State government-owned gold refiner Gold Corporation has had its longstanding national monopoly broken, with the accreditation of Sydney-based ABC Refinery by the London Bullion Market Association.
State government-owned gold refiner Gold Corporation has had its longstanding national monopoly broken, with the accreditation of Sydney-based ABC Refinery by the London Bullion Market Association.
The move means there will now be two Australian refiners, among 73 internationally, that are accredited for “good delivery” and hence can be used in the inter-bank bullion trade.
ABC, which is a subsidiary of private company Pallion, has operated the refinery for four decades, with various clients including miners, scrap metal dealers and prospectors.
But the Gold Corporation, which controls the Perth Mint, had been the only internationally accredited player during that time.
ABC managing director Phillip Cochineas said he expected the market size to grow considerably with two refiners now accredited.
“The fact that we trade in Australian dollars means our refineries are a lot more competitive among global players,” he said.
Mr Cochineas said the gold sector was a particularly positive story among the resources industry at the moment, with the Australian dollar value of the commodity around $1,500 per ounce.
That was enough for most Australian miners to be under minimal stress.
There are a small number of unaccredited refineries in Australia, and ABC’s elevation to the international field would be expected to bring business here from overseas, Mr Cochineas said, particularly in the Asia Pacific.
Additionally, it would mean a competitor for Gold Corporation.
“It should only be positive for competition in the Australian marketplace,” Mr Cochineas said.
The competition is expected to further reduce costs for miners, in a market that is currently worth around $15 billion to Australia.
It follows recent announcements by the Gold Corporation that further open its services to financial markets.
In November, the business said investors would be able to use an online trading platform to buy and store bullion and precious metals at the Mint.
It then signed an agreement with the ASX to develop precious metals derivatives for trade on the exchange.
It is expected to launch in the second half of 2016.
Perth Mint acting chief executive officer, David Woodford, said he congratulated ABC Refiners on their appointment to the LBMA good delivery list for gold.
He said the precious metals refining industry was firecely competitive, with an existing oversupply of capacity.
The Perth Mint was the only Australian refiner accredited on all major exchanges, he said.
Additionally, the Mint said it benefitted from its ownership by the state government.
"A guarantee from a shareholder with the highest short term S&P rating possible (A1+) is an important credential when evaluating a refining service, given that customers’ entire revenue can flow through their chosen refinery," the Mint said.
