KUPOL MINE, Russia (Reuters) - Every winter, an ice road is laid across 400 km (250 miles) of tundra to carry supplies to one of the world's most isolated gold mines.
There is no other way for heavy machinery to reach Kupol, the $700 million Arctic mine behind a resurgence in Russian gold production after five straight years of decline.
"It's one of the harshest climates I've worked in, and I've worked in the Atacama desert in Chile and at 15,000 feet in Indonesia," said Patrick Dougherty, general manager at Kupol.
"But I don't get to pick where the gold is."
Only South Africa holds more gold than Russia, but Moscow's fragmented industry has struggled to access vast reserves in its inhospitable Far East. The region was first mined in the 1930s by prisoners of the Gulags set up by Soviet leader Josef Stalin.
Russia is the world's biggest energy supplier, but falling prices and reduced demand have cut income from natural resources to about 8 percent of its gross domestic product in the first quarter of 2009, from nearly 11 percent a year ago.
Gold, on the other hand, has been helped by recession.
Its safe-haven appeal has shielded it from a demand slump that shredded other commodity prices, lifting it by 10 percent this year to keep it within striking distance of a record price of $1,030.8 an ounce set in March 2008.
Chukotka, a region revived in the last eight years by the $2.5 billion investment of Chelsea soccer club owner Roman Abramovich, produced a fifth of Russia's gold in the first half of this year. Gold is the region's passport to growth after Abramovich quit as governor last July.
Russia ranked fifth among the world's gold miners last year, between Australia and Peru, with an 8 percent share of output. Production rose 13 percent in 2008, the first increase in six years, and jumped another 25 percent in the first half of 2009.
"This was solely due to the commissioning of Kupol," said Olga Okuneva, mining analyst at Deutsche Bank in Moscow. "If other large projects in the Far East start producing gold, this will be a major growth driver for the Russian gold industry."
Kupol -- meaning dome in Russian -- is named after a rounded outcrop of rock that juts skyward from the tundra in central Chukotka, over 200 km (125 miles) from the nearest settlement.
The mine took five years to build. It is the largest tax payer in Chukotka, a land twice the size of Germany where reindeer outnumber people four to one.
"With a deposit as large as Kupol, mining's contribution to the regional economy is expected almost to double to 37 percent this year," said Roman Kopin, the 35-year-old who took over as governor when Abramovich resigned.
Kinross Gold Corp, the Canadian miner which owns 75 percent of Kupol, is unusual among foreign investors for holding a majority share in a major Russian mineral deposit. The government of Chukotka owns the other 25 percent.
