The Perth Mint has suffered a substantial fall in market share while also being rapped over the knuckles by the industry supervisor.
The Perth Mint has suffered a substantial fall in market share while also being rapped over the knuckles by the industry supervisor.
The Perth Mint’s share of the Australian gold refining market fell below 90 per cent last financial year and competitor ABC Refinery claims it has fallen much further since then.
The WA government-owned Mint traditionally held 99 per cent market share but has been losing out since Sydney-based ABC gained accreditation in 2015.
The Mint’s latest figures, supplied to Business News, show its market share fell to 88.5 per cent for the year to June 2020, down from 93 per cent in FY19 and below its target of 90 per cent.
The Perth Mint’s data also shows a substantial absolute fall in its refining volumes.
The Mint said it refined 215 tonnes of Australian gold in FY20 – that left a residual amount of 28 tonnes for other refiners.
Privately-owned ABC disputed these numbers, telling Business News it refined 50t of Australian gold last financial year, equivalent to 20.6 per cent market share.
The competition between the two refiners has heated up this year, since a number of senior executives including treasurer Joe Metcalfe left the Mint to join ABC.
One of the few things the two refiners agreed upon was the size of the Australian market.
Total Australian gold production last year was 325t, though that included 82t in concentrate.
This was exported to China and Japan for processing, leaving 243t of gold ‘dore’ for refining in Australia.
ABC said its market share had continued to expand over the course of the year, with data for the month of June showing its market share reaching 24.6 per cent.
Its new customers are believed to include Saracen Mineral Holdings – gold from its Thunderbox mine is refined at ABC while output from its Carosue Dam operation continues to be refined at the Mint.
The switch, made last year, was understood to be based on competitive commercial terms offered by ABC and the opportunity for Saracen to diversify its refining.
As well as competing for Australian mined gold, the Mint and ABC compete to refine imported gold.
The Mint said 82t was brought into Australia from overseas last year, and it refined 63t.
ABC said the amount imported was closer to 92t as six offshore mines were being serviced in Australia for the first time.
ABC said it was processing 29t.
In total, the Mint refined 278t last financial year, down from 324t in FY19 and 355t in FY18.
ABC’s global general manager Nicholas Frappell said that as well as increasing its share of Australia’s gold output, ABC was refining the majority of silver.
“Our enviable rate of growth and market share is driven by the fact that we partner with our clients for long term mutual benefit,” he said.
“Not being constrained by legacy systems, we champion the Australian gold sector globally by investing in the best people and utilising the latest environmentally sustainable technologies.
“Our strategic location in Australia’s largest trading hub provides significant logistical advantages to our partners in both domestic and international markets.
“It’s these factors that enable us to bring real competition to the market and significant bottom line refining and transport savings to our partners”.
Perth Mint chief executive Richard Hayes said it had seen competitors come and go over its 120 years of operation.
“We have always welcomed competition if it delivers transparent, compliant and positive refining outcomes for the gold mining sector as well as for the Australian community at large,” Mr Hayes said.
“We take great pride in annually publishing our audited refining numbers alongside our financial results.“
Richard Hayes. Photo: Attila Csaszar
Meanwhile, the London Bullion Market Association announced on Friday evening that the Perth Mint needed to strengthen elements of its risk assessment.
This followed a review of the Mint’s dealings with a gold miner in Papua New Guinea, Golden Velley Enterprises, that is owned by a convicted killer and uses cyanide and child labour in its operations.
The LBMA, which describes itself as the global authority for precious metals, identified a number of shortcomings in the Mint’s operations.
“There are elements of The Perth Mint’s risk assessment which need to be strengthened through a Corrective Action Plan to be audited by a third-party auditor,” the LBMA said.
It added that the auditor previously used by the Mint was no longer approved, and that the Mint will be required to use a new ‘Approved Service Provider’ to carry out the audit.
The LBMA said the Corrective Action Plan will address weaknesses in the application of The Perth Mint’s management systems.
“For example, the Papua New Guinea based counterparty was identified as medium risk, rather than high risk.”
Following the review, the Mint remains a ‘Good Delivery List Refiner’.
Mr Hayes said the review provided an opportunity to enhance the Mint’s practices.
“The Perth Mint has previously announced that it has ceased sourcing gold from ASM operations in PNG,” he said.
“We have also replaced the LBMA approved auditor as a matter of course.
“The review has been a worthwhile exercise and we remain committed to upholding the highest ethical standards.”
He added that the Perth Mint, which is owned by the WA government, is subject to greater scrutiny and held to higher standards than other refiners.
* This is an expanded version of the article that appears in the current print edition of Business News.
