Although Switzerland is not a major gold producer, it arguably plays a more important role in the global gold market compared to many gold-producing nations. Switzerland hosts four of the seven top precious metal refineries in the world and refines around 50% to 70% of the global gold supply. The country’s world-famous banks are also critical to marketing gold bullion, making the country a major hub for upmarket jewelry and watches.
However, Switzerland’s involvement in the global gold industry has drawn increased scrutiny due to transparency issues and claims of the Swiss gold industry’s involvement in mining abuses and illegal transactions. The Swiss industry is becoming synonymous with human rights abuses and adverse environmental impacts. The country has even been accused of “bottom of the class due diligence” after Switzerland’s financial watchdog reported that available customs data wasn’t transparent enough to distinguish between recycled gold, bank gold and mined gold.
Antoine de Montmollin, CEO of Swiss refinery Metalor Group, recently discussed the transparency and due diligence issues currently facing Switzerland’s highly lucrative gold industry. Montmollin explained that the company has deployed a strict and robust due-diligence system to ensure its gold supplies come from legitimate sources. The system includes cultivating relationships with customers as well as liaising with mines directly to confirm the source of origin and make sure their suppliers are being truthful about where they source gold.
Montmollin said that Metalor ceases doing business with any suppliers if doubts about their legitimacy arise to limit their risk of interacting with illegal gold. Furthermore, he continued, the company stopped working with Russian companies and does not accept gold sourced from the Amazon Forest. Montmollin stated that Metalor simply does not take gold it cannot trace to a legitimate source.
This includes avoiding intermediaries such as artisanal mining collectors and teaming up with the University of Lausanne to build a traceability tool.
Metalor also goes through four audits by Swiss authorities, the London Platinum and Palladium Market, the London Bullion Market Association and the Responsible Jewellery Council that involve selecting dozens of the refiner’s gold suppliers and analyzing their credentials to ensure they are fully transparent. Montmollin said that the company works with mostly African mines and has partnered with an estimated 20 to 25 mines on the continent.
These industrial mines are run by large, publicly listed companies that have strict policies to maintain their brand and stock images, he said. In addition, Metalor officials visit these mines every year to ensure the mines are compliant with human and environmental laws and to discuss any possible issues.
While it isn’t possible to allow only licensed extraction companies such as Royal Gold Inc. (NASDAQ: RGLD) to participate in gold mining, efforts should be made to get all actors to adhere to good mining practices so that environmental, human rights and other concerns are addressed while extracting this precious metal.
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