Aug 24 (Reuters) - * Cbank will exercise priority right to buy gold
* Plans incentives to stimulate domestic refining
* Gold’s share of international reserves rising
By Olga Orininskaya
ALMATY, Aug 24 (Reuters) - Kazakhstan’s central bank plans to augment its gold reserves by exercising its right to buy the Central Asian state’s entire bullion output, the latest emerging economy to favour gold over exposure to the ailing dollar.
The bank said it had asked the government to withdraw value-added tax incentives that encourage gold exports in order to encourage growth in domestic refining. It also said it would explore ways to arrange advance payment for bullion.
“Domestic gold producers ... will have a guaranteed partner and customer in the next few years in the shape of the National Bank of Kazakhstan,” the bank said in a statement issued jointly with the Association of Mining and Metallurgical Enterprises.
Central banks in many emerging market countries have added more than $10 billion of gold to their reserves this year in a sign of waning faith in the West’s benchmark bonds, as well as currencies like the dollar and the euro.
Emerging market central banks had bought nearly 180 tonnes of gold in 2011 by Aug. 3, more than double the roughly 73 tonnes purchased by central banks globally in the whole of 2010.
The spot price of gold has risen by more than 30 percent this year. On Tuesday, it hit a record high above $1,910 an ounce, spurred by persistent worries about the world economy.
Kazakhstan’s central bank held $3.5 billion in gold as of July 31, or 9.5 percent of its total gold and foreign currency reserves. Its gold holdings have risen by 14.4 percent since the beginning of the year, data compiled by the central bank show.
MORE REFINING
As well as increasing its gold reserves, the central bank said greater state control would help to stimulate the growth of a domestic gold market and encourage more refining.
Kazakhstan produced 21.4 tonnes of gold in the first seven months of this year, including 9.7 tonnes of refined gold, data from the State Statistics Agency shows.
Kazzinc, controlled by Glencore , is currently the only domestic producer of ingots that meet international standards, the central bank and mining association said in the statement.
Copper miner Kazakhmys can refine ingots to Kazakhstan’s domestic standards and could potentially upgrade its refinery to meet international standards, they said.
Industry Minister Aset Isekeshev said last month that Kazakhstan was considering building a third gold refinery as the country prepares to ramp up production of the precious metal over the next few years.
Writing by Robin Paxton; Editing by Richard Borsuk
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