As demand for gold as a safe haven surged during the Covid pandemic, concerns about sourcing the precious metal responsibly have again been thrust into the spotlight.
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 to scrutinize suppliers more closely.
Gold, which is trading near an eight-year high, is one of four conflict minerals that U.S.-listed companies from Tiffany & Co. to Apple Inc. must trace and report on to the Securities and Exchange Commission. Suppliers are coming under pressure to show they’ve got processes and policies in place to make sure the metal hasn’t financed conflict or been linked to corruption or human rights abuses.
In its report on Thursday, Global Witness alleges 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 are gaps in the LBMA’s responsible sourcing standards that don’t generally require refiners to disclose their suppliers. The LBMA and Valcambi declined to immediately comment on the Global Witness report. Kaloti said the allegations in the Global Witness report 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’s findings and said it conducts enhanced due diligence, the advocacy group said. Valcambi last month said it pledged to adopt a new system to increase transparency in its process for sourcing precious metals.
Based on blockchain technology, the system will require the refiner’s potential gold suppliers to upload all due diligence information, including data and documents into a database, which will then be accessible to all appropriate auditing parties. It’s not the only refiner coming under recent 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 it’s reviewing reported sourcing concerns at the Perth Mint over gold originating from Papua New Guinea.