Gold refiner, a high-risk profession

When it comes to gold, NGOs in the field deliver a vastly different message to the official statements by stakeholders along the supply chain. The ultimate demonstration came in July with the publication of two reports on the business dealings of Swiss refiners and their suppliers in Dubai which, the reports allege, source part of their gold from areas controlled by armed groups in Sudan, or from central Africa. In its investigation, Swissaid pinpoints ties between certain Swiss refineries, certified as complying with industry best practice standards, and Emirati companies “with dubious practices and sourcing linked to conflict gold”. Global Witness sets out similar findings in its report. The refiners in question lost no time in issuing a point-by-point denial while insisting on the fact their activity is audited by the London Bullion Market Association (LBMA), the global regulatory body for gold and silver refiners.

The "mystery" of gold

Accusations of this kind do nothing to burnish the reputation of a sector which directly employs 1,500 people in the Alpine nation. It is represented by the Swiss Association of Manufacturers and Traders in Precious Metals (ASFCMP) whose 14 members include five LBMA-certified refineries which transform 70% of the world’s gold. In 2019 this corresponded to imports of 2,100 metric tons of gold, worth around CHF 70 billion, and exports of virtually the same amount, in refined form. “Gold from dubious sources has no place in Switzerland,” declared ASFCMP President Cédric Léger, quoted by Swiss daily Le Temps, following publication of the two reports. While his words have been widely echoed, actions come up against the often inextricably complex structure of the gold supply chain – particularly when the aim is to conceal the metal’s origin. The situation, in Switzerland, is compounded by loopholes in legislation and inadequate controls of gold imports, prompting a report by the Federal Audit Office in June this year. Then, in September, the country’s State Secretariat for Economic Affairs (SECO) announced changes to classifications of gold imports that would improve transparency and traceability. They will be implemented in Switzerland from January 1, 2021.

The measure was welcomed by the ASFCMP, which used the future amendment as an opportunity to reiterate its ongoing collaboration with official bodies aimed at strengthening regulations, standards and voluntary codes relating to quality, environmental protection, biodiversity, human rights, corruption and legal compliance. Are its members exempt from criticism because of this? Whatever the answer, refiners were in the firing line at the recent Basel Gold Day organised by Professor Mark Pieth. Christoph Wiedmer from the Society for Threatened Peoples led the charge: “Since our first campaigns eight years ago, we are seeing greater awareness of and increased demand for ‘better gold’. However, irrespective of where gold originates, there isn’t a place on earth where environmental and labour laws are not under attack.” Mr. Wiedmer was no less critical of the SECO amendment, regretting that it would ” do nothing to make gold trading more transparent. The origins of the gold transformed in Swiss refineries will remain a mystery.”

Efforts at transparency

Speaking up for the refiners was Christoph Wild, CEO of Argor-Heraeus, one of the largest precious metal refineries: “The traceability of gold is far more complex than it seems,” he said. “We hear a lot about ASM and illegal mining in conflict zones, but what about recycled gold? We hear how refiners must be held accountable, which clearly they must given their central role in the supply chain, but this doesn’t exclude the accountability of banks, industry, even electronics manufacturers. Then there are the multitude of regulations, including self-regulation, and NGO monitoring. In an ideal world, every stakeholder would undertake its responsibility with the result that segmentation of the market would not be a handicap. But traceability is only possible if everyone plays the game, hence why the only solutions are the ones we find together.”

The message seems to have reached the LBMA, which recently published its first Responsible Sourcing Annual Report. “This brand-new report reflects the considerable efforts made to achieve greater transparency across the gold supply chain,” declared Susannah McLaren, who manages the LBMA’s Responsible Sourcing Programme. “This is, for example, the first time we are providing country of origin statistics for Good Delivery List refiners. These statistics differentiate between recycled gold, artisanal and small-scale mined gold and large-scale mined gold. The objective is to build trust in the market, knowing that this is something we cannot achieve by ourselves, and that there are refineries and jurisdictions where we simply cannot intervene.” When it comes to cleaning up the gold supply chain, there is still a long way to go or substantial progress has been made… it all depends which side of the fence you are on.

*1st session of Gold Essentials in French: 3, 8, 10 December 2020 on Zoom. English session in 2021.
Registrations: https://www.eventbrite.fr/e/billets-gold-essentials-formation-zoom-124100226117?aff=ebdssbeac
Information: isabelle.hildebrand@hautehorlogerie.org