The attempt to privatize one of Russia’s largest gold mining companies has failed. The only bidder for Yuzhuralzoloto (UGC) was denied access to the auction. The future of the asset is now uncertain, and the state may eventually put it up for sale at a minimum price.
The auction, organized by Russia’s Federal Agency for State Property Management, was intended to determine a new owner for UGC. However, among all potential investors, only one company — Moscow-based Russkiye Ugli, registered in 2024 — submitted an application. Organizers rejected the bid without publicly explaining the reason. As a result, the auction was declared invalid.
Under Russia’s privatization law, if an auction fails, the government has the right to proceed with a sale at the minimum permissible price. For major assets with a starting valuation above 20 million rubles, that minimum can be as low as 10% of the initial asking price. In UGC’s case, the starting price reportedly reached tens of billions of rubles, although the exact figure was never disclosed. A 10% threshold could dramatically reduce the asset’s value.
UGC’s financial performance remains relatively strong. In 2025, the company’s revenue increased by 43.4% to 108.8 billion rubles. Net profit rose by 81.2%, reaching 16 billion rubles. However, debt levels remain high: net debt increased by 10% to 83.8 billion rubles. At the same time, the company’s leverage ratio improved from 2.22x to 1.97x, indicating some stabilization.
Since August 2025, Semyon Grinko has served as president of the management company overseeing Yuzhuralzoloto. He will now have to decide whether the company will participate in further privatization procedures or whether the state will seek another way to sell the asset.
The market has now demonstrated twice that there is little investor interest in UGC. Analysts attribute this to the company’s high debt burden, the difficult geopolitical environment and uncertainty surrounding future gold prices. If repeated auctions also fail to attract buyers, the government may significantly lower the price or postpone privatization altogether.
For now, Yuzhuralzoloto remains state-owned, and its future depends on further government decisions and investors’ willingness to take the risk.
Source: @nerzhavey
Image: Donat Sorokin
