(Kitco News) – The London Bullion Market Association (LBMA) has asked six Russian gold refiners for its accreditation whether they have business ties with sanctioned Russian entities and if there are, it could affect their accreditation. The LBMA certifies around 70 refineries worldwide to produce gold and around 80 to produce silver.
There are six Russian refineries on the LBMA’s good gold delivery list. These are JSC Krastsvetmet, JSC Novosibirsk Refinery, JSC Uralelectromed, Moscow Special Alloys Processing Plant, Prioksky Plant of Nonferrous Metals and Shyolkovsky Plant of Secondary Precious Metals.
All of these, with the exception of the Moscow Special Alloy Processing Plant, are also accredited by the LBMA to produce silver. The LBMA is a trade association whose members mainly include refiners, banks and traders. Last week it revoked the membership of three Russian banks, VTB, Sovkombank and Otkritie, after they were added to the sanctions lists.
The loss of LBMA accreditation would make it difficult for refiners to sell gold and silver on the London market, the world’s largest, as major international banks generally only deal with LBMA-accredited refiners. .
It was said that even though these companies would be removed from the LBMA list, it was said that they would still find buyers in places like China and the Middle East. So it might have a small impact on the gold market in general.
Russia is the world’s third-largest gold producer, mining around 330 tonnes each year worth around $20 billion at current prices, according to consultants Metals Focus. The country also produces about 1,350 tons of silver per year, worth about $1 billion.
LBMA rules state that refineries it accredits “must comply with all relevant economic/trade sanctions lists”.
LBMA General Counsel Sakhila Mirza said “good delivery rules are very clear,” she added, “we asked for our rules to be respected.”
In Russia, commercial banks buy gold from miners and send it to refineries before exporting it. The Russian central bank is also sometimes a big buyer and announced this week that it would resume buying gold in the local market.