South African gold refining and precious metals company Rand Refinery is sourcing close to 40% of its business from outside South Africa, says Rand Refinery MD Geoff Millet.

He says that currently the refinery receives all South Africa’s newly mined gold and 75% of the rest of Africa’s mined gold. 
This is received mainly from countries in West and East Africa, such as Ghana, Mali, and Tanzania. Millet says that Rand Refinery is also looking at South America for refining material, which is a market that it has not entered before.

He says it is important for the refinery and its global footprint to source business from a diverse range of geo-graphical sources, as the gold throughput in South Africa is dropping steadily, which is a challenge for the refinery.
 He says that the refinery has trimmed its overhead structure to become more efficient in its manufacturing focus.

Rand Refinery is also looking at sourcing alluvial gold from small-scale mining operations that exist in Africa, with the support of structured mining houses, local governments and communities.

Millet explains that Rand Refinery’s strategic plan to acquire gold from outside South Africa has been successful, not only for the refinery and all its stakeholders, but also for the New Partnership for Africa’s Development, and Africa as a whole.

Rand Refinery sourcing and logistics head Chris Horsley comments that the Financial Intelligence Centre Act requirements are strictly followed by the refinery in its relationship with all its customers an, as a result, Rand Refinery does not deal with any country that has a United Nations embargo against it. He says the refinery makes a substantial effort to ensure that the gold source is reputable.

Further, Horsley says attempts to fill capacity includes procuring secondary gold, such as unwanted jewellery and scrap coins, and deep storage gold from investment banks.

Competitiveness
Rand Refinery head of global markets John Reid says that if Rand Refinery is not competitive in the South African market, some of the gold might conceivably be sent somewhere else, possibly to Switzerland, for refining, which would make it more difficult to recover high fixed overhead costs.

“Rand Refinery is trying to be as competitive as possible and, as a result, it focuses on internal cost containment. This allows competitive refining pricing,” says Reid.

He adds that the biggest challenge in the market place is receiving enough gold to refine from across the continent and finding demand for its fabricated products.

Future
Millet says Rand Refinery is continually looking to increase its global footprint, especially in the sales of value-added products such as coins and small bars.
 He says that an important area is semimanufactured products, which add value, such as gold wire. 
Customers benefit by being able to reduce their capital input in their production process and, in turn, Rand Refinery adds value to its production process.

Reid says that it is important to note that Rand Refinery has a vision of seeing South Africa as a significant exporter of finished jewellery and semimanufactured products to the rest of the world.

“We need to find a way to bring together all parts of the value chain in South Africa. South Africa has the gold, as well as the manufacturing expertise and the refining capability. 
“These three areas need to be brought together, with the help of government, to strengthen the value chain to allow manufacturers to create employment through exported finished gold products. 
“Rand Refinery sees itself as a significant part of that effort and is further involved in a number of initiatives using on-site resources to support the training and development of people for the jewellery manufacturing industry,” says Reid.

He adds that the refinery is also exploring refining and smelting opportunities in other countries. 
He says that refining is geographically bound and if the refinery limits itself to the Johannesburg base, it excludes gold sources from many other areas, despite its African footprint.

He concludes that the refinery has to use its qualification as one of only five London Bullion Market Association-accredited referee refineries in the world to expand its business overseas.

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