Switzerland’s Metalor, one of the world’s biggest gold refineries, said on Monday it would work only with gold from large industrial mines in order to reduce the risk of illegality in its supply chain.
Informal methods of gold production, known as “artisanal” or small-scale mining, have grown rapidly in recent years as demand for gold has boomed, pushing prices higher.
Artisanal mining provides a livelihood to millions of people, often in poorer countries in South America, Africa and Asia. But it often leaks chemicals into rocks, soil and rivers, working conditions can be appalling and the gold such mining yields is often smuggled or used to launder money.
METALOR PROCESSES AROUND 500 TONNES OF GOLD A YEAR AT REFINERIES IN SWITZERLAND, THE UNITED STATES AND ASIA
Metalor said it would stop working with artisanal mines or collectors and aggregators – companies which collect and resell gold from artisanal mines – because of the difficulty of ascertaining the mines’ legality and the origin of the gold.
“The increasing resources to secure compliance and the challenging conditions at the mining regions have forced Metalor to reassess its approach to artisanal mining,” Metalor said.
“As a result of this decision, Metalor will cease its operations in Colombia, after having already announced its decision to stop any business relationship with collectors/aggregators of gold dore in Peru.”
Gold dore is non-refined mined gold.
Most large refiners that supply gold to major Western banks, central banks and jewellers are wary of taking gold from artisanal mines, leaving them to find other buyers. A Reuters investigation in April found that gold worth billions of dollars was being smuggled from Africa to the United Arab Emirates, a gateway to other global markets.
Metalor processes around 500 tonnes of gold a year at refineries in Switzerland, the United States and Asia, its chief executive Antoine de Montmollin told Reuters.
Gold from artisanal mines and collectors accounted for less than 5% of this, he added.
Metalor stopped working with artisanally mined gold from Africa in 2015. It said it has not been using artisanal gold from any countries other than Colombia and Peru.
Metalor is one of four large refineries that together refine around 2,500 tonnes of gold a year in Switzerland, data from the United States Geological Survey shows – worth more than $100 billion at today’s prices and equal to around 60% of the world’s annual supply of gold.
More than 40 million people around the world work in artisanal and small-scale mining of resources including gold, according to a report by the World Bank and development organisation Pact in April.