Ghana Gold – This week’s Blog Guest is Stephen Yeboah, who is a policy analyst, researcher and strategic communicator on energy, climate, agriculture, finance and commodities in Africa. Stephen has been selected twice in a row as LinkedIn Top Voice on ‘Economy and Finance’ and Philanthropy and Global Development for 2017 and 2018 respectively. Stephen is the CEO of Commodity Monitor, a Ghanaian-based commodity trading, logistics and research company, which is leading the drive towards mercury-free mining in Ghana and other West African countries.
1. We always start with the guest giving a quick rundown of their background, so let’s start from the beginning so people get so see where you started along this path?
I have had keen interest in the development status of Africa. What’s accounting for Africa’s inability to grow and transform? Growing up in Ghana, this question has underpinned most of my engagements so far. Thus, my background in international policy and development. Africa’s progress in hinged on how it gets its policies right. This has been the foundation of all advanced economies.
2. Can you tell us about the work you did for the Africa Progress Panel with former UN Secretary-General Mr. Kofi Annan?
The Africa Progress Panelcame out of the idea of the late former UN Secretary-General Kofi Annan. The Panel’s work aimed to leverage policy change through unique combination of cutting-edge analysis, advocacy and diplomacy. It was a unique opportunity to work for a fellow Ghanaian Kofi Annan and his status in global development made it special. I worked as a researcher. I was an honour as it offered me the chance to work towards advancing the progress of the African continent. The panel’s work unearthed key issues from the natural resources sector to agriculture to energy. The impact was phenomenal.
We shined the light on key (mis)governance issues of Africa’s extractive sector. Why is Africa poor despite its abundant resources? I was part of the team that probed the causatives of this problem. And worked at finding solutions through actors’ engagement, including dialogue with African governments. Today, major policy changes in the natural resources sector became possible of our work at the Africa Progress Panel. Key energy agenda of African institutions has come about as a result of the Panel’s work on energy and climate.
3. I notice from your online persona that you are both well read and have written and many articles and studies on the commodity sector in Africa, which is your best published piece to date that you’d like to get people to read from this blog post?
This is a very good observation. One cannot be quiet and unconcerned in the midst of the challenges and opportunities in African continent. My motivation was to contribute to discourse. What are the issues and what could be done? This explains my over 100 articles, blogs and papers on Africa’s natural resources, energy, agriculture and finance, among others. And it also explains why I share a lot of contents on social media platforms, especially LinkedIn, where I have more than 600,000 followers.
5. Commodity Monitor Limited which is a tech-based business into direct commodity trading and economic and political research with a focus clearly on Africa, the LinkedIn page has over 4,500 followers and puts out some great content, when did you start this side of your business?
The production, processing, and trading of commodities through global value chains connect actors from developed, developing, and emerging countries alike. Commodities generate huge economic gains. But they are not without challenges. Often, developing countries particularly those in Africa grapple with maximising the economic and social potential of commodities.
This is the basis for Commodity Monitor’s operations. Commodity Monitor, registered under Ghana’s company law, is into the trading, logistics and research of the commodity value chain. We’re into both soft and hard commodities. Commodity Monitor was founded in 2017 by young Ghanaians who are passionate about driving business development using commodities. Our reputation is everything. With Switzerland and Czech Republic experiences, we are bringing highly reputable commodity trading business to Ghana and the world at large.
6. Beyond the website you have also gotten into the equipment supply business to the Ghanaian miners, tell us more about that business?
As it’s widely known, mining is critical to the survival of numerous economies, particularly those in Africa. Ghana, where we have started our operations, is a case in point. Ghana is now Africa’s leading gold producer. Total direct domestic fiscal receipts attributable to the mining and quarrying sector improved from GH₵ 2.36 billion (US$411 million) in 2018 to GH₵ 4.02 billion (US$ 731 million) in 2019. These contributions have been made by small, medium and large scale mining. But where does the big problem lie? It’s the artisanal and small scale mining (ASM) sector. For many years, the ASM sector has suffered negative conceptualisation as a misnomer to mineral-driven development by diverse actors in the country. But on the flipside, ASM sector contributes close to 40% of gold output in Ghana and employs millions of people. So, at Commodity Monitor, we have started the deployment of efficient, sustainable mineral processing technology. We’ve to look at the brighter side.
Today, mining and processing activities are carried out by manual means or through application of locally improvised but inefficient equipment and tools. As a result, the activities have become synonymous to negative environmental impacts, inefficiency, lack of adherence to health and safety standards, and activities that leverage negative social impacts. The uncontrolled use and exposure to mercury by artisanal, small and medium scale miners is a major but largely neglected global health problem – putting miners and their communities at enormous health risks.
This is where we come in. The technology we are deploying will reach a majority of small, medium and large scale miners, even in the remotest mining areas. This is to ensure a triple win: environmentally-friendly mining, high productivity and enhanced livelihoods. We want to send a clear message that “leveraging green mining in Ghana’s mining sector is urgent and possible”. The current mining practice, which promotes the use of excessive mercury, has recovery rate of about 30-35%. Our technology boasts of 90% and more recovery rate. This is a big win for artisanal and small scale miners. I am very passionate about this because we have more than 1 million of the country’s youth engaged in ASM. A transformation of this ASM sector means a lot for the country’s progress.
8. The NGO’s working in Africa along side the small and alluvial mining communities are looking to put in processing hubs, places like Burkina Faso where Planet Gold are now set up, is that helpful to the local communities or is it taking something away? I’d like your impression of this arrangement.
The diversity of actors is critical in the mining sector. The idea of processing hubs has a lot of potential. But in my experience, I have come to understand that one needs to learn and appreciate the behaviour of artisanal and small scale mining. Ghana in the early 1990s had established centralized processing centers in Tarkwa in Western Ghana and Bolgatanga in Northern Ghana. They failed to work. Why? There are lessons to learn.
I believe that finance and technology must go together to make ASM work for rural communities. PlanetGold’s intervention in the ASM sector is timely and critical. At Commodity Monitor, we will use our technology to make sure it works for the miners. In Ghana, a lot of NGOs are working to manage the activities of artisanal and small scale miners. What is missing is to tackle head on the real issues: missing technological needs of miners. This is where we are looking at. Each miner deserves an improve technology that will boost his operations and shift him/her away from the use of dangerous chemicals like mercury.
9. As people who have been on the ground or know Ghana well understand the locally traded gold is efficient in pricing (discounts seen on LinkedIn are not real people wake up), what we have seen/heard that the Ghana government has put in changes to policy for exporters to prove source of funds which has been helpful to eradicate the local black-market trade that occurs between Ghana and Dubai but we hear the banks have taken advantage of that by giving wider pricing on Ghana Cedi (the local currency), what can you tell us about this and what can be done to help Ghana in their exports of gold?
To me, it’s all about the ‘implementation’ of the regulations in the gold sector. The laws in Ghana clearly captures what ought to be done in the gold trading regime. We have experienced over the past years the proliferation of scoundrels who pose as gold traders. I have witnessed investors looking thousands and millions of dollars because of bad gold trading deal. The chain is interconnected. If you trade gold, you have to be interested in gold extraction. The banks in Ghana have failed to latch on to this opportunity of buying gold from artisanal and small scale miners. They may not understand the benefits but they’re more so overly focused on risks. We need to change this.
What about using our mercury-free mineral processing technology as a way to access ‘green’ gold from artisanal and small scale miners. We’re working to roll out a plan of working with investors who will invest in machines and get a secured, known sources of clean gold. This is the chain that will provide a win-win situation. I will always maintain again that gold buyers have to be realistic! Gold miners know the international gold price. There is nothing like having a 30% discount or cheaper gold.
10. What is your position on the recent announcement that the Ghanaian government are planning to list in London the Gold royalties from the country?
For more than a century of mining, rural communities that host mining operations have not developed. They lack basic infrastructure and bear the brunt of water, forest and land destruction. Any government intervention must aim at improving the lots of the people. The government is proposing to sell almost 76 per cent of its future receipts from gold royalties. Will it be beneficial for the country and particularly the mining communities who have not seen any decent development? In my view, the focus should be on developing a strong local economy that supports value creation. We have thousands of young people into ASM. Why are they not getting a better life? It’s because they produce inefficiently. Why not boost their operations to increase their income flows? There are critical matters that need government attention and not just the focus on royalty that accrues to the state via contributions from big mining companies.
11. With more refineries popping up across West Africa do you see a need for an oversight body that would work closely to ensure the gold refined and traded in country comes with a legitimate stamp of approval?
It’s a positive thing that more refineries are coming up across West Africa. A coordination approach of these refineries will help shape the gold value chain. Today, we are all concerned about sources of gold. The refineries should come together and work along the gold chain to know the source of their gold. Would a refinery buy gold that came from a conflict-ridden region? Adding value is what we all want to create value for Africa’s gold. But we can in addition create an environment for ‘clean’, ‘greener’ gold. We need to work together to achieve this.
12. Gold smuggling in Africa is as we all know I rife, what can be done to stem the tide of bad materials coming from illegal sources?
A collaborative approach is critical to reducing or ending illegal gold sourcing. This approach must be a bottom-up driven. Africa has its Africa Mining Vision. This strategy if it was implemented by various government could create the environment for collaboration to stop gold smuggling. Countries lose a lot from smuggling. Let’s organise the miners and offer good incentives in terms of production technology and good pricing.
13. Would you think that a working committee between the DMCC and the Ghanaian Government for the exchange of gold would be something that’s achievable to help govern the industry better?
Dubai has emerged as a critical destination of commodities from the African region, particularly gold. An effective gold trading regime requires a strong working partnership between different jurisdictions, especially the source and destination of gold. Let’s not think about even forming a working committee. We have to think about forging a strong private sector participation. The private sector is at the heart of a successful collaboration between DMCC and the Ghanaian Government. I am aware of private entities that are working on a blockchain technology to drive exchange of gold. We have to get the governance parameters right.
14. Where can people find you and your business online to connect?
Golden Girl Svetoslava Stefanova aka Sunny who is the Marketing Manager and Business Development officer at Kanz Mining Ltd, a Gold mining company registered in the United Republic of Tanzania, focused on mining with collaboration of the small-scale miners in the area. Sunny has been on the ground since 2016 and have seen a lot when it comes to gold mining and gold trading in Africa.
Welcome to the Blog Q&A Sunny, can you give us a bit about your background and where you come from?
Hello Spencer, thanks for inviting me. I am originally from Bulgaria and I moved to Tanzania 4 years ago back in 2017.
When did you first arrive in Tanzania?
I came with my husband in December 2016, following a gold trading deal with the dreams of finding cheaper gold from Africa
How did you get involved in the mining business?
Once we stepped on the ground and investigated the reality, we realized that you can never find cheap gold that you can export and make good profits from a single deal. We came to know that the only cheap gold that you can get is the one that you produce yourself. We decided to invest in plants, partner with the artisanal miners in the area and improve their working model and working conditions, facilitating them with machinery, capital and knowledge and getting gold tailings from them in order to produce gold. Later on, we started to develop our own mines.
Why do you think there are a lot less women involved in mining and how can the industry do more to bring in new female talent?
Well, mining is deemed a man’s business. You live in remote areas where sometimes there isn’t any good access to normal healthcare, education, and city life. Also, Gold Mining is not just a business, it’s an industry. An industrialist needs to create an entirely new industry or head operations of an industry with a larger reach. Mining involves a lot of risk and big responsibilities that men seem to be able to handle better. However, I know amazing examples of mine and plant owners in Tanzania that are females, and they manage it very well much better than men. I think women can be great in operations, planning, the financial part, marketing, fundraising but it can be very challenging for them – especially foreign women, to live in a remote area with so many men around, it could be considered dangerous.
A woman is not suitable for artisanal mining too as this is a very high-risk job. They normally help as caretakers in the mining areas and crush stones in order to process them into tailings but I haven’t seen a female that is going down in the mining shafts. Women should not be a mining laborer, they need to get a proper education in order to get office jobs, related to mining or to open their own mines and leaching plants. You cannot even get pregnant and work during pregnancy in a mining area as a foreigner, neither you can deliver and have a baby there, there are no modern hospitals, which means that having a child will put you out of the mining site for minimum 2 years.
Tell us about the back story of Kanz Mining?
Kanz Mining Ltd was established in 2017 with the concept of working with Artisanal and Small-Scale Miners (ASM) by providing them necessary resources and technology to improve mining efficiency. Tanzanian ASM activities are regulated mainly by the Mining Acts. Mining Act allows ASM miners to obtain Primary Mining Licenses (PMLs), granted for Seven years providing the miner to mine an area of up to 10 hectares. Kanz Mining Limited ventures with this ASM and partners with them to work on the PMLs by providing capital, technology, machinery, and other necessary tools and equipment to them and obtain mined ore from the site to process for extracting Gold. In the last years we managed to construct 2 fully operational leaching plants and we are targeting further development in 2021.
What is the local gold trade like in terms of volumes and prices?
Volume of local gold trade depends on the area where you are working. Some regions give 100s of Kgs of Gold every week (only from small-scale mining) – The Gold Traders collect them from the miners and then export them outside Tanzania.
As for prices – the traders when buying from Miners get a discount of approximately 2 to 2.5% on the current gold price. Please note that even the small-scale miners have access to the Gold rates by using Internet through their smart phones and in addition to that they can get the current daily rate from Gold Markets (regulated by the government).
In terms of buying/sourcing gold locally in Tanzania
The Government has established Gold Trade markets in every mining region in Tanzania. A lot of traders are available in these markets to buy gold, so the miners simply take their gold there and sells to these traders. Each market has an office of the Ministry of Mining, which helps to calculate and pay the Royalty due to the government against each consignment of gold being traded.
Any recent developments in Tanzania you can share with us?
The government has successfully regularized the gold trade markets and now its main concentration is to develop Gold Refineries in Tanzania so they can refine the raw gold and export Pure Gold bars.
What is Kanz Mining working on now?
Kanz Mining has acquired couple of more PMLs and is working on verifying its deposits before planning the mining operation and processing of Gold Ore.
Currently we are also working on establishing one more processing plant in an area of Mwanza region. Here we have signed agreement with PML owners who are mining and digging material but don’t have big facility to process the ore, so we entered a JV with them to process their ore and share the extracted gold with them.
Is Kanz Mining looking for business partners, funding etc. at this stage?
Kanz Mining is always looking for opportunity to expand its operation and acquire and mine more PMLs so definitely there is an option to add on business partner and investors.
This week’s Blog Q&A has a very distinguished guest, please allow me to introduce Maryam Al Hashmi Director, The UAE Kimberly Process and Director of Precious Metals and Stones (Dubai Multi Commodities Centre) at DMCC (Dubai Multi Commodities Centre)
1. Dubai is well known as a gold refining hub for Africa, what plans are there to tie up with African nations such as Ghana to improve the trade flow and tighten controls of gold movements and payments?
Dubai’s strategic geographic location between gold producing and consuming nations, and its close proximity to the African continent, means we have a competitive advantage. For its part, DMCC is a world leading Free Zone established to enable and facilitate commodity trade flows through Dubai. We offer world class infrastructure and state-of-the-art facilities alongside a wide range of products and services to enable businesses to trade with confidence. We also have a robust regulatory framework in place in line with international standards, such as the OECD Guidance, to ensure the responsible sourcing, refining and trading of gold. As a result, we have successfully created one of the world’s leading physical gold markets.
The African content presents a host of opportunities across a variety of sectors – and gold is an obvious one. In fact, we already have a number of African companies registered in DMCC. We work closely with all stakeholders across the value chain to promote collaboration and partnerships and will continue to do so to highlight Dubai’s unique ecosystem for the industry.
2. Would Dubai consider better tie ups with countries like Hong Kong, Singapore & India to give the Dubai Good Delivery a push in Asia and help with transparency in trade flows?
Transparency is one of the core values at DMCC. The establishment of the Dubai Good Delivery (DGD), which created a globally accepted benchmark for the sourcing and production of gold, is testament to our commitment to transparency and traceability.
We also strongly encourage knowledge sharing and coexistence in the industry as we believe this supports confidence across the entire value chain. We already have strong ties and partnerships in the Indian and Asian markets when it comes to the gold trade and are always looking for opportunities to strengthen collaboration. Of course, we would be open to sharing best practice when it comes to setting standards to further boost trade flows.
3. Gold is accepted within Singapore exempt from tax if it meets certain criteria under The Inland Revenue Authority of Singapore (IRAS), this essentially means LBMA approved for the most part. Why has Dubai not made a move to have Dubai DGD refineries gold accepted into Singapore duty free? Has anyone contacted Enterprise Singapore or the Singapore Bullion Market to discuss this initiative?
As DMCC, we have had some initial discussions with the Singapore Bullion Market that we will be pursuing over the course of the coming period.
4. Given there are over 10 active gold refineries in Dubai, why are there only two local refineries on the DGD list and what more can be done to add to this list?
The DGD was launched in 2005 to formally acknowledge refineries that have proven to meet a high standard of business practice, responsible sourcing, governance and quality control when refining, measuring, storing and trading gold. It is continually enhanced in collaboration with relevant international bodies, industry stakeholders and market participants and in alignment with OECD Guidelines.
As with London Bullion Market Association (LBMA)’s ‘Good Delivery List’ and ‘Global Precious Metals Code’ – and the many other standards available in the US, UK and Switzerland – DGD is voluntary in nature. Companies that qualify to appear on the DGD List receive international recognition for the integrity of their business practice.
We strongly encourage every refiner to become a member as we believe this in turn positively impacts their business and the industry as a whole. We are making good progress and are confident we will have more members on the list in the coming period.
5. Can you tell us why there has been a delay in announcing the details behind the new policy on governance, sustainability and innovation of the gold industry that was recently announced?
In October 2019, the UAE Cabinet committed to developing a policy to enhance the country’s position as a global hub for gold and jewellery trade, along with initiatives and tools to support its implementation.
The policy has three main pillars – governance, sustainability and innovation – with some strategic programmes and initiatives, also including the establishment of a federal platform for gold trading and a federal database for tracking, international marketing of the gold sector, and the use of technology in the production of gold.
A policy of this nature takes time, and the federal government will make details of the policy available in due course. The steps in implementation of the initiatives are progressing and all we can say at this time is please stay focused for the announcements coming out from our leadership in the coming months.
6. Gold flows from Africa gets refined in Dubai and ultimately ends up in Switzerland (despite their claims otherwise) which is based on the global ETF demand which is where the appetite for investors seems to be these days. With the DMCC having its own Dubai Good Delivery initiative do you see an opportunity to create a Dubai based ETF contract that is based off the Shari’ah Compliant Spot Gold contract (DGSG) that would allow for gold to remain in Dubai vaulting facilities?
There is already an ETF on the Dubai Gold & Commodities Exchange (DGCX) Shari’ah Compliant Spot Gold in Saudi Arabia.
If someone is interested in launching an ETF, we would of course provide them with all the necessary infrastructure and support. Obviously, there are few players like the Saudi based ETF who are thinking in this direction and we are providing all the support from our side, hope we will have some good news in the near future.
7. The London Fix is often referenced using the LBMA AM or PM Price (formerly known as the Fix before the banks were caught for price manipulation) to settle gold transactions. Why doesn’t Dubai create a Dubai Fix for global gold settlement (I am sure many data providers would happily carry and publish that if made available)?
As DMCC, we have focused our efforts on developing world class infrastructure, products and services to enhance the trade of gold to and through Dubai, in line with international standards. A Dubai based price determination would happen when the market requires it and as previously mentioned DMCC is an enabler of trade and we will provide the required support when the market requires it.
8. The UAE accounts for approx. 14% of the global gold trade yet is marred with bad press. Do you think that more can be done within Dubai by the DMCC in the media to ensure such stories from NGO’s get coverage of both sides of the story?
Let me start by clarifying that DMCC registers companies that wish to establish operations within its Dubai-based Free Zone only, and provides the licence required to conduct commercial activity. DMCC is not a regulator, nor is it responsible for regulating commodities trade – including gold or any other precious metal – in Dubai or the six remaining emirates of the UAE.
When it comes to the gold sector, DMCC has a robust regulatory framework that includes strict responsible sourcing rules. The rules are aligned with the OECD Guidance – the international benchmark for responsible sourcing – to ensure an inclusive and compliant, conflict-free supply chain.
In the global gold industry, DMCC is currently one of the member of the OECD’s Multi Steering Group (MSG) and continues to provide inputs for matters discussed at the OECD MSG that may impact the global implementation and policy of the OECD Guidance.
In the past, DMCC has signed agreements with various leading programs within the supply chain to bring best practice and compliance to its members. For example, DMCC has signed a Memorandum of Understanding with the (RJC), a global standards-setting and certification organisation for the entire jewellery supply chain, to work cooperatively on advancing the shared objectives of improving corporate social responsibility and responsible supply chain efforts in the jewellery supply chain. Over the years, we have made significant progress and will continue to work with all the stakeholders to ensure the integrity of the industry. The gold policy that the UAE government is developing will provide strong support here.
9. There are as you know zero refineries in Dubai that have been given LBMA Good Delivery status. I have heard stories told that senior LBMA Good Delivery committee members using such reasoning as “conflict in the region” to “Dirty Gold” as their justifications as to why no Good Delivery status has been given. Do you think there is too much self-protectionism within the LBMA as a self-governing organisation run by a handful of people who have self interest in the business, especially the bullion banks?
Each institution has its own processes and criteria for accreditation. What we can confirm is that DMCC Rules for Risk Based Due Diligence in the Gold and Precious Metals Supply Chain are aligned with the globally accepted OECD Guidance and other similar international standards.
10. The recent CME Group decision to list then delist Al Etihad was a poor one on their behalf according many in the industry as well as the Executive Chairman of the DMCC Ahmed Bin Sulayem on his LinkedIn profile. Many of the industry are aware of what it takes to go through such a process and a knee jerk reaction to remove them was uncalled for especially when Al Etihad Gold had done nothing wrong and a single bank and an NGO made a complaint which in one move Al Etihad have had their approval removed in 23 days of listing. Why do you think an industry can allow and trust an exchange like COMEX if a single bank and an NGO can make such a sweeping statement and get away with these claims against the whole of Dubai on a single refinery who had clearly worked hard to get that status?
We are not in a position to comment on this case as we have no information other than what was disclosed publicly.
11. A number of industry players we talk with think the World Gold Council would be a better fit for global gold governance and oversight as they see everything from the mines through to refining of end products. They have a global presence, deep pockets and over 100 staff worldwide, not a dozen people sitting in London who rely on conferences to maintain their overheads. Would the DMCC be open to a discussion around creating a new global group in conjunction with groups such as the WGC and other groups such as the SBMA where independence can be established and assist the industry instead of the current set up where you are either in the old boys club or you’re not?
As I indicated at the outset, DMCC is always open to an inclusive approach. We believe in collaboration and knowledge sharing across the industry. Over the years, we have always cooperated with stakeholders that are motivated by upholding the integrity of the global precious metals trade – and will continue to do so. Our ultimate aim is to elevate the standards of gold trade and drive meaningful value across the entire value chain. This stands to benefit all the stakeholders – miners, refiners and traders included.
Precious Metals meets FinTech – This weeks Q&A Blog post is with Mike Greenacre, Mike’s initial career was in the geophysical exploration industry, working in Africa, US, Middle East and Asia. He began his trading and brokerage career in Switzerland, with an initial focus on steel and iron ore, before moving into precious metals trading & broking. He subsequently spent more than ten years managing the global OTC metals business at ICAP. Mike ranked in the Exchange Invest top 1000 most influential people in market structure, and in the top 20 for FinTech in 2017. Mike remains active in FinTech, Digital/Crypto innovation and Sustainable precious metals production and technology.
1. Can you give us a brief introduction about yourself?
My early days and background was initially mechanical engineering that took me into the geophysical exploration space where the natural creep of technology peeked my interest. After several years “on crew” in mid east, US, Asia I ended up on settled research geophysical work in Switzerland. A bit of American football – NFL tryouts for a couple of teams and a serious non related accident I ended up broking bullion options in Zurich, but with a global client base and some more global travel – with better hotels and expenses….I moved to London with that work, taking my young family – Swedish wife and two trilingual daughters with me. I have worked independently for myself for the last 9 years, run fintech/trading/broking companies with a focus on precious metals. More recently in technology for SME sustainable gold and have helped develop a Silver nano particle sanitiser spray with durable efficacy against Covid 19 – which is getting busy.
2. You started your career in precious metals back in the mid 90’s when it was much less sexy than it is today, what was it like back then compared to now?
I started on the options desk at Premex in ZH, although a junior I had a bit of life under my belt and some unusual life experiences to share with clients. There were just two broking companies in the space, brokerage rates were high, spreads wide and poorly marked, it was fairly simple to get trades away. I actually think there was a bit more mystique about the market, gold was low, poor derivatives, over hedging, Swiss gold scandal and the BoE pathetic sale had put gold on a low ebb. But from there, the end of Gordon Browns & Ed Balls ill-conceived sales programme which drove gold to $255 it’s been on the up and up.
3. GFI & ICAP are known as a Global Brokers of OTC markets, how did GFI and ICAP cover the precious metals markets back then so we can better understand how the markets operated in that space?
Both GFI and ICAP were and are regionally siloed companies, the gold business was replicated most of the bullion banks where we had a global footprint. It wasn’t unusual for a client interest to originate in Asia and be passed to the London then US desks following the trading day. When I started at GFI we had London, NY & Sydney and when we got ICAP going the same thing, but Sydney died off as a centre – reduced mine hedging and bank and mine mergers. That was replaced by Singapore and HK as the focus of the Asian markets, China stepping up in the metals space.
4. You moved on from the broking world with a more entrepreneurial spirit, I had first come across you back when the announcement around the RFQ for the LBMA where Autilla Ltd was one of 8 shortlisted for the project, what can you tell us where you with this project?
I started Autilla in 2013. The idea was to build an independent platform for the banks to transact OTC bullion business. The whole world is moving to tech, the bullion market still resists the trend. The issues that the market faced were too attractive for us at Autilla to not get involved in. The metal fixings were the first RFP for us, we were the only company to demonstrate working technology during the RFP processes. We got a bit dumped on by the LME, but stayed in the game. Second RFP was the LBMAi – which we won. Third was the metal custody / origin / provenance RFP. The LBMA opened a discussion they couldn’t handle, manage or settle. The market suffers now – the Swiss refiners are buying 900 tons a year of gold from a country with no gold mines and KYC/AML reputation you wouldn’t hold up as world leading. It’s an issue that threatens the terminal market for bullion globally. We yet again demonstrated a working fully functional Mine to client, origin – provenance – identification chain of custody solution that worked on blockchain and would be relatively simple to integrate to current operations. We had a lot of input and support from miners, couriers, vaulters, refiners and interestingly the non-vaulting banks. The LBMA decided on an RFP that to my mind killed on the enterprise in the market that we and one or two others had started. It’s still undecided – if you wanted to intentionally kill the initiative you couldn’t have done a better job. Get some people to opine on tech they don’t understand.
5. There are a number of products out there in the market making bold claims of blockchain providing provenance, where do you think a number of them fall down from your perspective?
Non of them go back far enough in the supply chain, they either take the mine or refiners production at face value. To my mind that’s where the issues are most likely to occur. Bar identification is an obsession to “allow the re-entry of bars into the LBMA network” – simplify the process – treat all external metal as scrap and have increased due diligence at refineries to allow it to re enter the market. Other than localised VAT scams the issue is seldom the metal, its the funds/assets that were swapped one way or another for it. It looks like we’ll end up with some disparate tech solutions to various parts of the supply chain. People obsess about 50 cents here or there, when the terminal market collapses because the vaulting banks withdraw because there is no certainty of metal provenance in their vault the 50 cents for a solution would be a dream.
6. For the Blockchain you have in mind is that something you’d like to explore in the near future with any groups looking to better develop that side of the gold market?
Things have rapidly developed in the blockchain space, that’s if you need a blockchain. But, the tech is there, the methods to implement it is there. To combine with an overhaul of the London good delivery and create a cleared OTC correctly governed and administered market place would be the way forward, that’s if the market values gold as anything more than a jewellery and a correlated punt. How intrinsic is gold and is it needed in a modern digital adopting world. I would relish the chance to have input to a well supported and conceived project.
7. Whilst you have been developing more Fin Tech products of late via DigitalRFQ your roots are still firmly in the precious metals game, what can you tell us about your south American projects?
I have been working with a team on helping improve South American gold provenance and sustainability. We have technology to increase the gold yield with the use of nano particles in the leeching process that significantly increase yields in refectory ores. Also we look at bio solutions to cyanide contamination and treatment of tailing ponds. We were making good progress until the pandemic really hit the mining sector.
I think provenance is the answer, technology that allows them to directly demonstrate their production on a known platform and for them to compete for fair pricing. This takes them out of the local cash aggregator space, allows them to bank correctly, pay local tax and assist the local economy and environment. The LBMA should be driving this. The World Gold Council is also not doing a job on this either, it could be argued that its more their space to help the small-scale miners.
This is not a technology issue, it’s administration!
9. Lately you have been focused on a new product silver liquid called Nano Ag47, what can you tell us about that?
Nano-Ag47 is derived from the gold mine yield increasing nano particle technology we developed. We knew at the start of the pandemic that silver nano particles were particularly effective against pathogens, Viruses, bacteria and fungi. Cost and accuracy of production has been an issue. We have developed a method to produce them accurately below 40nm which is the optimal size to sanitise and inhibit viruses including Covid 19. We have a surfactant fluid that contains the suspended nano particles and can be sprayed or fogged onto surfaces, contact points and products. The product uniquely remains effective for a minimum of 72 hours from application. We have tested to EU/UK standards and we are launching the product globally. Part of the whole keeping your hands clean is protecting the surfaces we touch.
10. For anyone that wants to follow you or connect for business opportunities where can they find you online?
Woman in Mining – Needing to add some serious diversity to the all male blog posts so far, I could not wish for anyone more decorated in her field, so this week’s blog Q&A is with Georgette Barnes Sakyi-Addo Executive Director at Georgette Barnes Limited, Volunteer President at Women In Mining, Co-Founder of the Accra Mining Network and volunteer Elected President of the Association of Women In Mining In Africa with all of that work I was not sure she would have time for little old me and my Q&A but thankfully Georgette agreed, so here goes!
1. So as usual can you tell us a little about yourself to kick off this week’s Q&A blog session?
My name is Georgette Barnes Sakyi-Addo, I run a mine support company based in Accra and servicing clients all over West Africa.
2. Tell us more about Georgette Barnes Limited and what the company does?
We offer exploration, geological and drilling supplies and maintenance services on mine sites. We stock drilling fluids we are the local representatives for AMC muds. We also stock specialized tools & instruments targeted specifically for the mining industry. GBL also offers geotextiles, liners and Core shed equipment as well as drilling consumables.
3. Ghana is where you are based and we have seen a number of changes in the local gold mining business, is mercury still a major problem in artisanal & small-scale mining? What developments are being put in place to eradicate this issue in mining?
Mercury I believe is a global problem in the artisanal and small scale mining sector and not limited to Ghana, the miners, academia and government continue to work towards solutions to improve the situation.
4. What changes can be made by the government agencies to help the artisanal and small-scale miners in West Africa?
The government continues to engage miners and also there are technical training opportunities offered I believe. The sector I believe needs more financial support, innovation, and technology.
5. You seem to have made the switch into mining back in 1993 and only in the last decade we have seen a big push to be more inclusive of women in mining with such organizations as those you chair or represent, how was it back then compared to now especially for the medium to large scale mines in Africa?
Now there are more women participating in the mining sector and also, they are more visible compared to back in 1993. The emergence of women groups in the mining sector and a general global push for more inclusion has contributed to this growth and visibility. Social cultural behaviours or thinking greatly influence our choices, so in our communities we tend to aspire to be what we see and what we are exposed to in the media etc.
6. I have been watching with admiration from afar the work you do on the ground, can you tell us about the work you do with the Association of Women In Mining In Africa?
I work with AWIMA : The Association of Women in Mining in Africa (AWIMA), this is a network of African women in mining, oil and gas national associations. AWIMA was created on August 19th 2015 in Nairobi, Kenya during the African Women Business Linkages Forum organised by the African Union Commission. This network of associations from the Southern, Central, Western, Eastern and Northern regions of Africa advocates for the participation, representation, leadership and inclusive empowerment of women in the extractive sector in Africa. AWIMA is currently running a jewellery completion, The AWIMA Jewellery project aims to connect African women across the continent, to capture and share the opportunity equitably along the value chain. Funds raised from the sale of the jewellery will go towards projects that improve the health and safety of women in mining. The AWIMA Jewellery Project builds on the increasing demand for ethical products resulting from responsible supply chains and is aligned with and is delivering on the African Union’s Agenda 2063, the United Nations 2030 Agenda for Sustainable Development and the African Mining Vision, and is responding to the devastating COVID-19 pandemic. More information is on our website awimaafrica.org
7. What changes are you witnessing today that were not viable back in the 90’s for Women in Mining?
I wouldn’t call them changes but rather an increase and visibility of the work of technical women on mines. This also inspires other employers to give more job opportunities. There are still some challenges to overcome. I am however optimistic and will describe the status as dynamic. We need more opportunities for women professionals and women in ASM. We would like more to be in C-Suite positions, it is a process and we continue to engage stakeholders. Women In Mining Ghana also periodically holds information sessions on opportunities in STEM for Junior to High School girls in the hope of inspiring more of them to pursue further education in Mining.
8. How can younger women that are looking to get into mining help themselves to push that passion?
Education I believe is key, knowing which subjects to study is usually a great first step, and you need to educate yourself generally about the industry. There are so many options for accessing information these days if you have access to the internet. Follow your mentors on-line, follow your subjects of interest online as well so you can be informed of updates and innovations in your area of expertise.
9. How can people find you online or connect with you for business or the social work that you do?
Matt Watson is the Founder and Principal of Precious Metals Commodity Management LLC, based near California’s Silicon Valley. Specializing precious metals market research, hedging strategies, thrifting strategies, trading support, and overall risk management. Utilizing extensive experience in the Precious Metals Commodity markets to help clients make better decision, reduce costs, drive thrifting activities, improve trading performance, reduce risks, create and implement hedging strategies. My clients range from mining entities, investors, industrial precious metals users, processors, and recyclers.
My ongoing mantra is that this will be the century of clean energy and mineral constraints.
Kitco Interview: Platinum group metals demand to soar in face of biggest dilemma in history
1. Matt lets dig in and start from how you got into the precious metals business around 20 years ago?
I started my career as an industrial statistician, teaching over 800 Engineers design of experiments and statistical methods, and consulting with those students from a broad range of industries. Interestingly I won an award for the best global application of the Taguchi DOE Method in 1989 on a gold plating 96-pin connector project in England. After that I quickly became a yield and process improvement hired gun.
At an Six Sigma Awards Ceremony, and to everyone’s surprise, Matt Bear Hugs Seagate CEO Steve Luczo. Who is the real winner here?
After helping with the turnaround of a few hard disc drive substrate factories resolving persistent yield issues, I found myself working at Seagate on a series of precious metals PVD sputter target improvement projects. One day they moved me into the Commodity Management Global Materials Team and handed me responsibility for $540 million dollars’ worth of Platinum and Ruthenium products, along with sourcing and purchasing responsibilities. I was one of the precious metal’s industrial user big fish customers for several years.
I then moved on to a Solar PV start up consuming larger Silver paste, Ruthenium PVD and other critical metals. From there I joined Tanaka as the head of their business development activities in the America’s for 4.5 years. And from there now I have launched my own consulting practice.
2. Starting in a corporate function sourcing of precious metals what changes have you witnessed over time in terms of responsible sourcing changes over time?
Great question. Clearly responsible sourcing in the Electronics Markets leads you to a number of compliance issues, including Conflict Minerals. Over time of course we have seen the magnitude and complexity of those compliance requirements grown leading into blockchain and other compliance practices. Responsible Artisanal Mining still needs more work in a number of regions globally.
Mr. Frank Tanaka (5th generation Tanaka CEO) receives a large Canadian/American Sandwich
I think the segment of the precious metals markets that have changed the most in terms of responsible sourcing are the recycle and refine markets, especially in the areas of Jewelry and auto catalysts. All of the practices and terms surrounding recycle have become more transparent, and corrupt practices and business dealings have been dramatically reduced. Of course, recent changes in the banking and financing sector have essentially helped the larger publicly traded recyclers gain more clout, while many of the privately held independent operators struggle to secure financing services.
Seagate R&D Celebration
Recently my clients have led me into the lithium battery mineral space, where responsible mining is questionable at best. I’ve been preaching about the dumping of nickel mine tailings directly into the Indian Ocean. Nickel mines in Papua New Guinea and Indonesia in order to reduce mining operations have lowered costs by fouling one of the most sensitive ocean regions on the planet called the Coral Triangle. Of course today 65-70% of the global cobalt comes from the DRC, where cobalt is not treated as a conflict mineral. Human rights abuses in the DRC including child labor and militias controlling artisanal mining are still a significant issue that needs more attention.
3. Given the regulatory push in responsible sourcing and the ESG buzzwords being pushed across assets do you envisage this will have an overall impact on global pricing across the precious metals space?
No doubt it already has. Again, in the recycle and refine space for auto catalyst for example, has seen Banking and financial institutions tighten their compliance requirements significantly, and frankly refusing to work with privately held independent operators, pushing larger publicly traded recyclers into much stronger position when it comes to setting terms with scrap collectors.
We recently witnessed the industry recoil from Peruvian money launderings schemes, taking down entire US organizations along with it. We have also seen a major silver and gold refiner in Miami go down after inventories simply did not add up. Financers and customers across the US paid dearly for yet another default.
The net of market disruptions like these again assists the well-established larger publicly traded processors and refiners, putting the independents in a tougher and often thinner margin operating space.
4. Silver had a stellar year in 2020 but to me the Platinum Group Metals to the market by storm, can you give us your thoughts around Platinum, Palladium and Rhodium for the year ahead in 2021?
Silver is still going to keep rocking. Working through the Silver Institute, I presented a paper at a Chinese conference this year where I highlighted that industrial silver demand today at 61% will grow to 67% by 2025, and keep climbing from there.
Consider 10% of the global supply of silver, recycle plus mined supply, goes into Solar PV. This year globally we made some 115 GW of new Solar PV installations. Those installations will double by 2025. With design thrifting I project silver solar PV demand will grow to 14-15% by 2025. But wait, many clean energy advocates foresee a state by 2040-50 timeframe where 3-4 TW (terawatt) or 36x today’s market. Where will that silver come from? Silver is used as it is the worlds most conductive mineral. Copper is second. Using copper on solar cells and modules would result in a 20% electrical efficiency loss, and the expected module lifetime would reduce from 25-years down to 10-15 years. That’s why the use the silver.
Matt Presenting at a China CISC Silver Conference
I agree with you on the PGM’s. Rhodium is off the charts setting records weekly now, and that trend will continue. Rhodium is key NOx emissions. The most likely design shift will be to use 6:1 Palladium to augment the Rhodium loadings in auto catalyst. Given Rhodium mining is tapped out, and actually declining over the next 2 decades, this design shift will come.
Palladium will see continued strong demand through 2030. Eventually increased auto catalyst recycle and expanded N. American, Russian, Zimbabwe, and S. African Northern Limb mining will push Palladium from its current structural deficit into a structural surplus. I argue this is still over a decade off. China 6A, Euro 7, and tighter US standards will keep the pressure on Palladium.
Platinum is the metal of the hydrogen economy. Today’s PEM based fuel cell loadings are over 30x higher in fuel cells than auto catalyst. Even with further design thrifting, FCEV’s and other aspects of the hydrogen economy will put Platinum into an eternal structural deficit. There is literally no hope of significant additional mining to help ease that market on the horizon.
I presented on Iridium and Ruthenium at this year’s IPMI Annual conference. I predicted Iridium’s climb. Continued electronics demand including 5G and LED, along with a new set of demand coming from PEM Green Hydrogen Electrolyzer plants will keep this metal climbing as well. 2020 COVID impacts on S. African mining, and the Anglo ACP plant failures of course added to supply disruptions. Ruthenium will hold flat for another year before some additional electronics demands put pressure on that minor metal.
PGMs are indeed scarce.
5. South Africa the major supplier of Platinum and Palladium have been suffering over the last few years with power outages and more recently Covid shut downs, where do you see growth in output of Platinum Group of Metals globally to take up some of this slack?
Several new clients of mine are PGM Mining investors. There are a couple of large palladium rich deposits that are very shallow in the S. African Northern Limb and neighboring Zimbabwe to the north. Norilsk in Siberia is of course adding processing capacity as well, which will bring more Palladium and Platinum to market. And then there is the Montana Sibanye-Stillwater Blitz project, and expansion of mining there which will again help on Palladium. Finally, there are some Ontario Canada mines that will come online including the Marathon Palladium project.
The common thread with all of these is that they are on the lower end of the cost-curve for mined palladium, and some platinum. Little is added to the PGM minors including Rhodium, Ruthenium and Iridium.
On the recycle front, auto catalyst Platinum and Rhodium returns will be fairly flat, although the palladium returns from gas vehicles already on the road will more than double over the next decade. This weight is baked into the cake already so to speak. We are simply waiting for the older vehicles to go end of life to harvest their weight.
6. With Precious Metals being deployed across technology and clean energy products do you see these being the main drivers of price momentum or are we going to see an increase in investment products tying up metals for industrial use?
Palladium, Platinum, and Rhodium in auto catalysts whose ICE vehicle demand will peak until around 2032. Tighter emission specification coupled with new real world test conditions has exploded the loadings per vehicle.
Platinum in FCEV’s PEM Fuel Cells. Platinum is the only usable catalyst material in this space. Best in class platinum loadings are 30x higher than auto catalyst.
Iridium and Platinum in PEM Electrolyzer for green hydrogen production. Iridium market is already extremely thin and spoken for, now comes more incremental demand for green hydrogen.
Ruthenium is used in Direct Methanol Fuel Cells. Not a big demand yet, but commercialization is just getting underway.
A little platinum is used in Alkaline+ Electrolyzer for green hydrogen production.
Large stationary fuel cells that burn hydrogen to generate energy to balance the power grid use Platinum.
Ruthenium is used as a catalyst for Ammonia and Fertilizer, a key source of dense hydrogen. Look for this demand to accelerate over time.
Liquid Organic Hydrogen Carrier (LOHC) supply chain loop typically uses Ruthenium, Palladium and Platinum
Palladium foils used as hydrogen permeable films are great for ensuring hydrogen purity.
Silver is essential for Solar PV. 10% of the global silver supply goes into solar.
Small amounts of Platinum is the key enabler for Fiberglass Wind Turbine production. Wind turbines and their blades are only getting larger and larger over time.
Ruthenium’s use in electrochromic (or smart) glass will see industrial demands grow as attention of building CO2 emissions and power management takes off.
I’ll even throw in Copper. 75% of copper is used in wires for all industries and energy distribution. This includes 55 pound of copper wiring used per gasoline passenger vehicle, 110 pounds in a typical Hybrid Electric Vehicles, and 165 pounds per full BEV. Add in Wind Turbines where an average utility scale wind turbine generates 1.76 MW today and uses 6.3 mt/Copper.
Scandium use for strong aluminum used in vehicle light-weighting.
And then electronics in general. EV’s use lots more electronics consuming Gold, Silver, Palladium, Iridium and Ruthenium.
Passive components like high-temperature MLCC’s using silver and palladium are in high demand as EV’s and 5G networks/devices grow.
The list is long, but there are even more I could list.
7. By country which countries are the biggest physical buyers of Platinum Group of Metals?
China, China, then China
Japan and the rest of Asia
8. What capacity does the worlds refineries have in terms of Platinum Group of Metals?
The last analysis I did on global PGM’s was back in 2018. Then I came up with global recycle capacity of 214 mt of PGM refine capacity. The breakdown then was ~45 mt of Platinum, ~93 mt of Palladium, ~11 mt of Rhodium, ~62 mt of Ruthenium (which is about 2.8x the annual mined Ru FYI, the highest ratio of any PGM), and 2-3 mt of Iridium.
Going forward for recycle, more aggregate capacity will be needed globally for auto catalyst and fuel cells. Auto catalyst outturns are around 2.6 Moz of palladium annual, but this will grow to 6 Moz by 2023, and then higher beyond.
Inspecting 99.999% Pure Gold Bars
9. Platinum Group of Metals seem to have cemented themselves firmly in medical, energy, clean energy tech and finance but as we all know the total global volume available is limited, what metals are you seeing coming into play for future development that you think people can look at for early investment?
Clean Energy Long Term Constraints
I help a group of investors manage some of their funds. We netted over 44% gains in the last 2 quarters of 2020 after setting this fund up. My recommendation to them, to you, and the strategy I follow on my own personal investments is invest in mining, ETF’s, and precious metals processors surrounding these metals that are being strained by clean energy initiatives. Specifically, my list of constrained metals includes all PGM’s (Pt, Pd, Rh, Ru, Ir, Os), Silver, Gold, Copper, Nickel, Lithium, Scandium, Vanadium, and some of the RRE’s.
10. For anyone that wants to connect with you where can they find you online?