LONDON • With demand for gold as a haven during the coronavirus pandemic, concerns about sourcing the precious metal responsibly have again been thrust into the spotlight.
A report from Global Witness alleging that one of the world's biggest gold refiners has worked with a supplier that was at risk of having bought conflict metal originating in Sudan, is the latest in a series of calls from advocacy groups urging the London Bullion Market Association (LBMA) to scrutinise producers more closely.
Gold, which is trading near an eight-year high, is one of four conflict minerals that United States-listed companies, from Tiffany & Co to Apple, must trace and report on to the Securities and Exchange Commission. The same group of minerals will be covered by binding European Union due diligence rules from next year.
Suppliers are coming under pressure to show that they have processes and policies in place to make sure the metal has not financed conflict or been linked to corruption or human rights abuses.
In its report last Thursday, Global Witness alleged that Swiss refiner Valcambi bought large amounts of gold from Dubai-based Kaloti Precious Metals, which in turn was at risk of having purchased Sudanese conflict gold.
It said there are gaps in the LBMA's responsible sourcing standards that do not generally require refiners to disclose their suppliers.
Valcambi declined to immediately comment on the Global Witness report. Kaloti said the allegations were not true.
"Kaloti is independently audited each year against the relevant standards and at no time has any conflict material, from any jurisdiction, including Sudan, been identified in any of its supply chains," it said.
"Furthermore, Kaloti has never sent any gold material sourced from Sudan to any Swiss refinery whatsoever."
Valcambi has also denied Global Witness' findings and said it conducts enhanced due diligence, the advocacy group said.
Bern-based non-governmental organisation Swissaid, in a separate report published last Thursday, also criticised the LBMA's current standards, urging it to be "much more rigorous" on scrutinising the supplies of its member refineries.
The LBMA said last Friday that its responsible sourcing programme "is designed to be a holistic process that engages all stakeholders" and that the association cannot tackle the issue alone. It said it "also recognises that more needs to be done".
The association is working with a third-party service provider to have new recommendations this year on how to further improve transparency, disclosure and audit processes, said Ms Sakhila Mirza, an executive director and general counsel.
The LBMA will also publish its annual report with updates on the programme and future developments in the coming weeks, she added.
Valcambi last month said it pledged to adopt a new system to increase transparency in its process for sourcing precious metals. Based on blockchain technology, the system will require the refiner's potential gold suppliers to upload all due diligence information, including data and documents, into a database, which will then be accessible to all appropriate auditing parties.
It is not the only refiner coming under recent scrutiny.
Earlier this month, activist group Raid asked the LBMA to suspend India-based refiner MMTC-PAMP, part of another Swiss major, MKS PAMP Group, over gold from a mine in Tanzania where there have been allegations of human rights abuses. The refiner denied all the complaints and allegations by Raid.
The LBMA also said last month that it is reviewing reported sourcing concerns at the Perth Mint over gold originating from Papua New Guinea.