As demand for gold surges, concerns about sourcing the precious metal responsibly have again been thrust into the spotlight.
Gold for August delivery rose US$9.70 to US$1,810 an ounce, up 0.67 percent for the week.
A report from Global Witness alleging one of the world’s biggest gold refiners has worked with a supplier that was at risk of having bought conflict metal originating in Sudan is the latest in a series of calls from advocacy groups urging the London Bullion Market Association (LBMA) to scrutinize producers more closely.
Gold is one of four conflict minerals that US-listed companies from Tiffany & Co to Apple Inc must trace and report on to the US Securities and Exchange Commission. The same group of minerals would be covered by binding EU due diligence rules starting from next year.
Suppliers are coming under pressure to show they have got processes and policies in place to make sure the metal has not financed conflict or been linked to corruption or human rights abuses.
In its report on Thursday, Global Witness alleged that Swiss refiner Valcambi SA bought large amounts of gold from Dubai-based Kaloti Precious Metals Group, which in turn was at risk of having purchased Sudanese conflict gold.
It said there that are gaps in the LBMA’s responsible sourcing standards that do not generally require refiners to disclose their suppliers.
Valcambi declined to immediately comment on the Global Witness report.
Kaloti said that the allegations are not true.
“Kaloti is independently audited each year against the relevant standards and at no time has any conflict material, from any jurisdiction, including Sudan, been identified in any of its supply chains,” it said. “Furthermore, Kaloti has never sent any gold material sourced from Sudan to any Swiss refinery whatsoever.”
Valcambi has also denied Global Witness’ findings and said that it conducts enhanced due diligence, the advocacy group said.
In a separate report published on Thursday, Bern-based non-governmental organization Swissaid also criticized the LBMA’s current standards, urging it to be “much more rigorous” when scrutinizing the supplies of its member refineries.
The LBMA on Friday said that its responsible sourcing program “is designed to be a holistic process that engages all stakeholders” and that the association cannot tackle the issue alone.
It said that it “also recognizes that more needs to be done.”
The association is working with a third-party service provider to this year have new recommendations on how to further improve transparency, disclosure and audit processes, Sakhila Mirza, an LBMA executive director and general counsel, said by telephone.
The association would also publish its annual report with updates on the program and future developments in the coming weeks, she said.
Valcambi last month said that it pledged to adopt a new system to increase transparency in its process for sourcing precious metals.
Based on blockchain technology, the system would require the refiner’s potential gold suppliers to upload all due diligence information, including data and documents into a database, which would then be accessible to all appropriate auditing parties.
It is not the only refiner under scrutiny.
Last week, activist group RAID asked the LBMA to suspend India-based refiner MMTC-PAMP, part of another Swiss major, MKS PAMP Group, over gold from a mine in Tanzania where there have been allegations of human rights abuses.
The refiner denied all the complaints and allegations by RAID.
The LBMA also said last month that it iss reviewing reported sourcing concerns at the Perth Mint over gold originating from Papua New Guinea.
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