Indian gold importers can heave a sigh of relief. Dubai, one of the major sources from where India buys gold, has assured that Indian authorities it will not export “conflict gold” to India. Conflict gold is gold illegally mined by rebel outfits in Africa and sold clandestinely to buyers across the globe, thus enabling them to finance their wars against establishments.
Confirming the development, Pankaj Parekh, vice-chairman, Gem and Jewellery Export Promotion Council (GJEPC), said: ” Gautam Sashittal, chief operating officer of Dubai Multi Commodities Centre Authority (DMCC), has informed us about this development at the recently-concluded Dubai Precious Metals Conference. The country has come up with norms to ensure that only “responsible gold” is exported to other nations.”
The move comes at a time when members of Organisation for Economic Co-operation and Development (OECD), one of the largest buyers of Indian jewellery, have alleged that Indian jewellers are using conflict gold in their operations. There are 34 OECD countries which include the US, France, Germany, Italy and the United Kingdom. Nearly $70 billion worth of gold was traded through Dubai during 2012. India imports nearly 200 ton of gold from Dubai.
In 2012, India imported 864 ton of gold for meeting its domestic consumption and for exporting to the world market in value-added forms. Parekh said conflict gold is the greatest generator of revenue for armed groups operating and committing mass atrocities in eastern parts of Congo. In 15 major mines and other smaller mines across the region, children work in lifethreatening conditions to extract gold.
Local smugglers purchase the metal and work with armed groups to transport and trade it in eastern Congo. The consignment is then handed over to a small network of smugglers operating in neighbouring countries of Uganda and Burundi and later to other parts of the world. Industry officials say that conflict gold is allegedly sold to cash-for-gold dealers in Dubai.
These dealers sell such gold to refineries to be melted down and sold to investors and banks. Rohit Pitale, manager (India and Middle East), Johnson Mathey & PMM Refining, said: “The increase in the import duty on gold bars to 6 per cent may be one of the reasons why this sort of gold was entering into India. Gold dores, which have 95 per cent gold, attract an import duty of 2 per cent. They have become popular these days and increased the chances of conflict gold entering into India. The government should keep a close vigil on the movement of this sort of gold.”
Indian jewellers are also concerned about the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act in the US that is putting pressure on conflict-free gold. “If exporters do not meet the standard, the orders will get cancelled. The US constitutes nearly 60 per cent of our jewellery exports,” Parekh added. GJEPC has requested the Reserve Bank to permit gold only from refineries accredited to the London Bullion Market Association.
Source: Bullion Bulletin