5 players from BRICS nations ink pact to mine gold

The five players are SUN Gold Ltd, China National Gold Group Corp (China National Gold or CG), the Russian Sovereign Investment Fund, Far East and Baikal Region Development Fund (FEDF), and partners from Brazil and South Africa, SUN Gold said in a statement.

The agreement was signed on the sidelines of the BRICS Summit in Goa to develop the Kluchevskoye gold deposit located in the Chita region of Russia in Eastern Siberia, the statement said. 

According to statement, representatives of all five BRICS countries are parties to this BRICS Gold MoU -- Nand Khemka, Chairman of the Indian Khemka family owned SUN Group, Tong Junhu representing China National Gold, Alexey Chekunkov representing the Russian Far East and Baikal Region Development Fund (FEDF), Ivor Ichikowitz from South Africa s Trans AFRICA Capital, and investor Antonio de Moraes from Brazil.

The project, in the mining sector, is the first BRICS investment project. 

According to the feasibility study completed by Changchun Gold Design Institute, the proposed joint venture aims to develop the Kluchevskoye gold deposit into a significant open pit mine and heap leach operation with an expected production rate of 12 million tonnes of ore per year and gold dor production of over 6.5 tonnes per annum. The pre-production investment is expected to be $400-500 million.

SUN Group has considerable long-term expertise working in Russia, while the FEDF will be an important shareholder in the joint venture company, acting within its mandate, to help support the project s growth, with a particular focus on gold and copper mining opportunities in the Russian Far East.

Meanwhile, India’s efforts to get a BRICS credit rating agency set up appeared to have hit a roadblock due to lack consensus after some members voiced “concerns” over the “credibility” and access to “dependable data” for the new entity to take on the Wall Street-based Big 3 run on commercial principles. 

“The leaders were mainly convinced but we couldn’t sign the agreement right now because there is a sense that experts need to look at it more closely,” Economic Relations Secretary Amar Sinha told reporters here after the Eighth BRICS Summit. He said because of the lack of consensus, the item has been included under the “action plan” and not in the Goa Declaration. 

Elaborating on the concerns, he said, “Every credit rating agency has to have credibility and access to absolutely dependable data. These two things the experts have to look at now.”

Sinha, however, said this is not a setback, pointing out to the other items on the economic cooperation front like agri research and customs cooperation saw consensus.

The proposed credit rating agency also found a mention in Prime Minister Narendra Modi’s closing remarks. “To further bridge the gap in the global financial architecture, we agreed to fast track the setting up of a BRICS Rating Agency,” he said in the joint declaration. 

India had first mooted the idea of having such an agency for the BRICS grouping which can solve impediments for the emerging market economies posed by the present CRA market, which is dominated by S&P, Moody s and Fitch, all based in Wall Street and being run with pure commercial considerations.

These three hold over 90 per cent of the sovereign ratings market now. Indian officials were at the forefront of pointing out to the shortcomings and the need to have an alternative CRA in the days leading to the Goa summit and during deliberations at the conclave here over the weekend. 

According to media reports over the weekend, China had raised certain concerns about the proposal and was not in favour of setting up one now.

One of the prime reservations stemmed from the current approach of making the issuer paying for the rating and the strong desire of shifting it to an investor-pays approach to make it more credible.

Other factors which have been flagged included the weighting accorded to a particular country’s sovereign rating while assigning the sovereign rating, without considering an issuer’s capital position.