What happened to the refineries in India?
Half of the gold refineries in the country, the second biggest consumer of gold in the world, have closed down after the global outbreak of Covid-19. Out of the 20 refineries in the country, 10 refineries engaged in refining dore (impure) gold have closed down as dore is not coming Switzerland, Ghana and Peru as international flights are not operating.
These refineries are located in Uttarakhand, Ahmedabed and Delhi. Earlier, nearly 20 tonnes of dore gold was coming to India from these countries for refining.
James Jose, secretary of the Association of Gold Refineries and Mints said "Since the lockdown, the refineries which were only refining imported dore gold have closed down as there is no supply of dore gold. It is unlikely that situation will improve any time soon. The demand for gold in India has plummeted and therefore , the stock which is still there, is enough to meet to domestic demand"
Jose added "Moreover, these refining units are far from the majör gold markets of South India, Maharashtra and West Bengal. So getting old gold or scrap gold is also difficult for them."
Gold dore refers to a bar composed of mixture of precious metals, though these bars generally contain gold and silver. A dore bar is usually produced as part of the mining and refining process, but can also be created from scrap gold.
On average, a dore bar contains 50-75% pure gold. These bars require further refinement before the mental can be used as raw material for producing gold items.
MCX to work with Indian refiners
Meanwhile, to enable delivery of gold and silver refined in India, Multi Commodity Exchange of India (MCX) is actively considering the possibility of acceptance of bullion bars refined by Indian refineries for delivery via their contracts. This is subject to the refiners' meeting the exchange-set criteria as prescribed by MCX from time to time, said a release issued by the Exchange.
MCX accepts serially numbered gold and silver bars of the specified quality standard of London Bullion Market Association (LBMA) approved refiners, along with bars of Emirates Gold. The specified purity/fineness fort he Gold and Gold Mini contracts is 995 (with provision to deliver higher quality with proportionate Premium), while fort he Gold Guinea and Gold Petal contracts it is 999; and fort he silver, Silver Mini and Silver Micro contracts, the fineness is 999. The expansion of MCX gold delivery list is subject to further approval as per regulatory guidelines.