Monday, July 15, 2024
HomeWorldChina's Shanghai Gold Exchange says bullion from Australia's Perth Mint was 'doped' or substandard

China’s Shanghai Gold Exchange says bullion from Australia’s Perth Mint was ‘doped’ or substandard

The Western Australia government-owned mint started 'doping' its gold in 2018, and several reports have emerged detailing how it hid evidence from its biggest client China

A leaked internal assessment on Monday revealed that the renowned Perth Mint might be forced to repatriate $9 billion worth of gold bars after masking the sale of diluted or ‘doped’ gold bullion to China. 

The Western Australia government-owned mint started ‘doping’ its gold in 2018, and several reports have emerged detailing how it hid evidence from its biggest client China in an effort to preserve its credibility. The ABC Four Corners segment suggested on Monday that up to 100 tonnes of gold supplied to the Shanghai Gold Exchange (SGE) might not have met Shanghai’s exact purity criteria for silver content, even if the gold remained above general industry norms.

According to the reports, this is the biggest scandal ever to hit the Perth Mint. One of Perth’s biggest tourist destinations, the mint is recognized for manufacturing commemorative coins to celebrate events ranging from royal weddings to a new James Bond movie. It is also the largest processor of newly found gold in the world.

The mint sold only $20.3 billion worth of gold last year. It is the only mint on the entire globe that is supported by the government. Yet, a slew of scandals have recently afflicted the 124-year-old organization, formally called Gold Corporation. Up until March 2021, WA Premier Mark McGowan was in charge of the mint as a ministry.

Although not illegal, gold doping is a technique that is relatively tolerated in the business. Reports mention that it poses a great risk to refiners since it degrades the purity of bullion by introducing impurities like silver or copper.

While it is legal to include trace quantities of these metals in coins, Perth Mint’s strategy to maintain coins with a purity level of 99.99 percent leaves very little room for mistakes. The mint started doping its gold in 2018 in an effort to save costs, anticipating savings of up to $620,000 per year, or a minuscule portion of its annual sales.

This plan to save costs would, within two years, place the mint at the center of what might end up being one of the largest gold scandals in Australian history. According to the investigation, refinery personnel raised concerns about possible silver and copper levels that may have violated SGE limits only a few months after the doping started. Staff at the refinery nevertheless kept gold doping.

In September 2021, the doping scheme started to unravel. Two bars allegedly violated Shanghai Gold Exchange’s requirements and included an excessive amount of silver, according to the exchange. On the same day the complaint was received, an internal inquiry was requested. The inquiry made it quite obvious how much was at stake if the SGE went public.

“If SGE – Gold Corporation’s pre-eminent exchange client – had made public that they had issues with Gold Corporation bars … the impact of negative public statements on the business could be very significant,” the internal report said. “Based on average understandings of volumes, it was possible for up to 100 tonnes of stock to be recalled from the Shanghai Gold Exchange for replacement,” the report added.

One of the two gold bars that were the subject of the client complaint had been red-flagged by the refinery, according to a subsequent inspection by Perth Mint. The bar’s assay, or purity test, showed up above the critical 99.999% purity but fell short of SGE’s exacting criteria for silver.

Yet, as per the reports, it wasn’t just one faulty batch, rather, the majority of the gold bars produced throughout the course of the three-year doping scheme might have failed to meet Shanghai requirements. Importantly, the mint kept this knowledge from China.

According to the report, guidance from the then-CEO, Richard Hayes, was requested during a meeting on September 30, 2021, on whether both the failed and complying tests should be transferred to Shanghai. “CEO confirmed only the compliant assay would be provided to the customer, with the broader burden of proof to be left with the SGE to prove non-compliance,” the report alleges.

Notably, the mint stopped its gold doping program the moment the failed assay was detected. Perth Mint confirmed receiving a client complaint over a limited number of 1 kg gold bars, but said that the customer “did not return the bars… and consequently, the customer’s concerns could not be verified” owing to Chinese government prohibitions on shipping gold from China.

It claimed that since late 2021, its refining processes have improved and that it was now dedicated to greater purity standards than the industry norm. Further, the financial crime authority AUSTRAC is looking into Perth Mint’s adherence to the country’s money laundering regulations, according to the same Four Corners report.

Join OpIndia's official WhatsApp channel

  Support Us  

Whether NDTV or 'The Wire', they never have to worry about funds. In name of saving democracy, they get money from various sources. We need your support to fight them. Please contribute whatever you can afford

Searched termsAustralia china
OpIndia Staff
OpIndia Staff
Staff reporter at OpIndia

Related Articles

Trending now

Recently Popular

- Advertisement -