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Rand Refinery has been at the heart of South Africa’s gold industry for nearly a century. It is updating its processes and structures to ensure it stays at the forefront of the global market into the future. Ruari McCallion spoke to CEO Howard Craig.


Rand Refinery FEATURE


old is known as a ‘safe haven’ in times of economic uncertainty, so it is no surprise to see its price reaching record cash highs in the current climate. But Howard Craig, CEO of Rand Refinery, has no hesitation in putting the numbers into historical context. “The current price is not a record high in real terms,” he said. The price in early July was around $1200; the price in 1981, $599, is equivalent to $1417, inflation-adjusted. While gold is, technically, a commodity, it doesn’t behave like it, as Craig explained. “Gold is the world’s money – it has applications against every currency on Earth. We have had an extensive ‘bull run’ over the past 10 years but the price is not all about supply and demand – it is a complex mechanism.” Bank failures, low or negative real interest rates and factors such as war and broader economic crises all affect the price of gold. It is in reasonably plentiful supply, so the price should go down – but the additional influences produce the opposite effect. One of the attractions is that it has monetary value all over the world, as Craig pointed out. Most people prefer to keep their wealth in the form of banknotes, which are lighter and easier to carry, but the easiest way to transport gold is in the form

of Krugerrands, which is a legal currency – which is one of Rand Refinery’s significant product lines providing absolute product surety. “The gold that arrives at our refinery is already at 85-90 per cent purity. We refine it to 99.99 per cent – essentially 24 carat. We may then alloy it down for Krugerrands, for example, by adding copper and silver,” he said. “We make large and small bars, coins and we’re starting to make metal rings, as well.” Once upon a time, ingots and Krugerrands accounted for pretty much all of Rand’s output but the market has moved and Rand is moving with it. “We are moving ourselves up the value chain,” said Craig. “Institutional customers want their gold in coins and big bars; other customers want smaller bars, coins and other products.” Rand Refinery was established in Germiston, near Johannesburg, in 1920 by the South African Chamber of Mines as the sole authorised refiner of gold. It is now majority-owned by Anglogold Ashanti. Rand Refinery is not only London Bullion Market Association (LBMA) accredited, but also has the prestigious professional accolade of being an LBMA worldwide refinery Referee . While there are, now, other smaller refineries in South Africa, Rand remains not


Rand Refinery FEATURE

only the country’s leading refinery, it is the largest integrated single site refinery-smelter complex in the world. Over its existence, it has refined one-third of the gold that has ever been mined. It works with the Miller process and, more recently, with an electrowinning process. The sources of its raw materials have changed, as well. For much of its existence, its primary suppliers were the goldfields around Johannesburg; these days, scrap – including industrial and electronic scrap, such as computers and electrical equipment – also finds its way to Rand Refinery. It is the scrap sources that led to the installation of the smelter. “We source precious-metal bearing wastes, which have high precious metal content, from all over the world. Altogether, we receive 55 different types of waste products, and we can’t put them directly into the refinery,” he said. “The refinery is still producing in volume for bigger gold and silver output. This year, for example, will see around 400 tonnes going through the refinery – but the smelter will process something like 4000 tonnes of low-grade waste material. Like many other concerns, we are focusing on recycling and we believe we can grow the smelter business, going forward.” Perhaps strangely, however, Craig maintains that refining is only one of a number of functions that Rand undertakes. Logistics, fabrication and financial activities are at least as important. “We have a big logistics division,” he said. “We bring in gold from across Africa and that has major security implications. We use third-party contractors but we manage it very closely. Fabrication is part of our core business and it is about adding value.” The company has longterm and loyal relationships with its suppliers but while refining and fabrication may provide the bulk of turnover, the impression is that it is

the financial segment that determines the level of profitability. “We have a big treasury function,” he continued. “We buy gold from the mines and immediately sell it on through back to back transactions. We never actually own the gold we process; we handle it on others’ behalf. We charge refining fees and agent premiums. We manage the treasury function to ensure that customer requirements are met and are delivered within the specific time frame as well as each product being of the highest quality. Rand Refinery is, effectively, both a manufacturing and banking concern – you can’t separate the two functions.” The fact that Rand does not hold gold in its own name means that it is less vulnerable to swings in the market but that doesn’t mean that it can be relaxed about costs and efficiencies. It is in competition with refineries in Europe and the Middle East and other parts of the world; it has to run a tight ship. Part of doing so is ensuring that the right skills are in place. “We have a particular focus on training, especially in developing potential leaders,” said Craig. The company has a range of disciplines, from artisan trades to chemists and assayers. “Our employee standards have to be of the highest grade. Our recruitment principles are based on an approved employee equity policy. The aim is to establish each employee’s core skills and to distinguish and identify those with potential to further development. We provide them with higher training in order to progress.” The Ekhurleni Jewellery Project launch provides state-of-the-art jewellery training and manufacturing facilities. Rand Refinery was awarded ISO and OHSAS certification by international standards auditing body DQS, with the best results ever recorded. END

Gold is the world’s money – it has applications against every currency on Eart


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