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700 tons of gold ore lost at sea by Russian gold company

October 30, 2012360 view(s)

When gold companies profit, their shareholders often profit. But what happens when things go wrong or natural disasters happen?

A precious metals mining company in Russia called Polymetal unfortunately got the chance to find out when it lost a vessel that had 700 tons of gold ore yet to be mined aboard it. The ship carrying the gold assets sunk off the Pacific Coast of Russia, according to a recent report.

At the time, the ship was between Feklistov Island, its destination, and the coastal town of Neran where it had set sail from. The ship never made it to its final port in the Sea of Okhotsk; the last known communication with it was a distress call sent out shortly before it sank.

Gold companies in Russia, or any other country for that matter, have to face the reality that tragedies like these are part of the business of mining and transporting the ore which will later become refined gold. The precious metals industry may look dazzling to those on the outskirts, but this vessel sinking with such a vast load aboard — not to mention nine crew members it took to run it — shows that this is a high risk industry in many respects, even with today's advanced technology. It would be impossible to estimate the value of the potential gold assets those 700 tons of ore could have produced because experts know that it varies according to many factors involving the type of ore being mined.

According to the news report, "The company said it has shipped ore via that route before, and there was nothing unusual in shipping it by the sea."

No foul play is suspected judging by recent media coverage of the event and since ore typically contains very small quantities of gold, experts speculate that it could cost Polymetal more money to try to recover the lost ore than it would to write the loss off. Of course, for the families of those lost at sea the devastation has no monetary value; the losses are nothing that anything other than time can heal. While reporters have not specifically said that the crew has died, the time of year and location of the shipwreck suggest such frigid temperatures that it would be difficult for any human being to survive long at sea if they made it off the ship.

Russia is no small producer of gold, having mined 185 tons of gold in 2009 alone, a record year for the country. It is seen as a major producer of gold and, like its neighbor China, has shown a strong interest in building its reserves of gold in recent times. Back when the country was apart of the Soviet Union it produced nearly twice the amount of gold it produced in just recently in 2009. Clearly today, it remains a key player in world gold production.

Keeping abreast of gold news is important for those who decide to make the yellow metal part of the portfolio. Understanding the way the global economic realities of today affect the precious metals market can help investors make stronger decisions.

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