India's
army of gold refiners face new competition
Thu
Mar 28 2024
Refining
gold has a long history in the family of Satish Pratap Salunke.
Following
in the footsteps of his father and grandfather, he and his business collect
scrap gold from jewellers, melt it down and sell it back to the jewellers in
the form of gold bars.
He
has two refineries, one in Kochi in the southern state of Kerala and the other
in Tiruchirappalli in Tamil Nadu. Relatives have refineries elsewhere in the
south of India.
"Every
day my refiners on an average melt two to three kilograms of gold," he
says.
Almost
every town in India will have at least one small refinery similar to those run
by Mr Salunke. It is known as the "unorganised" refining sector,
which distinguishes it from big refiners who make gold bars and coins from
imported, unrefined gold.
It
is estimated that, in total, Indian households hold a massive 25,000 tonnes of
gold, and some of that is always available for sale, particularly when the
price of gold is high or the economy is bad and people want to raise some cash.
Jewellers
may process returned gold themselves but will often use small refiners who will
make the gold back into bars.
Mr
Salunke says local jewellers like to deal with small refiners like his, because
they work quickly and are happy to accept cash.
"Most
jewellers prefer buying gold from us, as we are based in every city with small
units. A jeweller can take back his refined gold in a few hours, not like big
refiners who will take days to refine the recycled gold."
According
to the World Gold Council, of the 900 tonnes of gold refined in India in 2023,
117 came from recycled sources.
But
that recycling market is being eyed up by India's big industrial gold refiners.
They
have expanded in recent years, spurred on by favourable import duties on their
main source of gold - imported, unrefined gold known as gold doré.
But
it is difficult for them to import enough unrefined gold to keep their
refineries running. In fact, less than 50% of their refining capacity is used,
according to Harshad Ajmera, secretary of the Association of Gold Refiners and
Mints.
So
big refiners have been opening scrap collection centres in big cities, hoping
to scoop up unwanted gold and turn it into high-quality bars.
"At
present most of the recycling of gold is done by the unorganised sector [small
refiners] - that has to change," says Mr Ajmera.
Source:
https://www.bbc.com/