South African gold shipments to London have been cut off
A South African refinery has stopped shipping gold to London because of a lack of commercial flights, adding to the disruption that’s upending the physical bullion market.
South Africa’s Rand Refinery Ltd., the continent’s only gold refiner, said it’s exploring back-up plans and alternative measures to be able to meet its delivery commitments to the London gold market.
“The supply from the established mines on the African continent to the refinery is currently disrupted,” said Chief Executive Officer Praveen Baijnath. “We are working hard with global logistics service providers to ensure our inbound and outbound commitments can be achieved.”
He didn’t specify how much gold could be affected. Still, it’s another example of how the supply chain — which runs from deep African mines to refineries and storage vaults — is being upended by the coronavirus. Earlier this week, refineries in Switzerland also announced they would temporarily close.
In one sign of how things have slowed down, shipping Russian gold overseas can now take about a week instead of a day, said Alexey Zaytsev, head of commodities & funding products at Otkritie bank.
The Rand Refinery is running at reduced capacity during a national lockdown, even though the company was exempted from restrictions, said Baijnath.
He said it’s important to keep some processing going because selling gold is an important source of foreign exchange revenue. The facility refines gold for companies including AngloGold Ashanti Ltd. and Gold Fields Ltd., which operate mines throughout Africa.
“A complete shutdown of the refinery would have had a domino effect on the production on the continent,” he said. “Moreover, stockpiling of mined gold on the surface would have heightened security risk for any mine.”
(By Felix Njini)