All THAT GLITTERS IS NOT GOLD Rand Refinery supports the establishment of refineries that add value to the African gold industry
In 2019, South African authorities granted 19 refining licences, while in the rest of sub-Saharan Africa, 26 refineries were either completed or under construction; these refineries increase the likelihood of local beneficiation and can help prevent illegal gold mining or smuggling.
Gold refiner Rand Refinery supports the establishment of refineries that add value to the African gold industry, says CEO Praveen Baijnath.
Refiners that are not accredited with international organisation the London Bullion Market Association (LBMA), however, “add little value, and export nonoptimally refined gold product and material, with little interest in where the material is sourced or how it is extracted”, he stresses.
“Some of these new refineries could be destroying value and harming the industry by not complying with responsible sourcing activities, thereby indirectly funding conflict and ensuring that African governments do not receive their rightful royalties.”
He adds that being an LBMA-accredited refiner provides assurances that practices and processes in these refineries are aligned to the requirements of international entity the Organisation for Economic Cooperation and Development (OECD).
Baijnath reiterates that Rand Refinery is concerned with illegal artisanal mining being conducted locally in discontinued mines by so-called Zama Zamas – or illegal mineworkers.
This mining is often characterised by human rights violations, money laundering and environmental damages, he states. Illegal mineworkers do not process their material through formal channels, so the material does not form part of Rand Refinery’s mining supply chain.
Illegal gold is exported through smaller refineries, where much of the material is refined or blended with other forms of scrap gold, and sold into Dubai, the Far East or European markets.
Rand Refinery estimates the value of the legitimate local scrap market to be from 2 t/y to 5 t/y. Gold in the form of scrap from smaller refiners, however, exceeds tens of tons every year. Baijnath maintains that much of this scrap may contain material from illegal miners, illegally mined material from across borders, and stolen gold.
Further, while Rand Refinery previously sourced responsible artisanal and small-scale miner- (ASM-) mined gold in Africa, the company’s model allowed for stringent vetting and due diligence when dealing with a subsidiary of the central bank of an African country.
“Our requirements, and the need to engage and assist with continuous improvement, designed to protect the host government and ASMs, mean that we will not compromise on standards, and suspend trade if issues are not addressed.”
Baijnath suggests that the introduction of an ASM policy locally, if implemented within the required regulatory controls, governance structures and duty of care, has the potential to add to gold volumes.
He asserts that, should such an ASM mechanism be regulated to satisfy LBMA responsible-sourcing requirements, ASM gold could be delivered to the “LBMA ecosystem, where it will fetch the highest return and reinforce the tenets of responsible mining”.
Rand Refinery intends on providing comments and assistance for local policy on ASM, particularly with regard to responsible sourcing.
“Our sourcing processes are a key strategic differentiator. We have robust systems and processes, and deal only with credible mines. All the gold received at Rand Refinery can be classified as responsible gold, as it comes from sources that can be verified through tracking and traceability, including geological fingerprinting,” explains Baijnath.
The company’s gold input is sourced from large-scale gold miners, with some listed mining companies also being shareholders of Rand Refinery. Current shareholder mines and shareholder joint venture operations in Africa comprise 85% of its current sourcing, and other well established local and international mines the bulk of the remaining sources.
Rand Refinery’s sourcing from shareholder and nonshareholder mines is aligned to the OECD and complies with the LBMA Responsible Gold Guidance and Responsible Silver Guidance for Good Delivery Refiners.
The refinery has also developed rigorous sourcing standards and is leading efforts to foster transparent and responsible gold supply chains in Africa.
“Every depositor, shareholder or not, has to pass a rigorous onboarding process and due diligence. “Changes in the internal or external environment of a previously onboarded customer have to be vetted by a committee, as there have been occasions where depositing customers have been suspended or relationships terminated, owing to noncompliance.”
In line with the LBMA responsible sourcing guidance, the committee provides the depositor an opportunity to rectify gaps before taking action.
Rand Refinery offers further traceability through the RandPure programme, where it offers products with full certification of origin. A product can be commissioned to be produced from a single point source mine or a blend of responsible mines.
The company sources responsibly mined gold through its programme, which requires site visits and necessary assurances. It also conducts stringent due diligence and continuous monitoring for secondary and recycled gold and requires secondary depositors to undergo suitable third party audits to verify their sourcing practices.
The company also conducts tests to determine origin verification and demands photographic evidence.
“Rand Refinery transacts only on a principal-to-principal basis – it only enters into formal agreements with the gold owner. The owner must be a company and not an individual. We can confidently say that all material deposited at Rand Refinery is of known provenance,” he concludes.