Spotlight on the South African Market
Chapter 4 - Recycling and Refining
- Despite mining gold since 1886, pure gold refining only started 50 years later.
- Much of the refining of gold mine supply takes place at the Rand Refinery, the region’s only LBMA Good Delivery operation.
- There are a range of licensed refiners vying for gold recycling that is notably smaller in comparison to the primary sector.
Even though the first discovery of gold in the region is said to have been in 1852 on Paardekraal farm, Krugersdorp and the prospecting of the gold- bearing reefs centred in what is today known as Johannesburg from 1886, it was only in 1922 that South Africa started to refine gold from low-quality ingots (doré) to the benchmark standard of the time. Previously, Johnson Matthey and Rothschilds further refined gold in the UK they received from South Africa. As indicated in the mining chapter, primary gold production amounted to around 93t in 2022, ranking the country 13th globally.
Secondary refining in South Africa is far more modest, which Metals Focus estimate at around 10-12% of primary supply. Secondary supply is far more diverse than the primary sector, with scrap gold sourced from various processes, including jewellery, industrial products, dental items, and coins.
Primary Metal Refining
For much of the past 100 years, gold mined in South Africa has been refined by a single refining and smelting complex, the Rand Refinery based in Germiston. The company treats both doré and low grade mine by- products. This single-site operation also includes coin and bar production, that encapsulates the Krugerrand gold bullion coin programme (which is discussed in Chapter 5). It is the region’s only LBMA-approved gold refiner.
Established by the South African Chamber of Mines (now the Mineral Council) in 1920, its shareholding structure consists of the country’s largest gold mining companies: AngloGold Ashanti (42.41%), Sibanye Gold (33.15%), DRDGold (11.30%), Harmony Gold Mining (10.38%) and Gold Fields Operations (2.76%). In addition, many mining companies that produce gold as a by-product (such as the PGM mining companies) would contract with the Rand Refinery to produce LBMA-accredited gold bars.
Sourcing doré, be this from domestic or elsewhere on the continent, follows the same long-standing KYC (Know Your Customer) and KYP (Know Your Product) standards as are observed in other international gold markets. In the context of the Rand Refinery, adherence to key standards includes:
- LBMA Responsible Gold Guidance (and also the Responsible Silver Guidance where applicable);
- OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas;
- US Dodd-Frank Act.
South African Gold Recycling
Source: Metals Focus
Secondary Metal Recycling
The feedstock for secondary gold is diverse. It can range from low-grade mine material, such as slag and other mine process waste streams, to recycling generated from the manufacturing of jewellery, coins, dentistry, industrial products, as well as jewellery sold back by consumers. In addition, unsold jewellery, returned by manufacturers in South Africa or by a South African-based retailer, gold recovered from end-of-life consumer electronics and industrial products and the dental sector all form part of the recycling landscape. For Metals Focus supply and demand models, we do, however, limit the definition of recycled gold to capture metals recovered from fabricated products.
By its very nature, estimating the volume of recycled gold in any market can be difficult. However, Metals Focus’ latest estimates suggest this could reach around 10t in 2023 in South Africa, reflecting the jump in Rand gold prices to new highs, as well as the uncertain economic backdrop, which is likely to see a jump in distress selling by the public.
Over the past ten years, the South African Precious Metals and Diamond Regulator has issued around 182 refining licences. Within South Africa, more than 80% of refining companies are based in Gauteng, with the North West Province following in the distance with around 5%. The issuance of refining licences aligns with the country’s objectives to monitor the processing and manufacturing of precious metals and related products while maintaining control and governance to avoid unlawful trading, tax evasion and money laundering.
Due to the structure of the Precious Metals Act, many companies that hold refining licences will not be directly involved in refining secondary material as a core business. Instead, they will hold this licence to allow for processing material into an intermediate product or as part of the refining of material within a broader fabrication objective. Many licensee holders will also have a beneficiation licence. Consequently, the refining capacity, technology and structure are aimed mainly at serving the needs of the operation to process metal for their own further use, or for processing at the mine site to an intermediate product that will be further refined.
In essence, the secondary recycling market in South Africa can be segmented into three tiers. Given its size and global reach, the Rand Refinery stands apart from other recyclers and refiners in South Africa, although recycling accounts for an extremely small share of its overall feedstock. There is a second/mid-tier of refiners which includes the likes of Metal Concentrators which runs a plant in the OR Tambo International Airport Special Economic Zone (ORTIA SEZ). This is one of the first SEZs linked to a port of entry that formed part of the government’s SEZ programme in the early 2000s. The aim of the SEZs is to support local beneficiation of precious metals that are exported via air freight, through cashflow benefits on import VAT, savings on import duties and corporate income tax incentives.
Refining Licences Approved Since 2008
Source: South African Precious Metal and Diamond Regulator