New gold rush in Siberia?

The region of Magadan is poised to receive a federal go ahead allow gold panning, with prospectors allocated 0.15 square kilometres of land to seek their fortune. 

One - perhaps optimistic - prediction is that prospectors could earn $410,000 on their plots over five years based on predictions that each segment of land would not contain more than 10 kilograms of gold. As in other regions, panning is currently illegal in Magadan, notorious in the Soviet era for its GULAG labour camps, some of them involved in gold mining. 

Officials say that legalising small scale gold prospecting will halt a black market that may cost Russia ten per cent of the value of the precious metal mined annually in the country. Russian premier Dmitry Medvedev has paved the way to new legislation which could be extended to other areas after the trial in Magadan. 

Vice-Governor Boris Zhuravlev believes that when individual gold panning is allowed, with a simplified selling system and tax incentives, it will give impetus to the development of small and family businesses. 'We hope to decrease the outflow of population from the north, the region will be more attractive for living,' he said. 

'According to preliminary estimates, we can get 250-300 kg of gold from private miners per year. Note that this is without any additional investments. Adoption of the law will add new sources of revenues, and reduce budget expenses by cutting the number of unemployed.'

The predictions of the benefits seem optimistic but while he admits there are risks, he is certain the move will be advantageous. 'Now we are working on ways of reducing the negative impact on the environment, to ensure the safety of the work, and for example stipulate the list of equipment for the mining fields.'

Blasting will be prohibited, and excavations below five metres restricted. Under the plans, foreigners will not be able to take advantage of the new rules. 

One expert involved in drawing up the plans disputed a local media claim of potential earnings of $410,000. He suggested 100,000 roubles a year - around $1,615 - was a more likely sum. While the plots will be available to the permit holder for five years, panning is possible for probably only three months a year in a region which lies just below the Arctic Circle. 

The following cases of police action against illegal gold miners highlights why officials believe a change of approach is needed:

September 21: Local resident found about 3 kilograms of gold in a disused mine using a metal detector. He tried to sell it but was caught by police. 

September 22: Passenger on a Magadan-Moscow flight was detained at the airport with 3.8 kilograms of gold. 

October 7: Passenger tried to smuggle 3.7 kilograms of gold sand in four packages attached to his body. Experts estimate the value of gold as 9 million roubles. 

October 8. FSB officers found 1.7 kilograms of gold in a car. The value was at least 1.5 million roubles. 

October 12. Resident of Ingushetia, 52, jailed for two years seized on Novosibirsk railway station transporting 10 kilograms of gold from Magadan to his home region. The value was put at 16 million roubles.