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How Valcambi sees the Asian gold market and operates a responsible supply chain

Introduction

 

Valcambi is a world leader in the refining of precious metals with 57 years’ experience. Based in Switzerland, Valcambi operates one of the world’s largest and most efficient integrated precious metals plant, with an annual refining capacity up to 2,000 metric tonnes for all metals.

Valcambi refines gold, silver, platinum and palladium and offer a broad range of products and services.

The refiner’s clients include mining companies, jewellers, digital and tech manufacturers, premium luxury watch manufacturers, international, governments and central banks.

Michael Mesaric, CEO of Valcambi, shares his view of the Asian gold market and Valcambi’s approach to operating responsible supply chains.

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Being owned by Global Gold Refineries Ltd, belonging to REL Singapore PTE Ltd and Rajesh Exports Limited in Bangalore, the Asian market is of prime importance for Valcambi, with India and China dominating the world region demand of Valcambi gold.

It is fair to say that India has come through a challenging period over the last few years, with the sector grappling with regulatory changes, funding issues, demonetisation and the introduction of Goods and Service Tax (GST). Despite this, we see strong fundamentals for the country longer term driven by the government’s focus on boosting farm incomes, improving rural infrastructure and agricultural production that should benefit gold demand. We also see the set-up of a spot exchange currently being discussed as a necessary step for a more efficient and transparent Indian gold market.

Transparency and responsible sourcing are of the highest importance for Valcambi, because we know that it is critical to the sustainable success of our business and of our sector, and the sustainable development of the countries the raw materials originate from.

We meet and go beyond the most stringent industry standards of traceability in compliance with all the principle responsible sourcing frameworks. These include international regulations and voluntary standards and guidance such as the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, the LBMA Responsible Guidances on precious metals, the Responsible Jewellery Council Code of Practice and Chain of Custody Standards, World Gold Council “Conflict-Free Gold Standard” and the Dodd-Frank Act Section 1502.

To ensure those standards are respected and upheld we conduct extensive due diligence practices to identify and select our business partners.

We source our mined products from large-scale mines and small mines, and in the last few years, we have started engaging and sourcing from artisanal and small-scale mines (ASM).

Artisanal and small-scale gold mining employs 90% of the workforce involved in global gold extraction, and is responsible for 17 to 20 per cent of global gold production. The ASM sector overall plays a crucial role in offering a way out of poverty for over 100 million people, including miners and their families, around the world.

Given the importance of the sector in gold mining, we have been taking a leadership role on ASM responsible mining and sourcing to pull the sector forward on responsible business practices so they can access global markets. We are committed to support miners that show a commitment to formalise their activities to operate within appropriate legal and along good practices frameworks.

We recognise though that sourcing responsibly from ASM is complex. We all well know that ASMs, in particular in conflict-affected and high-risk areas, may be at risk of contributing to or being associated with significant adverse impacts, including human rights abuses and conflict.

To mitigate our risks, we work wherever possible directly with the mines, cutting the number of intermediaries, and we have developed a specific sourcing model for ASM that involves conducting extensive due diligence on the potential counterparty. Our processes include risk assessments covering white-collar related crimes risks including money laundering and human rights such as working conditions and child labour.

In parallel, we have been working on a number of initiatives and projects on the ground to support miners improve their practices. We learnt at the beginning of our journey on ASM that harnessing ASM's potential, and responsible sourcing from ASM demands a collaborative approach that starts with dialogue and engagement with multiple stakeholders including governments, NGOs, civil society, upstream and downstream sector associations and, of course, ASMs themselves. That’s why we work with organisations and associations such as Fairtrade, the Swiss Better Gold Association (SBGA) (of which Valcambi is a member) and the Better Gold Initiative (BGI); the Alliance for Responsible Mining and Fairmined; the European partnership for Responsible Minerals (founding member and strategic partner), among others.

It was through our collaboration with Fairtrade that we recently signed a long-term supply agreement with Cooperative Limata, a small mine in Peru.

The ASM sector has huge potential as a way out of poverty for millions of people, and as a source of supply for those of us wanted to diversify their sourcing between large-scale mines and ASM, but also for actors who are unable to enter into long-term contract with large miners. To those new to the ASM sector, my recommendations are to get involved in initiatives aimed at supporting the ASMs to adopt responsible practices and to approach ASM sourcing conducting rigorous due diligence, all this via close collaboration with all the multi-party stakeholders involved.

 

Disclaimer: Views are personal and not the views of the publisher.