USSR: REDUCTION IN ESTIMATED GOLD PRODUCTION

Created: 12/1/1978

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USSR: Reduction in Estimated Gold Production

USSR: Reduction in Estimated Gold Production

A Research Paper

the Office

The authors of tWs^per are

nomic Research and

of Imagery Analysis. Comments and queries artnmr and should be directed to

op

USSR: Reduction in Estimated Gold Production

Nallonsl Fortirn Autummt Outer December WB

Key Judgment!

Identificationajor ore-unloading bottleneck at the Muruntau goldlargest in therevuions in our estimate of the gold content of the Muruntau ore deposit have resultedeassessment of the plant's outputeduction in our estimates of total annual Soviet gold productionc now believe that Soviet gold production totaledetric tonsons less than our previous estimate. Soviet gold reserves at thc end7 arc in turn calculated atons insteadifference of more lhan S2 billion0 per troy ounce (seeur revised estimates suggest that the USSR has been selling substantially more gold than it has been producing

The revisions reflect only thc reassessment of production alaccounted for one-third of our previous estimate of total Sovietbutercent of production in tlic revised estimate.production in Magadan Oblast and thc Yakutsk ASSR, which accountone-half of the revised

not been changeu. we are also reasonably certain

or the accuracy of the estimate for ihe roughly one-fifth ofyproduct of the copper industry. Wech lessproduction atther gold mining locations scattered throughoutwhich account for most of the remainingercent of productionrevisedetailed analysisthese facilities,

now under way, may lead *jo further revisions in our esU mates of total Soviet gold production and reserves.

The estimates of thc capacity and level of production at Muruntauwith thej assistance of leading US experts in the fields ofand transportation. These experts

[developed estimating approaches ' *

inese experts also provided nature of Ihe ore deposit and *he efficiency of the refining

Wc estimate that Muruntau's present ore-processing capacity0 tons per day. Given an ore with an aveiage;old content0 troy ounce ocrpercent recovery rate,ay work year, it is estimated that production would beons of gold per year. Processing capacity will increase0 tons of ore per day when construction currently under way is comp'.ete. This will be sufficient to support production ofons or gold per|

:!

1owever, much of the processing capacity has been idle because of an ore-unloading bottleneck. Evidence P

together with Soviet data and factors derived frohi iuc uperaung expenemx of US mining and railroad companies, indicates that, between the start of operations in9 andhe Soviets could0 tons of ore per day to thc plant. This volume could support production of aboutons of gold perons less than thc production figure we have been carryinghe estimate of ore deliveries'

which pointsigure of0 tons Tor the ore processed per flay

Between the start of operations9 and the enduruntau's unloading capability0 tons of ore per day was not significantly belowton capacity of Ihc processing; facilities.3 andowever, processing capacity grew0 tons per day to0 tons, while ore-unloading capacity remained0econd ore-unloading facility was completed byith the second facility in place, maximum potential output from Muruntau has jumped to aboutons of gold por year, still well below the processing capacity. To operate the plant at or near design capacityons perhe Soviets will have to install at least two more unloadinging the existing rail transport system, or move part of thc ore by truck. To date we have no evidence they are doing either.

The revision of estimated gold production al Muruntau has caused us lo reduce our estimate of Soviet golu reserves as ofonsillion0 an ounce) to0he reduction in our estimate of reserves h> of little immediate importance for the Soviet hard currency position. Withillion in gold reserves and annual gold production valued atillion, availability ol gold for export is not likely lo constrain imports substantially in the near term. In thc nexl few yean, however, falling Soviet oil production is expected to cut into Moscow's hard currency earnings; this will probably intensify pressure to expand gold sale* in thc West. At some pcint Moscow will have to tie its sales more closely to current production in order to maintain reserves at an acceptable level.

Top

Key

The Refining Process at Muruntau

Estimating thc Design Capacity of the Gold Plant

Crushing Capacity

Grinding Capacity

Thickening Capacity...

Pachuca Tank Capacity

Power Capacity J.

The Production Bottleneck

Ore-Loading Facilities

Unloading Facility

Possible Explanations of Unbalanced Muruntau Expansionfor Production and Sales

1 1

0 10

47

of Facilities 19

for CIA Estimate of Soviet GoH Reduction at

Locations Other Than 23

. . - ..

'. I . '

i, : .

USSR: Gold Production and Reserves Frontis

World Gold Production 2

Ore-Refining Process at Muruntau (diagram)4

Processing Facilities ai Muruntau 5

Grinding Millsand Mercury AmalBamators at Muruntau

7

Thickening Tanks at Muruntau (photograph)8

Pa^hvica Tanks at MurunUu 9

Estimates of Ore-Processing Capacity at MurunUu (graph) 11

Rail Transport System at Muruntau (drawing)

T.blc,

USSR: Production and Allocation of

USSR: Revised Estimate* of Gold Production, by Region

"I I' 1 ' "

Map

USSR: Major GoW-Producing Regions

USSR: Reduction in Estimated Gold Production

otal world gold production amounted toona, of which theons orercent and Southons orercent.oviet gold production has exceeded the combined output of

; all other world gold produceis, except South

frica (seeold, along with arms, ranks after oil as the largest source of Soviet

i (hard currency earnings.or example, Soviet gold sales amounted to aboutillion,

I roughlyercent of Soviet hard currency earn-

i ings in that year.

S the Soviets began to develop anpit gold mine near Muruntau. located in the Kyzylkum desert of the Uzbek SSR,ilometers west of Tashkent (see map).of thc processing plant began in, and production Inincethe entire Muruntau complex (piocessing plant, 'mine, support facilities, and housing) has been expandedlthough still underMuruntau dwarfs in size any gold plant in the United States and is considerably larger than any South African plant (seeA forS experts estimate that it would cost0 million to duplicate the processing plant in the United States.n infrastructure would amount to an0 million.

3 OER estimated that the Muruntauplant would produceons of gold per year at capacity., as the Sovietsanded key sections of the plant, wc increased our estimate of the plrnt's annual production capacityamount al leastercent greater than the largest gold plant in South Africa. Wc estimated that production was

close to the level of installed capacity. and7 accounted for about one-third of total Sovietproduction.

New evidence about the pace of operations at Muruntau, however, ted us to question whether the gold plant was actually producing up to capacity. Therefore we conducted, with the help of UShorough reassessment of both capacity and production at Muruntau. Theof this reassessment are reported in this paper. Because our estimates of capacity and production are directly related to the flow of materials through thc refinery process, thethree sections of this report will (I) briefly trace the iey elements in the refiningefine th: specific techniques used to estimate the processing capacity of the plant,escribe the ore-unloading bottleneck and its effect on actual production at Muruntau.we offer some possible explanations for the unbalanced expansion of Muruntau's facilities, and briefly outline the prospects for future Soviet gold production andetailed description of all facilities at Muruntau and the basis for our estimates of gold production at other locations in the USSR are included in1 ;

Tho Refining Procosi at Muruntau

The refining process at Muruntau is defined in metallurgical termsesin-in-the-pulp (RIP) process. Although not used in thc United States to recover gold, the RIP process is employed in the US uranium industry and in South Africa for the joint recovery of gold and uranium.

The refining process at Muruntau consists of nine basic steps: (a) crushing the ore,hc ore, (c) recovering thc heavy gold nuggets

Top Shaft

I

i'

1 . 1 1

Bout* ASnta

"

m

{

m

.

7

mercury amalgamation, (d) thickening ihe slurry, (e) dissolving the pulpodium cyanide,xtracting the gold out of solution with ion exchange resins, (g) recycling the resin, (h) refining clectrolyticaily, and (i) final refining. Tbe process is described below and shown in the

simplified flow sheet (see

j The ore is brought to the plant by rail from an open-pit mine eight kilometers to tbe east.crushing of tbe ore is performedat the unloading1 where the ore is probably crushedaximum size of IS toentimeters. The crushed ore is transported

iiro ihown In pmrwtowi reftr to itw prcooulrcIn flgsra

by conveyoro the top of the millnd deposited into holdingocated along the north wall of the building. The Soviets probably maintain an eight-hour inventory of ore at all times to ensure continuous operations when the crushers are undergoing maintenance.

The crushed ore is moved by conveyor belts from the holding bins to semiautogenousmills where it is groundater is added to tin grinding mills to speed the grinding process and reduce power consumption.

' An iBlofCBOn* (rindingr* inUm ore frtndi ludrambicavotrint cylinder. InlemUutOfenoM irindintew Karl balb ara iddadba milt tohe crTidcncy of Um irtndlfli prooaa,.

USSR: Major Gold Producing Regions

mm

Eft

v-v.

MurunUu

Unclaulflao

HWS'j?

ground ore is passed through amalgamators adjacent to the grinding mills. Free gold (heavy gold ituggets) released from thc ore during the grinding process adheres to the mercury-coated inner wall of the amalgamator. Periodically the sludge or amalgam formed on the inner wall of the amalgamator is removed and sent directly to the rrfincry for final purification. The Soviets probably recover aboutercent of the total gold output at Muruntau by the mercuryprocess.

Ore containing the fine gold particles passes through the amalgamators into spiral classifiers whichniform size grinding prior to the thickening process. Oversize particle- of ore are returned by the spiral classifiers to the scmiautc-genous mills for additional grinding. Upon leav-

ing the classifier, the powdered ore isater mixture (slurry)olid content of aboutercent.

Thr! slurry is piped out of the mill building into Urge circular tanks calledc reduce the proportion of water. This is achieved by allowing the solids to settle to the oottom of the tank. Because the MurunUu ore settles slowly, chemicals called flocculants are added to the thickening unks to speed the process.

When the desired liquid:*olid ratio has been achieved, thc viscous residue at the bottom of thc thickening unk, called pulp, is piped through pumpnto the icn-exchange. The water in the thickening Unks, called overflow, is returned to ihe mill for reuse in the grinding circuit.

Prorata at Muruntau

Primary Crushing

rinding

Tank*

I

Coaree Gold Recovery) (Mercury An-algamation)

1

Spiral Claaiillera

(1B% Solid)

Ion Exchange (Pachuca Tanktl

% SobdJ

CN

XXXXX) uoo

Imtxsgnalac' Raain

Reeln Stripping

Gold Solution

Tailings ll1

rVocasalncj FocJIruaa at Muruntau

ion-exchange building houses columnar tanks, called Pachuca mixers. The pulp, which contains aboutercent solids,eries of mixers and its gold content is dissolved in sodiumrocess takingoours. The dissolved pulp then enters other mixers, where it is exposed to ion-exchange resinspolymers with an affinity for gold) that adsorb the gold out of the cyanideoviet manual indicates thatachuca tanks are used to dissolve the goldanks are used to expose tbe solution to ion-exchange resins. The resin is recovered for reuserocess called resin stripping.

The gold is then refinedtandardprocess in which the gold is deposited on titanium sheets (cathodes) set in electrolytic cells and; then manually peeled from the cathode. Final purification of the gold recovered by the mercury amalgamation process and the RIP process is performed in theehind

' I. N. MulmfUkiy and L. V.t<r* Mororod-nikh mnalln. Moscow:. ;

the ion-exchange building,tandardprocess to produce gold thatercent pure.

Estimoling the Design Capacity of tho Gold Plant

Our new estimate of the ore processsing capac-Ity at Muruntau is based on analysis of-

stages in the ore-processing sequenced

An esti-

mated range of maximum capacity has been established for each stage, depending variously on measurements :A

analysis by US engineers laminar witn goia mining and processing techniques, factorsfrom Soviet technical journals, andwith processes used in gold plants in non-Communist countries.

Crushing Capodry

The size and type of crusher used atbased on reports from |visited

other Soviet mineral processinginch crushers arc com-

monly used. Morcovc^4hc-siaAiwcii-wnh ihai required tonchS technical manuals indicate thatinch crusher canons of ore per hourcentimeter pieces suitable forthe grinding mills. Accordingoviet technicalinch cone crusher is capable of crushing moreons of ore per hour/ Gold ore processing plants operateay; crushers, however, frequently opcr-

| ate for only two shifts, orours each day.

; Maintenance is conducted during the third shift. Until this year, Muruntau operated with only one crusher. Assuming that the; crasher can

;ons per hour and operates forours each day, the plant would have had a

j crushing capacity0 tons of ore per day.1

In4 construction began on afacilitv rind eruth/r new

tt iininch

crushers operatingay. the plant wouldrushine camcjtvnat. of ore per dav.l

t umvii uiinsduiug lauilircs

are mx ueing usea nmultaneously. If the second crusher were constructed to ensure that one or the other would operateay, the plantrashing capacityons of ore

Grinding CorXKSry

U

lwo semlautd-iuus grinding mms approximatelyeters jineters long (see

j Accordingeach mill of this size

'could processXX) tons of

^gcstsTihaiine ouiiaing is divided into seven or

A.tkhartcktikayt ebonuhmiytevodor lyoiAiljikM invrwAAoacow:

J

elleveoni perore reallttlc MdlyInch com enuhw.

eight bays, each large enough to accommodate one mill and the associated catwalk, pipes, and access space. Thus, if all of the grinding mills were operating, the total capacity of the mill building would be at0 tons per day, andons perhese mills require constant maintenance, however, so at least one or two may be out of operation in any given time, thus reducing the overall milling capacityons per day.

Thkfcaning Copodty

Eighteen thickener tanks will be used inat Muruntau to reduce the proportion of water in tbe slurry that emerges from the milling process. Each of tbe tanks measureseters in diameter andurface areaeters (see

analog ida diameter ofetersurface areaquareTheir capacity0 tons per day. By applying tbe ratio of square feet to capacity of the tanks at the US plant to the tanks at Muruntau, we estimate thickener capacity at Muruntau to2 tons perpplying the ratio of square feet to capacity of the thickener tanks at five other non-Communist gold plants to tbe tanks at Muruntau yields an estimated processing capacity in the range00 tons of ore per day.

Accordingoviet technical manual,tanksquare meters of surface area toon of clay-base ore eachhe manual adds that the amount of ore processed can be increased two to four times with the use of flocculants, which promote agglomeration and settling. Sovietstudies indicate that tbe ore processed at Muruntaulay base. In addition, three

ay per mill7ay peray.

1t/aq nthkkcMT unti -

ay.

I. N. MaikrriUHy and L. V. Cbniacv. op.

Thickening Tanks at Muruntau

Unclass.llfld

.

eters in diameter

ne imcKcnerbelieve

these tanks contain fiocculants. Thus, taking thc measured surface area of the thickener tanks at Muruntau and applying thc variablesin the Soviet manual, the daily capacity

of thc thickeners would fallange of00 tons.'

qqank/8 thickener4effect of floecultflU)6 tqiok/B ihiekener4efteci of4 hn.

ft is estimated that the capacity is more likely to be in the upper half of the range00 tons, given the calculations of thickener capacity at non-Communist gold plants and our calculations of Muruntau's capacities at the other stages in the processing sequence.

!

achuca Tank Capachy

{IA totalachuca tanks will beat Muruptau when construction isThe tanks are located in theand are used for leaching andadsorption of the gold.eters highnlunvubichat each tank

couldons of orehouranks could0 tons. However, believe that the pulp can be fully

Oissoiveu in lhe Pachuca tankseriod of 10

toours (contactxperts reason that

because the heavy gold particles have already

been removed by the mercury amalgamation

process, the fine gold particles remaining in thc

pulp would be comparatively easy to dissolve.

ontact time ofoours, the

processing capacity of the Pachuca tanks during

hour period would range0 to

ons."

4 flrconiKt6 I.oeuet6 t.

fa

'At presentachuca Unks have been constructed, thus constrainingangeCO00 ions/day.

Willi Cagaitli

Two electrical substations supply power to tbe Muruntau plum. One subsution contains three transformers designed locrnating current^}

'ihc Soviet TDTNG type, rated0 kilowatu each. The thirdappears toodified TDTNG with fewer cooling radiatorsmaller oil-coolant Unk. This suggests that its power capacity is somewhat less0 kilowatu. Current from the subsution is carried on transmission linesearby rectifier building for conversion to direct current, which is needed in therecovery of lhe gold.

The second subsution contains two probable Soviet TRDTsNG transformersoviet-rated power capacity0 kilowatu each. This subsution docs not appear to be linked to the rectifier building. Instead, it probablyalternating current for operation of plant equipment. Soviet technical manuals indicate that industrial plants involved in processes that would be severely disrupted by powerare providedercent redundant transformer capacity. Individual transformers are routinely operated al SO percent of their rated capacity so that they will be ready to assume the additional load needed to operate the planl in the event one transformer or the other fails. Thus, the actual power used to operate equipment at MurunUu may be only SO percent of the subsution capacityegawatu, or

1 Analysis of Western gold plants processing ores similar to those at MurunUu indicates that between IS andilowatt hours (kWh) of electricity are required toon of ore. Average power consumption per ton ofhese plants isWh. Assuming that (a) power consumption at Muruntau is comparable to aver-

age power consumption at Western plants, and (b) lhe transformers at Muruntau are operated at SO toercent of capacity,00 tons of ore could be processed eaci, day."

While the estimated range of capacity differed somewhat from process to process, all fiveconsistentlyange00 tons (seeesult, we judge that this range represenu the most likely interval within which the design capacity of theplant falls,est estimate of0 tons of ore per day. Given (a) an average gold content0 troy ounce,percent recoverynday work year, this equates to an output ofons of gold per year."

Tha Produt..on Bottleneck

Despite our finding that the design capacityMurunUu plant seems to beons of ore a

a significant difference oeiween me pro-

cessing capacity of the plant and the capacity of the transport system that supports it (seepecifically, the loading and unloading areas as presently configured are major bottlenecks, having the capacity to supply only00 tons of orehourless than the ore-processing capacity of theor the rail system to meet the design capacity of the plant to process ore would require thaiton rail car be unloaded everyecondshourphysical impossibility, given the present configuration and use of the loading and un'jading facilities.

0040 (shortmetric torn)0040 (ibortetricot cry nit bv the amount of foW actually obtainedercent of thc amount that could oo obtained if thc rtfininf proceu were perfect.

"Since coralmeiton of sit fadWIea it not yet completed, the present procteiini capacity la eatimatod lo be onlyorn of fold per year.

" Thc transport lyttem probably operateswo-ahlfl day. it ia thc cmthen. Do* wiream facilities ocerale around thc clock.

Sterol

90 r

Metric Toe* Ptr Diy

Mod Or) Borhrl IKportorrooocAororterlottca.otttrita.

I

The ore-loading facilities at |Muruntau arem west of the open-pit mine and consist of two broad-gauge rail Spurs thatwith the main rail line to the plant,m to the west Ore moved from this mine is transported to this area by Belon capacity) or Belon-capacity) trucks. Ore is then loaded onto raitsing

eitheron capacity) oron capacity) power shovels (see.

usually only one 'faiTspurs andshovelafoading rail cars at this site at any tdTre.'r^Thit information combined withoperation factors obtained from Soviet technical manuals made possible estimates of rail car loading rates.

Tho I* rial number of powerthe nine tu

e JewJWtyl"

Rail Twraport Sysrtam ai Muruntau

Distance from Mine Loading Site to Rantm.

'i.

End of Trac* >Area f^ Siding

1 The outputower shovel was determined by using the size of the bucket in cubic meters, the amount of time required lo dig and unload each bucket (cyclend the total operating Itirrie per day. In addition, other factors such as the bucket's actual load (it is not alwaysnterruptions in cycle time, and the type of soil being loaded were taken into.consideration to

refine the output

largest 'shovel, the EKG-SiE

eket, is used for loading, and we assume that downtime for maintenance isby use of anotherhovel.

The practical hourly outputower shovel with these factors in mind can be obtained from the following formula containedoviet manual."

* B. Botjr,. K,be niltni focior for well-fomented rock. K,. tfco bolklnifor toil of medium dcmily.

Where:

utput per hour in cubicucket capacity in cubicuration of cycle ineconds per hour

illing factor of thc bucketulking factor of the soil

time-use factor of the excavation; for filling cars ito account for spillage. In this estimate, we use the midpoint.

)

lcubichour

era!

t.i

ti tons ol gold ore per cubic metertandard engineeringhis power . shovel outputapacity to load about i 0 tonsof ore peronsof ; orehour day. This could easily be in-.creased, however, by using both tracks at once and adding more power shovels. !

UnloodlnB Facility

i The unloading facility at Muruntau is the major bottleneck restricting oreo thc quiinii.ics supplied by only one power shovel

loading onto one rail carime. Untilhc plant had only one unloading piteters long served by two tracks. Since thc second ore unloading facility just came on stream inc have not considered it in our estimates of past production "

take

railroad engineers estimate that il would each side-unloaded car three to four minutes to complete thc unloading cycle at the plant. This includes getting thc cars positioned, unloaded, repositioning thc carriage, and moved

Top Secre)

allow another car lo unload. This ts long by US standards but reflects the fact that the size of the ore-loading pit is almost thc same as thc length of the rail cars. This means that each car has to be positioned exactly before unloading to avoid spills that could increase downtime al thc pit.

We estimate thathourars could be unloadedhree-minute turn-

around,ars could be unloadedour-minute turnaround. Assuming eachons of ore. this equates0 tons per day0 tons per day, respectively.

ross-check on these figures, wclhe volume of waste in the waste ponds south of thc plant. Thc four manmade waste ponds (seeontain an estimatedillion tons of waste, nil of which has accumu-

laced over the last nine years. Dividing the figure by nine yearsayshroughput of0 tons amore in line with the transport delivery capability than the

. plants orocessing capacity. An additional waste pond exists in the desertm to the southeast. This pond has been used for the past two years.

but measurements'

are not possible since tne waste is being aumpea free-form in the desert. Since each of the other four waste ponds tookoonths to fill,

i however, we estimate that the waste in thii pond representsercent of the total waste in the

' four manmade ponds. The total volume of waste

: equates lothroughput0 tons of ore a

!

V 51 J'

ecause the estimated throughput ofrangesow0 tons per daywaste deposits)igh0 tons(basedhree-minute unloadingjudge that ore deliveries probably0 tons per day. This is equaltons of gold per year using thespecified regarding the gold contentore, the recovery rate, and the length of | ||

| l' I I:

! 'Between the start of operations9 snd the endnloading capacity0 tons of ore per day was not significantly belowton capacity of processing facilities.3 andowever, orocess-ing capacity grew0 tohs per day to0 tons, but ore-unloading capacity remained0 tons untilhe second ore-unloading facility, installed this year and which doubled Muruntau's capacity toore, gives theaximum output of aboutons of gold per year, still well below its processing capacity. To operate Muruntau at or near its design capacity, the Soviets Will have to install at least two more unloading points using the existing rail transport system or move part of the ore by trucks. We have no evidence that they have done either.

Poiilbls Explanation! of Unbalanced Muruntau Expo niton

We do not knew why the Soviets have not expanded ore-unloading facilities in tandem with the ore-processing facilities. We can thinkumber of explanations but have no hardto support any of them. One possibility is lhat the Soviets have encountered technicalin the refining processes that limitedand delayed the need for expanded ore-unloading facilities.

Moscow recently criticized the Ministry of Chemical Industry for not producingamounts of chemicals used in the refining process at Muruntau. Tbe Soviets reported that shortages of chemicals (ton-exchange resins and flocculants) weregold production at plants using Muruntau's technology."

gold productionlant which uses the same refining process as Muruntau) fell short of planned outputherebyationwide shortage of

Moreover, we cannot overlook the possibility that the gap between unloadinp capacity and processing capacity has been Ihe resultifferent kind of bureaucratic bungling. Soviet ministries are notorious for their lack ofwhen given responsibility for different parts of the same construction project.esult, large new facilities often stand idle for lack of raw materials or critical components.

A change in Soviet gold sales policy may also have slowed the growth of gold production at Muruntau; requisite chemicals could have been imported and/or additional unloading points constructed sooner had the USSRigher priority to domestic gold production in the. In all likelihood, the

1 Kkimtcktikava.

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iu substantial gold reserves and cautious salesno pressing need for additional gold

roduction.

Following heavy sales in the, the USSR withdrew from the gold market. Annual sales to the West fell fromverageonso an average ofons. The Soviet decision tosubstantial gold sales apparently came latey this time reserves had beenrebuilt, and gold prices had begunpward movement following the Smithsonian accords.

The USSRelatively cautious gold sales policy. Excepthen heavy gold sales were required to meet grain import requirements, Soviet gold productionsales (seestimated gold reserves at thc end5 were slightly above1 yearend level.

During this period the USSR probablyoath to increase gold sales markedly at thef adversely affecting gold prices. Moreover, the availability of Western credits in theelatively costless alternative means

of raising needed foreign exchange. Under these circumstances Moscov* appeared under little pressure to expand domestic production.

By the endoscow's attitudesales strategy had apparently changed. The rise in Soviet indebtedness increased the cost of borrowing and raised questions in the West regarding Soviet ability to manage its balance of payments. Western recession demonstratedvulnerability to Western market conditions in marketing exports. Thus, it appears, inthat the USSR may have decided to increase its reliance on gold in managing its balance of payments. Annual sales latgetsere raised well above previous levels. Soviet gold0 tonsxceeded production in the last two years and are expected to do so again

Outlook for Production and Safe*

With the recent expansion of thefacilities, we estimate that annual goldat Muruntau will climb to aboutons8 andons9iven likely increases in other parts of the country, total Soviet gold production probably will not

1

USSR, Production and Alteration of Gold

Metric Tom

OAorodocHon

MurunUu

Other

Dorneetie consumption

Ye.rerrfre.rm

Other

Reviled CIA etllmatca | j; Total production (J_

Trererxl .

mi

17

joreboulercentthan wc previously believed. If the Sovietsable to operate lhe Muruntau plant al ortotal Soviet gold productionons per year byeeor the methodologyestimate gold production in regions other; .

The reviled estimate of gold production at MurunUu has caused us to reduce ourf Soviet gold reserves as of7ons (SI2 billion0 an ounce)onse now estimate that since lhe resumption of large gold sales6 lhe Sovieis have drawn down their gold reserves byons to meet hardequirements.oscow earned3 billion from gold sales. Moscow sold aboul

ons of gold valued at1 billion during the first nine monthsales this year couldons, yielding more5 billion.

The drawdown on reserves is of littleimportance for lhe Soviet hard currency position.8 billion in gold reserves and annual gold production valued at aboulillion, availability of gold for export is not likely to constrain imports much in the near term. In lhe next few years, however, falling Soviet oil production is expected to cut into Moscow's hard currency earnings; this will probably intensify pressure to expandsales to the West. At some point, Moscow will haveie iu sales more closely to current production in order to maintain reset ves at an acceptable level.

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APPENDIX A

DESCRIPTION OF FACILITIES

Muruntau complex consistsaboratory,and road transport system,rickIn addition, there are maintenancepower supply facilities, antwo separate housing compoundsand prisonhemicala few ancillary buildings that have notidentified,aste disposali_-

: The open-pit mineurfaceectares andaximum depth140

xcavators were operating

in theiles^df displaced overburden cover an, area ofectares

j An underground mine is under constructionilometer from tbene and will begin operationseters. This mine does not yet appear to be in operation. An article published in Ogonyok indicated that sever'l underground mines eventually will be built at Muruntau, but there is no firm evidence that development of more than one underground mine is under way.

[p |lh ! ; f

Tha Ora Dtp-It

ntensive geological prospecting of the Kyzyl-kum desert began7 and continued through athe decision to build theplant apparently was based on estimates made during thef gold in surface deposits. Explorationevealed that vast reserves also existed at depths upeters below the surface. Thisigher gold content than the ore al the surface. Although data on the sire of total reserves have not been published, the Soviets reported officially9 that reserves were

twice as Urge as originallyoviet publications have indicated that the Muruntau depositone of the world's largest, with proved reserves that will last at least several decades."

The Muruntau formationow-gradein which gold appears in quartzimilar to the Australian gold deposits at Balla-rat and Castlemine and to the Homestakein South Dakota. Experts I

' estimate the average gold content of the Muruntau deposit0 ounce per ton, based on detailed Soviet studies of the geochemistry of the Muruntauheir analysis iswith Soviet reports indicating that where favorable mining conditions exist, such as those at Muruntau, deposits with ore grades0 ounce per ton are being commercially exploited. An ore grade0 ounce per ton is about one-half the average grade of ores currently being mined in the United States and South Africa.

Procralng Fodlltlos

The processing plant is located about 8west of tbe open-pit mining area and is connected to the mining areaail shuttle. The planturface area of aboutectares and consists of four major production facilities " '

MP. 3.

A- Vyfcbom. Ekamemtis mdnrr^mofowor Nadra. IW,.

* Accordlni io tbe US Oedoflcal Sumy. WW depoalljMrU-pyriiMrsencpyriie.

Wi pmtOuly eaUmalad ibe mtip taUf ibe* troy oaact perndeed, tone eiperu bctim tbai ibe Imiabir ibapa of Ibe Mm indicata Owl ibe Soncti bate adectirr-ly mined tba oreechnique called "highMiractim ihe richeat orarder lo achieve.hlflfaer 1ml of oaipat from wnaikr qaaxUUca of on.oe expem ar* con Hated ibai ibe soul oaaadty of orealeyield an arena* aoM content0 ounce per ion.

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eters in length, grinds thcrimary crushing is performed underground

before entering the mill. The mill also sizes and sorts tbe ore to ensure a! uniform feed mixture prior to final refining. The millquipped with amalgamators that recovereavy gold nuggets. The mill buildingto be completed, although we do not know whether it has been completelywith machinery and equipment.

iA thickener area ofanks, eachetersn diameter,iscous solution.truction in this area was recently completed.

ion-fxehartge building housing cylindrical |Pachucaxtractsold. Atachuca tanks arc installed and work is under way on putting the finalanks in place,

eters in length. Is used in the final stages of purification. The refinery

j was completed in the

The pace of construction suggests that thefacilities should be completed.

uruntau is the largest tavestment project ever carried out in the Soviet gold industry and probably the most expensive undertaking by any gold industry in the world. | jindnstry experts

estimated that if this investment, includingwere undertaken in the United States, it would cost about SI billion8hc most expensive part of the project, the processing facility, probably would cost0 million. This is roughly three to five times the capital valuation of the largest gold plants in South Africa and the United States.illion represents costs such as the water supply system, road and rail transport, the construction of the nearby city of Zarafshan, and related ancillary costs such as the geological survey and development of the open-pit and underground mine.

The capital investment at Muruntau can also be inferred roughly from published3 the Soviets reported that the total capital investment at the Zod plantew gold plant in Armenia) amountedillionccording to ruble-dollarrevious CIA study, the published ruble investment figure would equate to0 million0 prices or0 million8 prices. The Zod plant is considerably smaller than the one at Muruntau, in terms of both size and estimated capacity, and is locatedegion of the USSR where construction costs are less.

"Summary of World BroadouU,

BLANK PAGE

APPENDIX B

BASIS FOR CIA ESTIMATE OF SOVIET GOLD PRODUCTION AT LOCATIONS OTHER THAN MURUNTAU

Soviet gold production is the sum of (a) mined gold ind (b) gold recovered as ain tbe refining of copper, lead, and zinc.

Mined OoU

The Northeast Region, consisting of the Magadan Oblast and the Yakutsk ASSR is tbe

largest

21

proaucuon in tne rvortneast Region are based

The estimate of gold production in the Lena Gold Trust (Irkutsk Oblast) is based on .the reporting

2

Met* Tom

Gold Byproduct

k--totelr il

Muruntau

Recoverr'

CoU *

.

97

:

i no :

62

.

|,

SI

'fi

'

88 it

!

'Wti'il

66

i'lat1

99 .

U

i

103

Ut |

108

.

iish! ..

||

.

mi !

mi ii."

CoroWing of Ihe Macedin Oblul end ibe Yaaetlkold recoveredyproduct ot copper reflnln*

Cold produced In Kuakhrtas, Amur Beaton, the TrewbaUjJ. and otherlocation. Ir, the

goia production in tbe Lenaainuunieu TO aboutons per annum i nd that output was noto increase significantly in the foreseeable future.

|;The estimate of mined gold productionparts of the USSR is based on twoindicated that the North-

cast Region accounted for aboutercent of

he USSR's production of mined gold at that time. Production in the Northeast Region amounted toonsence, total Soviet

| 'mined gold production probably wasons in that year, of which other areas accounted for

| aboutons."

I Since the, little information has been available on gold production in these other areas. In the absence of such intelligence we have simply increased our estimate of output in these areas at about the same rate that production has been increased in older mining areas in the Northeast Region. This estimate is, of course, tenuous at best. We are currently reassessing available data on theold processing plants other than Muruntau and those in the Northeast

'rrevta ily, reporting fe* UM Lent Gold Trial ni includedother trcu. Sine* information on gold prodacdoa la iho Leaa Ration haa becomeTillablear* lilted tbe Lena Region

separately and hare adjusted our eatisMte* of icM prodacUon la

other arras, accordiagiy.

Region and the Lena Gold Trust. When this study is completed, we may revise our current estimate. Preliminary analysis of five of the largest of theseoviet gold plants suggests that their combined output probably isoons per year. Thus our overall estimate of gold production in other regions of thetons inbe of the right order of magnitude.

GoldtByproduct

To estimate tbe amount of gold recovered in the processing of copper, lead, and zinc, an average factor was developed for the recovery of gold per ton of refined copper at each copper refinery in the USSR. The average recovery factor for each refinery was weighted according to its estimated share of total Soviet output of refined copper. The overall factor was thenupward slightly to allow for the small amount of gold that is recovered in theof lead/zinc ores. We estimate that on the average the Soviets recoverrams of gold (slightly more than one troy ounce) per ton of refined copper. The USSR producedillion tons of refined copperhich would yield an estimatedons of gold.

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