After the Bureau of Indian Standards (BIS) took steps to regulate the gold manufacturing business in India, by making it
mandatory for gold dore refiners to get BIS certificate, the bullion industry has begun inculcating the best business practices for sourcing of dore or unrefined gold.
Rahul Gupta, of the Bullion Federation of India (BFI), a body of India's largest traders, said over phone, "India should now take steps to follow OECD guidelines on sourcing of gold to ensure that conflict gold doesn't enter India." He was speaking from Paris, where he was representing some of India's largest bullion traders at the Organisation for Economic Co-operation and Development (OECD) Mineral Forum held in that city.
The Diamond processing industry world had taken steps to stay away from blood diamonds two decades ago and started following the Kimberly process. BFI will also make representations to commerce ministry.
Conflict gold is mined for financing armed forces or for illegal purposes. Largely, such gold is produced in African countries. Several European refiners have already adopted OECD guidelines which specify norms to be followed such as vetting suppliers and mines and thoroughly checking their KYC to ensure conflict gold is not supplied.
In 2013 the OECD came out with an upgraded version of its due-diligence guidelines in this area. OECD defines gold dore as "newly-mined gold metal alloy, which after smelting to a high concentration, normally yields 85-90 per cent purity'. This dore has to be finally sent to refinery for conversion into commercial quality gold bars.
According to BFI, "There was lack of awareness among traders and regulators on the meaning of these guidelines. The OECD has stated its intention to work closely with the government and raise awareness. The market is also changing, with more than 35 per cent of domestic supplies now coming through dore. However, small refiners are finding it difficult to source gold efficiently. Some are sourcing from alluvial operations, which domestic refiners now fear may have been illegal mined."
Dore imports have been hovering at 150-200 tonnes during the past two years. Thirty per cent of this is said to come from small-scale miners. BFI seeks to to ensure that the Indian government works with OECD and asks refiners to follow its norms to ensure conflict gold is not imported.
The BFI has agreed to send delegates from India along with officials from the regulatory body, to get trained on these guidelines so that the implementation process is smooth. Twenty of India's gold refineries are members of the Federation.
