SA’s mining and processing industry is once again mystified by utterances by politicians involved in overseeing the sector after the chair of the parliamentary portfolio committee on minerals and energy called for SA gold to be refined in Rwanda at the continent’s “first gold refinery”.
In a matter that has a parallel with minister of mineral resources & energy Gwede Mantashe’s now infamous boast to an international audience in Australia about the new “hazenile” mineral discovered in SA based on an April Fool’s Day spoof, Sahlulele Luzipo appears to be the victim of doing insufficient research in his vocal support of the small Rwandan gold refinery that is in all kinds of trouble.
Clearly drawing on media reports from 2017 and into 2018 from Rwanda, Luzipo “welcomed” the news of “Africa’s first gold refinery in Rwanda”.
This ignores the fact that SA is home to the century-old Rand Refinery in Germiston that processes all SA’s gold and gold from elsewhere in Africa and the Americas, and is ranked as one of the world’s biggest smelting and refining operations with accreditation with the London Bullion Markets Association (LBMA).
“Mr Luzipo further said the committee, at its earliest sitting, will find a suitable date to invite the department of mineral resources & energy [DMRE] to present plans on how the department will utilise the refinery to process SA’s gold reserves,” the portfolio committee said in its July 28 statement.
Officials at gold mining companies in SA pointed to the glaring disconnect between the government’s drive to beneficiate, or add value to, the country’s minerals to promote industrial development and the call by Luzipo for SA gold to be processed in Rwanda.
In response to a query, Luzipo said the statement “neither directs nor dictates the DMRE to overlook the Rand Refinery in favour of the Rwandan one”.
Rand Refinery
He further went on to defend the original statement by saying he sought only to “acknowledge the Rwandan refinery as the first refinery that only specialises in gold (as per media reports)”.
On its own website, the Rwandan refinery Aldango mentions refining silver too.
Rand Refinery, which is owned by SA’s gold companies, refines 250 tonnes of gold a year, with about half of that coming from Africa and elsewhere. It has capacity to refine 350 tonnes annually.
At its peak in the 1970s it was refining 1,000 tonnes a year, providing 80% of the world’s gold.
It produces the blank coins the Mint turns into Krugerrands as well as investment gold products such as bars for international markets.
It generates about 60 tonnes a year of refined silver, a by-product from the gold smelting and refining processes.
Aldango can process about 72 tonnes of gold a year, but what its actual output is cannot be accurately determined.
“When I first saw this, I thought the statement was rather bizarre and unexpected. With due respect to the chairperson, it seems like it is coming from an ill-informed source,” said Praveen Baijnath, CEO of Rand Refinery.
Illegal activities
“In the past few years, we have converted in excess of 50% of SA’s gold into value-added products that go into the international markets like the Krugerrand, and supplying products to the big gold markets of India, China, North America and Europe,” he told Business Day.
Luzipo believes Aldango is the answer to illegal gold mining activities in SA and the continent, the committee said.
“He believes that with a single gold refinery in the continent, countries who are besieged by the acts of violence as part of illegal mining activities, like in SA, should be able to track down the illicit gold market,” the committee statement says.
Not only does the Aldango refinery not have LBMA accreditation but it is small and mired in a tax dispute with the Rwandan government, which bodes ill for its future.
According to a detailed report in Taarifa, a Rwandan media organisation, on July 8 the Rwandan Revenue Authority had ordered the seizure of Aldango’s assets to repay a tax bill estimated to be $113m.
As Rand Refinery is Africa’s sole holder of LBMA accreditation, it has the liquidity created by participating with relevant bullion banks involved with the London-based association, said Baijnath.
“We don’t consider that Rwanda refinery as a threat or something we must worry about,” he said.
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