CompanyGraph
Polyus PJSC
PLZL · Russia
Extracts gold from Siberian permafrost deposits using continuous-heating heap leach systems, where year-round freezing conditions are a prerequisite rather than an obstacle.
Polyus extracts gold by treating Siberian permafrost as a thermal regulator, where stable sub-zero ground temperatures hold cyanide solution circuits at conditions that would fracture and drain on seasonally thawed ground, making continuous heap leaching possible year-round. Because leaching runs uninterrupted, throughput scales by expanding pad surface area rather than rebuilding thermal infrastructure, so extraction cost per tonne falls as licensed deposit volume grows — but that same continuous process depends on uninterrupted energy and diesel fuel supply, meaning a power or fuel disruption halts the entire operation within days. The doré produced must then travel thousands of kilometres on Trans-Siberian rail, and when Russian Railways reallocates cars to agricultural transport during harvest periods, the volume of refined gold that can be delivered against offtake agreements is directly capped, with no alternative route available from these remote sites. Western sanctions have closed London Bullion Market access, redirecting sales toward Asian markets at the same time that ruble-dollar translation exposure links operating costs to exchange rate movements, so the conditions that make the extraction system function — remote permafrost geology, Russian rail infrastructure, ruble-denominated labour — are the same conditions that concentrate its exposure.
How does this company make money?
Gold doré bars and refined gold are sold at spot gold prices, with processing and transport costs deducted, to the Russian Central Bank, international refineries, and trading companies. Sales flow through a combination of long-term offtake agreements and spot market transactions, with amounts denominated in US dollars.
What makes this company hard to replace?
Three specific mechanisms make displacement difficult. The long-term Russian Federal Subsoil Use Licenses are tied to particular geological deposits and cannot be transferred to a competing operator. Established rail car allocation agreements with Russian Railways give regular, scheduled access to doré transport that a new entrant would need to negotiate from scratch. The permafrost processing infrastructure itself — heating systems, leach pads, solution circuits — would take years for any competitor to build and commission under comparable climatic conditions.
What limits this company?
Russian Railways diverts rail cars to agricultural commodity transport during harvest periods, compressing the window in which doré shipments can reach refineries and export terminals. Because no parallel transport route exists from these remote Siberian sites, any reduction in allocated cars directly caps the volume of refined gold that can be delivered against offtake agreements in that period.
What does this company depend on?
The operation depends on five upstream inputs it cannot substitute: Russian Federal Subsoil Use Licenses for specific mineral deposits in Krasnoyarsk and Irkutsk; diesel fuel delivered via Trans-Siberian rail to power mine equipment; specialised permafrost mining equipment manufactured primarily in Finland and Canada; Russian Railways rail car allocations for doré transport; and sodium cyanide imports used in the heap leaching process.
Who depends on this company?
The Russian Central Bank's gold reserve accumulation programme relies on domestic production quotas that this output contributes to. London Bullion Market Association refineries process the Russian doré into London Good Delivery bars — a recognised international standard — and depend on that raw material flow. Moscow jewellery manufacturers require specific gold purity grades for the domestic luxury market. Chinese gold processors import Russian doré through Trans-Siberian rail connections and depend on that supply route remaining open.
How does this company scale?
Heap leaching operations can handle increasing ore tonnages by expanding pad surface area and adding cyanide solution circuits at relatively low additional cost per tonne. What does not scale easily is the maintenance workforce: keeping equipment operational in sub-Arctic conditions requires specialised technicians drawn from a small pool of Russian and Nordic engineers with permafrost mining expertise that cannot be quickly replicated.
What external forces can significantly affect this company?
Western sanctions have restricted access to the London Bullion Market and European precious metals trading platforms, forcing a shift toward Asian gold markets and alternative payment systems. Ruble exchange rate movements against US dollar gold pricing create a translation exposure, since operating costs are denominated in rubles while gold sales are denominated in dollars. Climate change is also affecting permafrost stability across Siberian mining regions, requiring additional ground stabilisation infrastructure to maintain safe operating conditions.
Where is this company structurally vulnerable?
The continuous heating that makes year-round leaching physically possible requires uninterrupted energy and diesel fuel supply. A power grid failure or fuel delivery disruption freezes the cyanide solution circuits and processing equipment within days, halting extraction at the licensed deposits that are the sole basis of the entire operating position.