LONDON (Reuters) - The London Bullion Market Association (LBMA) plans to create an official committee for gold and silver refineries, after some complained their interests were being ignored.
The LBMA, which oversees London’s $10 trillion-a-year gold market and sets standards for the world’s biggest refineries, has tightened its rules on the sourcing of gold every year since introducing them in 2012.
The rules aim to exclude from the market any gold that is illegally mined, smuggled or used to finance violence – risks underlined in 2017 when a major U.S. refiner was found to have imported gold worth more than $2 billion smuggled from South America.
But some refiners say the LBMA has burdened them with compliance costs and risks without giving them enough of a say in rulemaking.
LBMA-accredited refiners, known as ‘good delivery list’ (GDL) refiners, are invited to an annual meeting with the LBMA, but the association said these meetings would now be formalized into an official committee.
“It’s open to all GDL refiners and is an opportunity to discuss among other things challenges facing refiners and areas of mutual interest,” the LBMA told Reuters.
The committee is expected to convene four times a year, with the first meeting scheduled during an industry gathering in London in May, sources said.
The change comes after Michael Mesaric, the head of Switzerland’s largest refiner, Valcambi, called for a new lobby group called the International Precious Metals Refiners Council to defend refiners’ interests and exert influence on the LBMA.
In a letter to the LBMA and other good delivery refiners last year, Mesaric said refineries were being held responsible for enforcing good practice in the gold supply chain.
“With such responsibilities (and associated penalties) I have long felt that we as an industry group are not finding a collective and strong voice,” he wrote.
He said he was not seeking to weaken the LBMA’s sourcing standards, but to have more involvement in their creation.
The letter added pressure on the LBMA to change, industry sources said. “Michael’s letter was a wonderful catalyst to get the discussion going,” said one.
Mesaric declined to comment.
The LBMA said good delivery refiners had always been consulted on changes and the creation of a refiners committee was “a natural progression”.
Rising compliance costs and competition that has driven down refining charges have made it harder for good delivery refiners to make money in recent years.
Reporting by Peter Hobson, editing by Mike Harrison