Rand Refinery, Africa’s largest, is expanding its footprint to Ghana, marking a pivot for the 105-year-old organisation.
Established in 1920 in Germiston, Rand Refinery offers refining and smelting services to listed gold and silver producers in South Africa and the rest of the continent.
The refined products are sold to bullion banks and are produced using cost-effective technologies while adhering to international benchmarks for responsible sourcing and mining.
Two weeks ago, the group penned an agreement with Ghana’s Gold Coast Refinery to treat as much as 1,000kg of artisanal and small-scale (ASM) mining ore a week. It aims to take up full ownership of the Gold Coast Refinery in the next two years.
Treating ASM ore is a step change for the refinery, which has previously taken gold only from listed companies. While listed entities operate labour-intensive underground gold mines, ASMs are mainly community-led mines operating on the surface. This is also known as alluvial mining.
The key for the refinery is ensuring ASMs also meet global standards for responsibly mining and sourcing, said CEO Dean Subramanian. He said the partnership comes as Ghana, Africa’s top gold producer, races to add value to its bullion locally before exporting it, rather than exporting it as raw ore at a time when gold and silver prices have reached record highs.
The country also wants to achieve fair value for its gold, particularly the ASM market, which does not fall under the strict guidelines of the London Bullion Market Association. “We want to ensure that the artisanal miner at the bottom is getting fair value, but more importantly, we want to support Ghana and ensure the gold that comes through the ASM ecosystem is responsibly sourced,” he said.
Subramanian, former ArcelorMittal South Africa CFO, described Rand Refinery as a “referee” that validates the ore it receives. He said the partnership was both a protection strategy and a growth strategy. “It is to protect the resources we currently receive from Gold Coast Refinery; it is also a growth strategy because today I do not take ASM gold.”
Ghana has a substantial ASM market, which combined is bigger than South Africa’s large-scale gold market, producing north of 100 tonnes a year.
He said the goal was to grow the ASM market share space and manage the risk that comes with governance and traceability. “With any business there’s always risk; it is about how you manage and mitigate that risk. So, our approach to Ghana is very cautious; we first form a joint venture. We want to understand that environment.”
Rand Refinery is the world’s only refinery owned by mining companies, with its shareholders including AngloGold Ashanti, Gold Fields, DRDGold, Sibanye Stillwater, and Harmony Gold Mining Company.
Subramanian said the group had found a golden opportunity through a partnership, particularly as the bullion price has touched record highs due to global uncertainty.
He said the approach going into Ghana is “very cautious”. The company will initially form a joint venture with Gold Coast Refinery with the intention of better understanding the environment and thereafter take on a shareholding in the operation. “That would mean Rand Refinery would expand its footprint from South Africa into other jurisdictions in Africa.”
Rand Refinery aims to work with Ghana’s gold board to implement a framework of responsible sourcing. “All of this won’t happen overnight. It is a journey we are walking with them,” Subramanian said, adding that profitability comes with ensuring everything works right.
With almost 40% of the world’s gold coming from ASM mines, it was a sector that could no longer be ignored. “The longer it stays out of the mainstream, the more there will be bad actors in the system. Ghana’s intention is to bring the ASMs into the mainstream and legitimise the gold so the ASM miner gets paid fair value, and the country receives the royalties and taxes,” he said.
Rand Refinery, which refines 200 tonnes of gold, has the capacity to refine 400 tonnes. During the heyday of gold mining in South Africa, it treated 1,000 tonnes of gold.
However, with mines becoming deep-level underground operations, the group’s production has reduced tenfold. “South African gold resources have dwindled over time; therefore, we needed to expand our footprint and go into other jurisdictions.”
Business Times
