Perth Mint Replies to ABC's Allegations of Gold Doping

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Perth Mint Replies to ABC's Allegations of Gold Doping

Post by Catweazle »

So, apparently there's been some interesting headlines about the Perth Mint recently, largely due to an ABC report on the television series Four Corners. Gold 'doping' they call it. Thought some members might be interested.

Now, gold bars can never be made 100% pure as such because they will always contain some other material of one type or another. Diamonds are similar in that they can contain impurities too. I know because I've recently been diamond shopping, y'know ;) However, the industry standard is for gold bars to be 99.99% gold.

That leaves a fraction left of the total 100% there
Unfortunately, the Perth Mint started adding a little too much silver into the mixture and the Chinese buyers complained.

You see, between 2018 and 2021, we sold gold to China that met broader industry purity standards for 99.99 per cent pure gold, but not the stricter standards for silver content advocated by the Shanghai Gold Exchange (SGE).

Gold doping is a somewhat accepted practice in the industry and is not illegal, but is high risk for refiners, as it lowers the quality of bullion by adding impurities like silver or copper. Trace amounts of these metals are permitted, but Perth Mint's plan – to keep just within industry standard of 99.99 per cent purity – only left a miniscule margin of error.
Gold refinery & pouring at the Perth Mint
Gold refinery & pouring at the Perth Mint
The Mint uses at least four different refining processes, the combination of which - they state - ensures the most cost-effective treatment of high and low-grade gold and silver sourced from the mining, manufacturing, industrial and jewellery sectors. These include:
  • Miller chlorination
  • Electrolytic gold refining
  • Aqua regia digest refining
  • Electrolytic silver refining.
But the Mint also began 'doping' its gold as a cost-saving measure in 2018, expecting to save up to $620,000 a year — a tiny fraction of its annual sales.

Did you hear about that? Sounds suss to me, but then what do I know about this stuff? I just collect stamps! Is this common practice amongst other Mints around the world?

The mint has now accepted the "doping" was "damaging and unacceptable", while the WA Premier has pointed to a $34 million investment in fixing issues at the mint.

That's the story in a nutshell.
Perth Mint CEO Jason Waters
Perth Mint CEO Jason Waters
Perth Mint CEO Jason Waters explained that it was standard for refiners, like the mint, to keep their gold as close to 99.99 per cent as possible – because any gold over that threshold wasn't paid for by the customer.

According to the ABC, "the mint's processes produced 99.996 per cent pure gold, meaning about 0.006 per cent of each bar was "giveaway", so to reduce that amount, silver was added to the mint's bars.

That wasn't a problem for most places where the mint's gold was sold – but it was for the [Shanghai Gold Exchange], which requires no more than 0.005 per cent of each bullion to be silver."

Obviously I'm late to the table here. I know gold bars are usually 99.9% gold but I had no idea that people starting adding silver to the mix.

Anyway now the London Bullion Market Association (LBMA) - an international trade association representing the London market for gold and silver bullion - announced they had commenced an "incident review process" over the matter - a review apparently welcomed by the Perth Mint.

"We value the relationship and are committed to working openly and transparently throughout the process," the Mint said in a statement issue this week.

"The Perth Mint is constantly identifying areas for improvement in the business, including addressing historical practices.

The Perth Mint is working hard to meet its obligations to the Western Australian community, the gold mining sector and our customers around the world."

According to the ABC, this means that the Mint may yet issue a recall of these golden bars; about $9 billion in all - or up to 100 tonnes which is a considerable amount if you do the maths.
Perth Mint responds to ABC wrote:The Perth Mint emphasises that there is no question about the gold purity and value of the gold bars The Perth Mint has sold to customers in China. At all times the one-kilogram bars The Perth Mint produced and sold contained at least 99.99% gold, as per their specifications. This has never been in dispute.

The Perth Mint’s one-kilogram 99.99% gold bars contain up to 0.01% of non-gold materials, including silver and copper. These purity specifications meet industry standards and align with those set by the international market authority, the London Bullion Market Association.

In September 2021, The Perth Mint was made aware that some of its one-kilogram bars did not meet the non-gold specifications of the Shanghai Gold Exchange (SGE). The SGE specifications demand that the non-gold component – that is, 0.01% of the bar or 100 parts per million (ppm) – contains no more than 50 ppm silver.

The Perth Mint immediately launched a review of its refining practices, including how it applied the industry-wide accepted process of ‘doping’ or ‘alloying’ its one-kilogram bars.

Due to the nature of the refining process, there are varying amounts of extra gold above 99.99% in each bar. This is known in the industry as the gold give-away because the customer does not pay for this extra gold. It is gold refining industry practice to minimise the gold give-away without affecting the purity minimum of 99.99%. Minimising is done through ‘doping’ or ‘alloying’ by ensuring sufficient volumes of non-gold elements. This practice does not impact the 99.99% purity of the gold that the customer pays for.

As part of The Perth Mint’s review of refining practices, new processes were implemented to ensure that one-kilogram bars would have on average minimum gold purity of 99.996%, compared with the industry standard of approximately 99.992%. As a result of this new practice, which came into effect in December 2021, the maximum non-gold component in a one-kilogram bar is 0.004% - which adheres to the SGE’s non-gold specification standards.

The Perth Mint is working with its customers and other stakeholders to assure them of our commitment to quality and compliance with all relevant laws and regulations.

The Four Corners program also questioned the checks The Perth Mint makes in relation to retail customers and re-examined historical customer relationships and non-compliance issues.

The Perth Mint is not able to discuss existing or potential customers. Section 74 of the Gold Corporation Act 1987 precludes us from doing so.

The Perth Mint treats all compliance obligations, including in relation to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), with utmost seriousness and is continually identifying areas for improvement.

The Perth Mint is a complex business operating under a mix of state, federal and international laws. We have acknowledged there have been shortcomings in the past that led to some non-compliance with relevant laws.
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Re: Perth Mint Replies to ABC's Allegations of Gold Doping

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