companies that are looking to circumvent the new regulations.

Shares in London-listed Polymetal and Petropavlovsk have fallen by more than 60% since Russia launched what it called a “special military operation” in Ukraine more than one month ago.

While the two miners were facing “contrasting fortunes,” Petropavlovsk appears to be facing an “existential crisis,” said A.J. Bell analyst Russ Mould in London.

“A gold producer which can’t sell gold doesn’t look a very sustainable proposition. … Having (Sudarikov) as such a dominant shareholder probably doesn’t help the company too much in the short term,” Mould said of Petropavlovsk.

Sudarikov, through his REGION brand of businesses, disclosed a stake of just over 29% in the miner earlier this month, regulatory filings show. REGION is also a shareholder in the sanctioned Credit Bank of Moscow, according to Refinitiv Eikon data.

Shares in Polymetal reversed early gains to fall 7% by 1320 GMT, while those in Petropavlosk tumbled 21%.

In a positive development for Polymetal, the company said it had resumed gold sales in Russia after shipments were initially hit after terminated agreements with logistics providers.

It added that sanctions have not had a material impact on business but did not rule out the possibility of sanctions on the company itself, which is partly owned by Russian businessman Alexander Nesis.

Polymetal maintains $500 million of undrawn credit lines from non-sanctioned Russian lenders.

(Reporting by Yadarisa Shabong in Bengaluru; Additional reporting by Sachin Ravikumar and Muhammed Husain; editing by Anil D’Silva, Jason Neely and Mark Porter)