The opacity in the disclosure of business relationship between Gold Refineries and African mining companies

Transparency in the mining sector has become very essential in efforts towards responsible mineral sourcing, traceability and sustainable development. However, a recent report by SWISSAID has highlighted the lack of transparency in the disclosure of business relationship between gold refineries and African industrial gold mines. This development is a major setback to responsible mineral sourcing and physical traceability of gold.

The report revealed that most of African industrial gold end up in gold refineries across the world mostly in Switzerland (Metalor, MKS PAMP, Argor-Heraeus, PX Precinox, Valcambi), South Africa (Rand Refinery) and in some few instances India (MMTC-PAMP). In 2020, London Bullion Market Association (LMBA) certified refineries refined a total of 450 tonnes of gold from large scale mines in Africa. Out of this, the five LBMA certified refineries in Switzerland refined 177 tonnes of gold.

Varying Levels of Transparency in the disclosure of business relationships

The report identified varying levels of transparency in the disclosure of business relationships between the gold refineries and African industrial mines.  A number of gold refineries (Rand Refinery, MKS PAMP SA, MMTC-PAMP, Argor-Heraeus, Asahi Refining Canada and Emirates Gold DMCC) displayed sheer reluctance to disclose the origin of their gold unless SWISSAID sign a non-disclosure agreement which upon doing would have defeated the purpose of their study. However, other gold refineries such as Metalor (26 mines), PX Precinox (1), The Perth Mint (5), Nadir Metal Rafineri (2), Italpreziosi (1) and Emirates Minting (3) disclosed and confirmed the names of the African industrial mines they source their gold.

Similarly, some mining companies under no obligation disclosed the names of the refineries that process their gold. The information was disclosed either on their websites, annual reports, Environment and Social and Governance (ESG) reports, technical reports and sustainability reports and other public sources. Other companies also disclosed the names of their refinery partners upon request. Some few mining companies (Newmont, Kinross, Perseus Mining and Allied Gold Corp) however declined to disclose or confirm the names of their partner refineries.

In the study, SWISSAID identified 142 business relationships between 16 gold refineries and 116 African industrial mines between 2015 and 2023.

Justification for non-disclosure of business relationships unconvincing

Refineries who declined to disclose their business relationships justified their stance on the basis of security, competition and confidentiality. However, these reasons have been deemed unconvincing. In a situation where some refineries in the same competitive market publicly disclose their business relationships and the origin of their gold, where lies the competition argument, the report argued. According to SWISSAID, if the disclosure of names of the mining companies as well as destination of their gold by refineries pose a security threat, why would majority of the mining companies willingly disclose the names of the refineries they supply to. With regards to confidentiality, the report highlighted the inconsistent application of confidentiality policies between refineries and mining companies, making it a weak justification for non-disclosure of business relationship.

Rather, the “serious problems” identified in majority of the 125 mining companies that the refineries source their gold could only be the reason why most of the refineries are reluctant to disclose their business relationships. These problems included varying forms of environmental damage, injuries and deaths of mine workers, illness and diseases of local people in mine areas, land expropriation and forced displacement, lack of proper compensation for victims of forced resettlement or destruction of homes and loss of livelihood. Other human rights issues such as rape and sexual assault, murder and attacks on journalists as well as issues of illicit financial flows, corruption and tax fraud were also identified in some mining companies.

Call on LMBA to ensure Transparency and Due Diligence

The report described the lack of disclosure of business relationship by refineries as a challenge to physical traceability of gold and due diligence. According to the report, information disclosed by LBMA refineries as required by the LBMA Disclosure Guidance is insufficient to ensure due diligence. SWISSAID called for subsequent LBMA Disclosure Guidance to obligate all refineries to disclose the same type of information, disclose not only the countries from which they source, but also the names of their suppliers and quantities of fine gold involved. In addition, LBMA “should also require refineries to include, the specific measures implemented to address the problems asso­ciated with each mine from which they source in their annual compliance report”.

The report noted that “in the face of problems at many of the industrial mines from which they source their gold, this lack of transparency is particularly problematic and does not ensure the effectiveness of their due diligence. Indeed, the more transparently a refinery communicates the risks identified and the mitigation measures taken against its suppliers, the less likely it is to be accused of breaches of due diligence and allegations of involvement in human rights and environmental abuses.”

Commenting on SWISSAID’s report, an LBMA spokesperson in an engagement with Global Trade Review responded: “We engaged with SWISSAID on this point of disclosure, and a range of other points, prior to publication of their report, and underlined our intentions to add additional disclosure requirements, beyond the OECD requirements, in future iterations of the guidance.”


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