Fidelity Printers and Refiners, the country’s sole gold buyer, is hopeful of being readmitted to the London Bullion Market Association (LBMA) and is working on processes pending the outcome of its application to the LBMA executive committee.
BY NDAMU SANDU
LBMA is an international trade association representing the London market for gold and silver bullion which has a global client base. Fidelity was chucked out of the LBMA in 2008 due to low gold volumes refined in a single year.
At that time 4 tonnes of gold had been acquired by Fidelity for refining falling short of the minimum LBMA annual threshold of 10 tonnes.
This saw the company being downgraded to a former refiner status which precluded it from using its hallmark on gold products until it pursued a set of reaccreditation programme.
Fidelity, which resumed refining bullion at the end of 2013, is optimistic of readmission on the back of increased gold output. Last year, Fidelity applied to LBMA to be placed on a specific accreditation programme buoyed by a steady growth in gold production.
In 2014, Fidelity refined 13,9 tonnes of gold to a purity level of 99,5%.
“This exceeded the minimum threshold for accredited refiners of 10 tonnes refined gold per annum. Going forward, Fidelity is very confident that as long as the country’s annual gold production stays above 10 tonnes, it will achieve its objective,” it said.
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In the interim, Fidelity said it was working on equipping its assaying section with the necessary machines for analysis of gold with a purity of 999,9 parts per thousand (99,999%) before submitting documents to LBMA.
“This is a requirement on assaying capabilities of all refiners seeking accreditation,” it said.
Fidelity is also working on the appointment of a compliance officer in line with the provisions of the responsible gold guidance scheme. Another area being worked on entails developing a video showing the refinery premises, assaying, smelting and refining equipment with some background explanation.
In addition to the video, Fidelity has to provide a technical diagram of the gold bars showing the position of the hallmark, year of manufacture, serial number and assay although the company has to decide whether to retain the previous hallmark or not.
LBMA accreditation reduces costs arising from the use of intermediary refiners to get to the market as hallmarking by an accredited refinery enables tradability of the gold bars on the international market without need for verification of purity of the gold.
Currently, Fidelity is using the Rand Refinery of South Africa as its intermediary refiner, at a charge and is also creating additional relationships with two more leading accredited refineries to be used as potential reference refiners.
An LBMA accredited member has capacity to sell the gold before it reaches the refinery process thereby reducing the impact of price fall risks.
LBMA accredited members have direct interface with international buyers. Currently, gold off-takers are buying Fidelity gold through Rand Refinery.
It will also increase confidence of producers in the region or internationally in dealing with Fidelity thus boosting quantities of refined gold with the associated financial gains. Fidelity will also have the capacity to produce value added products with some premium above the international price of gold thus enhancing its revenue.
