Is Russia set to become the world’s second biggest gold producer?

Australia could face stiff competition for the position of world’s second-biggest producer of gold this year, as Russian miners ramp up output of the precious metal.

Recent statistics from the International Monetary Fund (IMF) have already shown Russia’s central bank reserves are on the rise, and now production levels look to be following suit.

The country mined approximately 248.5 tonnes of gold last year, compared with Australia’s 265.3 tonnes, according to Mine Web.

However, The Moscow Times reports Russia is thought to have increased output by 26.6 per cent in the first half of 2014. As such, the country could edge ahead of Australia if the last six months of the year produce similar results.

Russia’s Gold Industrialists’ Union, a gold producers lobby group, recently claimed output jumped 17.4 per cent year on year.

Lobby head Sergei Kashuba stated: “[Companies] are increasing production to compensate for a gold price decline.”

Estimated final productions levels in Russia will be approximately 275 tonnes, although this may be conservative. Particularly as previous forecasts had predicted a 5 per cent decline.

Mr Kashuba, speaking to PRIME, said gold production is likely to increase if prices continue to climb.

“Methods for resolving the global downturn have not been found, despite flooding the economy with money, but it is inflation. As for gold, it is an ant-inflation instrument, and it will be in demand,” he explained.

IMF data cited by the Wall Street Journal suggests central banks across the world are steadily filling up their gold storage facilities, as confidence in the US dollar begins to slip.

Russia increased its holdings by a further 10 tonnes in July, having already added more than 16 tonnes in June. The country now has approximately 1,104 tonnes of central bank gold.

Kazakhstan, another heavy purchaser of physical gold in recent years, increased its reserves by 1.4 tonnes, bringing its total to 158.6 tonnes.

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