Gold refiner stops taking scrap delivery to melt down in US

Metalor Technologies SA, one of the world’s top gold refiners, paused accepting new shipments of metal due to an inventory backlog caused by severe US weather and an influx of scrap materials driven by record-breaking prices.

The Swiss company has also paused advance payments to clients as it struggles to deal with the surge in business, according to a Jan. 27 letter seen by Bloomberg News. “To navigate this environment responsibly, Metalor is implementing an immediate pause on outgoing advances,” according to the letter, which was sent by the company’s Americas refining business group to clients.

Metalor declined to comment on the letter. 

Gold prices have surged more than 20% this month and this week reached fresh records above $5,000 an ounce. Soaring prices are adding financial strain across the bullion supply chain as companies need more working capital to finance physical metal flows. The rally has also encouraged selling of gold jewelry and coins, which is finding its way to refiners such as Metalor for processing into ingots.

Large precious metals refiners often act as a source of financing for small and medium-sized dealers, offering advanced payment for incoming raw materials.

“Our current inventory backlog is primarily the result of production constraints at our North Attleboro refinery,” the company said in an emailed statement Thursday, referring to its Massachusetts plant.

A severe snowstorm damaged part of the facility, forcing Metalor to slow down part of its refining lines just as high volumes of incoming scrap significantly increased the amount of unprocessed material at the site.

“To address this, we have made the decision to temporarily pause new shipments for approximately 5-10 business days,” said the company, which is owned by Japan’s Tanaka Precious Metal Group Co. “Once these activities are completed, we will resume normal service levels for all customers.”

(By Yvonne Yue Li)