A Petropavlovsk detail I’d not known

As well as have having mines in Russia’s far east, one of the company’s prized assets is its ownership of one of only two factories in the country that extract gold and metals from ore, a difficult process.

That’s normally called a refinery but no matter. What does is that bars from that refinery are no, or no longer, good delivery into the London and Chicago bullion markets. That rather crimps refinery margins. It’s entirely possible to sell the stuff but at a discount. Either in other markets, or to another refiner who then recasts it.

Something of a detail of course……

21 thoughts on “A Petropavlovsk detail I’d not known”

  1. I am surprisec and rathef suspicious as to why gold has been underperforming in its price. I’d have thought, with war,famine, pestilence and the imminent collapse of so many currencies and no one really understanding Bitcoin et al, it would be shooting up.

    I suspect certain state dead hands at work here.

  2. Who are the largest buyers of Gold?
    If Chicago & London are their largest markets it would be of great concern, if however the buyers of gold are content to buy in Dubai, Mumbai, Chennai or Shanghai its of less concern?

  3. Indeed Nessie

    Or even why didn’t Vlad nationalise the mines and keep all the gold himself ? As Britain discovered when buying tanks and B24s , gold is bloody useful in wartime

  4. I am surprisec and rathef suspicious as to why gold has been underperforming in its price.

    Gold has been bouncing around an all-time high for a couple of years now, so it may be that the “big” players who use it to hedge against paper inflation have already bought as much they want. If things get very shitty governments are likely to seize gold anyway, as per FDR in 1933 (so much for guns and the land of the free). There’s an upper limit to security in gold.

    It’s entirely possible to sell the stuff but at a discount.

    Same with his energy resources. He can get some money for the short term (might even look good value at peak prices) but overall he’s losing big time. Having said that, there are signs Biden’s Handlers are going to throw Ukraine under the bus, in which case Putin comes out grinning and building up for the next one.

  5. “Same with his energy resources. He can get some money for the short term (might even look good value at peak prices) “

    Oh, I think it’s working better than that.
    Oil and gas are at record high prices, so Putin sells (even at a ‘discount’) to non-US colonies at a higher price than he was getting in 2021.
    He weans 2/3 of the world off of the dollar and US-controlled payment systems, building a new global trade structure dominated by Russ…China
    He makes a lot of friends in Middle East, who cannot believe the bonanza in oil prices, since the West have cut off their own noses to spite their faces.

    Worryingly, I don’t think this is an unexpected outcome. I think this was well planned and started a long time back. Bigly planning, against * and Bojo. Taking milk from babies, etc.

    And now we have Pelosi starting a new war, since the US does so well in them. Ahem. O Lord, please deliver us from interesting times of the US-fuckup variety.
    I’m sure our home grown politicos are fully capable of local fuckups of equal magnitude.

  6. Plenty of industrial buyers out there, plenty of them for new production. The thing is that “good delivery” means you can just sell into the bullion market itself. You’ve a “terminal market” in the buzzwords. Don’t have to market or anything, stick in warehouse, get your warehouse receipt chitty and sell on possibly the most liquid market outside the FX ones. Easy peasy. But it’s a minor problem, yes, if you can’t do this.

  7. He weans 2/3 of the world off of the dollar and US-controlled payment systems, building a new global trade structure dominated by Russ…China

    This one still makes me giggle. Not that the US isn’t undermining itself (been going on for years) but that the world will adopt trade structures based on Russia and China. They’re basket cases.

  8. They’re basket cases.

    True, PJF, but so is everywhere else. In the land of raffia, the man with the plastic bucket is king.

  9. PJF – Russia will always be a ramshackle shithole full of depressed alcoholics, sort of like Scotland but with nicer weather. But idk why anybody would misunderestimate China.

    They’re building the future in East Asia, while the collective West painfully contorts its economy into a horrifying ouroboros of ecological autofellatio. While we can barely get a new railway line built and the rest of our infrastructure is embarrassingly creaky, the Chinks are building dozens of brand new atomic reactors and shiny new superhighways for fun.

    Seems a safe bet that – by the middle of this century, possibly as soon as this winter – gwailos will be jealous of the standard of living enjoyed by Chinamen, Hindoos and Koreans. Wealth is strength. And as a famous Saudi religious scholar observed, people love the strong horse.

  10. @Steve

    China is not the economic paradise you imagine. You need to expand your sources of information outside the CCP propaganda machine.

  11. There’s been quite a few individuals and small companies frozen out of the banking system in the West.
    If Visa or MasterCard or PayPal take a dislike to you then they can cripple your business.
    Even if you’re not banned from the payment system, they can exert influence about what kind of business you can do.
    I reckon quite a lot of people in the West would be very interested in an alternative system not prone to influence by wokesters.

  12. Can you leach me with acid now?

    Why did this passage from an email I just got make me think of this blog?
    .
    《British Columbia’s Copper Mountain mine is a ticking timebomb just miles from the Washington border. New reports show an unacceptable chance of failure of the mine’s waste dams which would decimate communities, critical waterways and wildlife on both sides of the border.》

  13. Remember when all the smart money was on Japan ruling the world’s economy?

    That’s what is going to happen to China. The flaws in their system are even hidden any more. Soon enough one will cause major problems.

    In the long run it, like Japan, will be their aging population.

  14. “Remember when all the smart money was on Japan ruling the world’s economy?
    That’s what is going to happen to China. The flaws in their system are even hidden any more. Soon enough one will cause major problems.
    In the long run it, like Japan, will be their aging population.”

    Hence the extreme danger now. China’s got one shot at world domination before demography kills any chances it has. If they can break the US super power hegemony using a combination of their military, industrial and financial muscle now, then that gives them a breathing space to deal with the fallout of the population issues. So IMO the CCP will take extreme risks over the next decade or so to try and make that happen.

    They have already unmined the US industrially, to the extent that vast swathes of the US (and the West in general) cannot function without the flow of goods out of China (which gives them a considerable power should they turn that flow off). They are equally desperate to undermine the US financially by destroying the US dollar as world reserve currency, which the current energy crisis will give them a chance to do as well. And they have the opportunity to see whether the US will fight over Taiwan.

    But I hear you cry, the Chinese need the West as their export market as much as we need their stuff. True, but while an economic war will be very painful on both sides, the winner will be the one who can withstand the most pain and still be standing, albeit bloodied, at the end. Which leads me to my other conclusion – the current Zero Covid policy in China has nothing to do with covid, and everything to do with putting controls in place over their population, and conditioning them for authoritarianism the like of which they haven’t seen since the time of Mao. The CCP knows whats coming and are preparing to make sure their grip on power is absolute, and can withstand domestic trouble to a far greater extent than the West could ever dream of.

    We in the meantime are obsessed with Net Zero and whether a woman can have a penis……

  15. Lots of the gold produced in Russia is sold as a concentrate, a kind of semi-refined product. This is then shipped off to proper refineries – in the east, it often goes to China.

    I may be wrong as I’m relying on recall here, but the thing that Petropavlovsk has, of which there are two in Russia, is a POX plant. That’s a facility that extracts metals form ore using pressured oxidation in a big autoclave – roasting basically. It’s necessary for accessing ‘refractory’ ores, of which there is a good amount around unexploited but it’s a very challenging metallurgy. It’s not a refinery.

    They are famously tricky beasts to install and get operating. I’ve had it described to me as more like baking a cake – you have a recipe but need to tailor it to your oven and ingredients. Petropavlovsk had a bit of a disaster with delays I recall. Polymetal own the other one and did a better job with it.

  16. BitFR

    If my memory of Fortescue is correct, the British government printed large sums of paper money to allow it to snaffle the gold needed to support Wellington’s peninsula campaign.

    Indeed I understand that Wello at one stage called on all coiners in the army to step forward and help him turn gold from India into Spanish and Portuguese currency.

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