IN THE DEPTH OF CHUKOTKA MINES

«We do not want do be just dependents» — I heard this in Chukotka many times. «You better give us a chance to earn our living!» But there is no work

IN THE DEPTH OF CHUKOTKA MINES

The messenger bringing the bad news is always to blame. Northern residents remember who it was the first that mentioned the obvious out loud. One of Chukotka veteran-dwellers, contemplating about his life, noted: «Yes, there is a lot of ice around here, but there are no people with icy hearts. Only a person whose heart has turned into an icicle could possibly say that Russia does not need the North». It was Yegor Gaidar who said that when he visited the Magadan Oblast in his then capacity of the Acting Prime Minister of the Russian Government. It was tantamount to a death penalty to the Northern community.

This evaluation of the epoch of market transformation is shared by many here. Now, when the years have gone by, one should not reduce it to the nostalgia for the times when the state spared no money for the Northern exploration. The people are well aware that the country has changed irretrievably. «We do not want do be just dependents» — I heard this in Chukotka many times. «What do we need the humanitarian aid for? You better give us a chance to earn our living!» But there is no work. Because at a certain moment, in one fell swoop, everything was destroyed that had been built by enormous effort in the previous years. There is no more agriculture in Chukotka, the building industry collapsed, geological prospecting disintegrated, the mining industry is left to its own devices.

The transition to a market-driven economy proved painful for the entire Russia. But it turned into a catastrophe in the North. The Soviet Chukotka used to be proud of its mining enterprises. They accounted for over 90 percent of the overall industrial production. They prospered once, for the question about the price of this prosperity was pushed aside. When the erstwhile flagships of the local industry became bankrupts, the rest tumbled as well. The epoch of northern increments could exist only within a centrally managed economy, with all its unlimited sources for state subsidies and a «conditional» pricing. And the market epoch, which is associated here with the attraction to the riches of the local subsoil of the private capital ready to fertilise permafrost with investments, is delayed to some indefinite future.

«One should not compare Chukotka with districts in the Central Russia», my interlocutor was disgruntled with the fathers of the nation. «People there have places to go, scope to develop. They thought that the local population would enter market through «shuttling»... It did not work and it could not work. We used to know that we had a tomorrow, but now we do not have it any more. We live with a feeling that disaster is unavoidable. This is a very recent thing, but after the water pipes froze in Pevek last year and the heating very nearly gave way, after Omolon was left without heating, after employees of the utilities board in Ust-Belaya went on a hunger strike for three weeks for they had not been paid for several years, and the administration of the okrug (district) pays no heed, this feeling became obsessing».

This is how Chukotka evaluates the results of a many-years-long Nazarov's governorship. Despite permanent trumpeting about the need to help the North and invest into development of its natural resources, Nazarov failed to put forward a comprehensive program for the transformation of the okrug's economy. The federal power is forced to allocate to the Chukchi Autonomous Okrug subsidies that are quite substantial for the treasury, and no end to it all is visible. The okrug is now totally subsidised. It pays nothing back to the country and is unable to feed itself, despite transfer pricing. But there was a chance! Like the Magadan Oblast, the Chukchi Okrug received in its time a «golden» credit for the development of the gold industry. But that money was spent to sate disproportionate appetites of a narrow circle. This is a separate page in the history of Chukotka.

In the Soviet times, gold was recovered in Chukotka, very much like in the rest of Russia, without any special technological sophistication, out of auriferous gravel. The gold content in gravel is 1.5 grams per a cubic meter of rock, while its content in ore is 10 to 20 grams. If one were to divide the volume of gold produced by gold wash in Chukotka per number of employees, the result would be about 200 grams per person. At the same time the maintenance of one person is 1.6 kilo. When the lack of profitability in the recovery of gold by the old methods in Chukotka became clear, the state allocated a «golden» credit to the okrug. It became possible to make a smooth transition from the gravel deposits to the exploitation of ore.

So how did it happen that people responsible for the disbursement of credits and capable of developing the subsoil exploitation as if deliberately did everything for destroying this industry? They simply understood that disbursement of «golden» credits proved to be more lucrative than recovery of gold. Gold is in the ground; you've got to sweat producing it, while the credits, or rather a result of clever turning round of credits is a sure piece of bread. They started with a gold and silver field Valunistoye. They procured a practically zero-interest credit in convertible currency with a long period of repayment in gold. The first purchase made by the management of a company, glamorously called Chukotka's Gold, was flats, offices and foreign-made cars in Moscow, satellite communication and other accoutrements befitting hot businessmen. Then they got round to organising recovery. At this stage they were joined by a company called Gold Cross, headed by person who is vice governor of the orkrug in charge of investments. This company is remarkable, because a sizeable part of the «gold» credits went into its accounts: to conduct market research of the Russian and the world's markets for new technologies and «production and development» techniques. In the case of Valunistoye, the technological acumen prompted the following: let us recover gold through heap leaching. Hundreds of tons of gear were shipped to the tundra by air.

Basically, this heap leaching (that is, cyanide poured on heaps of rock penetrates through the rock, «fetching» the gold) is applied in the rest of the world on major fields with depleted ores. Valunistoye is a silver and gold field, and silver retards leaching. That is why the main specialist for «production and development» techniques suggested that rock should be reduced to flour. Imagine what happens to flour if you pour liquid over it? And this is what happened in Valunistoye. Cyanide failed to go through the ore ground to resemble flour. Then they brought in the vinyl pipes, placed them in gutters and started pumping the cyanide up. And what is the result of those daring technical solutions? Not a single kilo of gold has been recovered in the course of several years, the employees have not been paid a kopeck of salaries, the imported equipment collects rust in the tundra. And the managers of the company with a proud name Chukotka's Gold live in Moscow and drive Mercedes cars. The field has been given over to a prospecting partnership Chukotka, and they are trying to organise recovery, presumably, in a sensible way.

Concurrently, a finance-and-production company Chukotka's Gold, with the same people at its head, also started its operations (at the initial, most «productive» stage it was headed by the first vice-governor). The task as it was set was global: «to obtain means for the development of the gold fields in Chukotka». The company's assets were based on the same «golden» credits. A big chunk of the resources accumulated in the company's accounts found its way to the accounts of the Gold Cross. The first major FPC's operation became «development of tailings of mining combined works». New planes started flying into Chukotka carrying tons of equipment. To start with, they chose the tailings of the Poliyarninsky enterprise. Those tailings were very much present in legends. Even today one can find some accounts in press where it says that, according to some specialists, up to 200-250 tons of gold are allegedly present in the tailings. Which is equal to Russia's two-year output in the recovery of gold. The empirical assessment, preceding the «tailings development» was much more modest: 30 tons. But even this looked doubtful to some specialists who insisted that survey be done. But while the prospecting was still in progress, an enriching factory has already been built. And the survey proved that the total gold content in those tailings is about 100 kilo. Logically, the factory has not produced a gram of gold yet.

Having said all this, there is an enterprise in Chukotka that produces gold. A unique field — Karalveiem — is situated in the Bilibinsky District. It is quite average in terms of proved resources, but from the point of view of gold content, gold quality and the conditions for recovery, there are only few ones like this in the world. It has been proved technologically that using a cheap and elementary gravitation method, one can recover here 93% of gold, and 99% are recoverable with the use of floatation. However, based on the results of the Gold Cross's «marketing and engineering» survey, they chose a chemical and metallurgical conversion, that is the use of cyanide, and have been able to achieve, within four years of exploitation, 58%. The field development and the ore enriching according to Gold Cross's recipes have been in progress for nearly five years, and half of gold ends up in the tailings! The field economy has been turned upside down, and the joint stock company Ruda, which is developing the field is bankrupt.

The specialists say that developments in Karalveiem defy comprehension. And drawing up results of the Gold Rush in Chukotka, add: «Money has been thrown out of the window. Unfortunately, it was the wrong window. Independence got to our heads. Now we should attract foreigners. We have already shown what we can do ourselves. There is practically nobody now in Chukotka who can develop the recovery of gold: professionals, who tasted this schizophrenia, fled already in early 90s.»

Is it necessary to explain that these adventures incurred huge losses for the okrug? And this money was sufficient for the timely supply of petrol products and food, settlement of salaries for the state employees and utilities service and so on.

Will there be another chance?

Chukotka veterans who still harbour hopes for the restoration of normal life in Chukotka are tracing the fluctuations of world prices for resources hidden in the Chukotka ground. «Your gold, they were telling us, is unprofitable. Who needs it? And the world's prices for gold creep up now. It said in some press that the demand for tin is also improving. Whereas here they have taken everything out, having freezed developments. And what does freezing amount to under our conditions? A student of geology knows that underground vacuum in permafrost gets filled out very quickly; so in future the new shafts will have to be made. It takes one day to destroy things, whereas to restore...»

The okrug territory is utilised insufficiently, with only seven percent of it having been explored. But the earlier geological surveys concluded that natural resources are versatile and important. Gold, tungsten, tin and, of course, oil and gas found not only on the Bering Sea shelf, but also in the valley of Khatyrka River. Famous Alaskan oil fields Prudhoe Bay are no more than pathetic tails of the ones in Chukotka that have not yet been even properly prospected. Doesn't Russia need all of it?

Peter MIKHAILOV