LBMA Chief Executive Ruth Crowell appeared to snub calls for a ‘Good Delivery B list’ during a keynote speech at the IIGC conference here in Agra and instead called on Indian refiners to step up to international standards.
“I am often asked if we can create a Good Delivery B List and the short answer is no,” she told delegates. “It is important that the LBMA Good Delivery list has integrity,” she added.
Some groups – particularly in India – had been calling on the LBMA to create a ‘B’ list, as many are unable to comply with the threshold limits and strict standard requirements that it requires refiners to have.
Under the rules, amongst many things, refiners must have an established track record of producing gold or silver for at least three years and produce a minimum of 10 tonnes of gold and 50 tonnes of silver every year. They must also have a tangible net worth of at least 15 million British pounds and be able to provide a letter of endorsement from a central or commercial bank in the country of origin.
“It is important that for everyone around the world who relies on London Good Delivery, that it can be trusted,” she said. “We are not in the business of accrediting every refiner in the world. We are looking for global partners who can add diversity and deliver large quantities of quality metal into London and markets worldwide,” she added.
Crowell also said that the organisation is looking for refiners that are going to be in the business for decades, as opposed to a few years. Many of the refiners in India have popped up in the last few years to takeadvantage of an arbitrage on the import duty between refined bullion and unwrought gold dore – although this gap was narrowed in the most recent budget in February.
“If we compromise our standards, the banks, the central banks, the refiners, investors, mints, jewelers and electronic companies that rely on us would all suffer commercially,” she said.
According to a recent GFMS report, there are around 30 refiners using their license to import gold, yet only one of them, MMTC PAMP – a joint venture between PAMP SA of Switzerland and MMTC – is accredited by the LBMA for good delivery gold.
India, instead, suffers from a number of issues that haunt the integrity of some of its refiners – although many do follow international standards – including under-caratages and irresponsible sourcing of gold.
Crowell also addressed questions over whether or not responsible sourcing is really necessary and whether this is simply a Western or European problem.
“As friends we have to tell each other harsh truths – and this is one of those – you can’t ignore responsible gold, you can’t ignore responsible silver,” she said. “Ultimately it is coming for you – so my advice would be – why not get ahead, use it as a commercial advantage to get ahead of your competitors” she said.
“If India is ultimately looking to become the jeweller to the world – you need not just to be compliant and you should be the leaders in responsible gold, you can’t simply sign a letter and expect large multinational companies to accept you at your word,” she said.
Crowell said that in recent years, China has stepped up and is now taking responsible sourcing seriously and becoming a leader in the space. The country vies with India as the world’s leaders in consumption of gold, accounting for over 50 percent of global demand.
“India does need to do the same to remain competitive.”
(Editing by Martin Hayes)