JOHANNESBURG-Behind multiple sets of locking doors, watched over by hundreds of security cameras, is a windowless refinery that has processed almost a third of all the gold produced in the history of the world.
Now, the storied Rand Refinery is switching up its playbook. Long the go-to destination for Africa's commercially mined gold, it is working to tap the vast quantities of metal dug up by the continent's countless informal miners, too.
The South African company recently started working with a refinery in Ghana that processes gold from local artisanal and small-scale miners, and aims to start handling that metal itself soon.
The move is one of the boldest yet to legitimize the billions of dollars worth of gold unearthed by informal miners, a business often associated with worker exploitation and environmental damage. Bringing more of that metal into the mainstream could improve conditions for impoverished miners and increase lawful supplies at a time of near-record prices.
"At this price, every milligram counts," Rand Refinery Chief Executive Dean Subramanian said. Artisanal gold "is a serious player."
The effort to tap what is called ASM gold helps plug a gap. Traditionally, the Rand Refinery processed gold from big South African mines, but output from the country-once the world's No. 1 producer-has dwindled in recent decades. That has left the Rand Refinery running at roughly half its capacity, even though it has added gold from other large mines across the continent into its supply.
But using ASM gold as a feedstock poses challenges. Before the Rand Refinery can handle the metal, it needs to ensure it is mined in a responsible manner, including without damaging the environment, mistreating workers or funding corrupt officials.
That is because the refinery is accredited by the London Bullion Market Association, or LBMA, which sets the industry's responsible-sourcing best practices. That crucial status allows gold produced at the Rand Refinery to be traded in global precious-metals markets without needing extra tests. The gold can also be purchased by central and commercial banks, because its weight, serial number and minimum purity are fully guaranteed.
Founded in 1920, the Rand Refinery was established by gold producers upset about the cost of shipping gold to London for refining. Over the past century the facility has processed more than 50,000 metric tons of gold. It still handles about half of all gold from Africa's commercial mines.
Gold doré, a semirefined bar made from a mixture of gold and silver that is cast at mines, arrives by helicopter at the sprawling site where it is melted into products including 27.6-pound bars worth some $1.7 million each. Gold bars of various sizes are stacked in gigantic vaults within a vault. Staff submit to frequent polygraph tests to ensure they aren't making off with the bullion. Both employees and visitors must wear coveralls with the pockets sewn shut to prevent the theft of even a few gold granules.
By contrast, gold from informal mines is often laundered into regular supply chains through smaller local refineries and subsequently exported to sites in Dubai and India where it is used to make jewelry.
About half the continent's gold production is estimated to come from ASM operations, which include panning for gold in rivers, descending thousands of feet underground to mine in abandoned commercial shafts and hand-digging shallow tunnels through rock.
In South Africa, informal miners known locally as zama zamas pry open closed shafts to try their luck extracting what remains of the country's gold reserves. The illicit activity is fraught with peril, and miners frequently die in graves they themselves dug. The problem has only become more acute as gold prices have soared to all-time highs.
That has the Rand Refinery looking to other African nations to source ASM gold it can turn into legitimate bars. It signed a partnership agreement in December with Ghana's Gold Coast Refinery, in what is now Africa's biggest gold-producing country.
Under that deal, Rand Refinery is expected to take a 15% stake in the business and could boost its holding in the coming years, Subramanian said.
So far, the company has sought to deepen its understanding of the local environment and provide technical, operational and responsible-sourcing expertise to its Ghanaian counterpart, he said.
Subramanian's objective: to improve checks and balances to the point that the Ghanaian informally mined gold is fully traceable. That would allow the company to ship granules to its South African refinery and convert them into large bars to send to London.
"Provenance sits at the heart of everything we do, but easier said than done," Subramanian said.
While ASM mining is regulated in Ghana, many of the local players continue to operate informally, including some mechanized operations. These mines have been linked to a raft of environmental issues, accused of fueling corruption and suspected of employing child labor.
"The idea to formalize, to engage, is a really good one, [but] there are a lot of loopholes," said Marc Ummel, head of raw materials at Swissaid, a nonprofit that works on development projects. "There is still a long journey until Ghana solves ASM challenges."
The Rand Refinery says it hopes to be part of the solution.
The LBMA described the company's efforts as "a major advance" and said it wants to help more responsibly produced ASM gold to enter formal markets.
Subramanian said his ultimate goal is to help the Gold Coast Refinery achieve LBMA accreditation itself.
Bullion with that status is the global gold standard of the industry, according to Subramanian. "LBMA is as good as having cash," he said.
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