Russian Oligarch's Gold Firm Plunges $8.5 Billion on Dividend Halt

Russian gold giant PJSC Polyus experienced one of its most significant stock market declines on Wednesday, July 8. Shares plunged 26% in a matter of hours, erasing approximately $8.5 billion from its market capitalization on the Moscow Stock Exchange.

The sharp fall was triggered by the company's surprising decision to halt dividend payments to shareholders until 2030. This move caught investors off guard, especially since Polyus had reported strong financial results, including a net profit of 314 billion rubles and free cash flow of about $2 billion at the end of the previous year, buoyed by record gold prices.

Polyus officially stated the dividend suspension is necessary to fund major investment projects. However, Russian analysts speculate the decision might be a preemptive move against potential new taxes on the mining and metallurgical sectors. Russian media reports suggest Moscow is considering a tax on "windfall profits," aiming to address the budget deficit. This tax could potentially reach 20% of the profit exceeding the average from 2018-2019, projected for 2025.

The company's stock had previously seen a larger drop in September 2008 during the global financial crisis, when it lost 27.4% in a single trading session. PJSC Polyus is majority-owned by the family of Russian senator and oligarch Suleiman Kerimov, who is considered a close associate of President Vladimir Putin. The Moscow Exchange index itself has recently hit its lowest point since December 2022 amid concerns over economic slowdown, high interest rates, and energy sector issues.

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The decision to suspend dividends is necessary to finance major investment projects.