Gold samples are take to check for purity during a smelting process at the Rand Refinery in Johannesburg Wednesday, April 9, 2008. Gold production in the world leading supplier South Africa fell more than 10 percent in the second quarter compared to the same period last year, the industry said Thursday, Sept. 4, 2008 blaming electricity shortages since the beginning of the year. (AP Photo/Denis Farrell)

Ruby Lian and David Stanway

RAND Refinery was considering setting up a refining plant in China within two to three years, joining hands with a local partner on its first such plant abroad, a senior executive said on Friday.

Rand Refinery is targeting Asia, home to the top two gold consumers, China and India, as a key region for future development. The company expects to complete a sampling and assaying facility in Singapore by the end of the year.

“During the past year, we [Rand Refinery] have identified one or two possible opportunities to partner for a potential initial refinery footprint in China,” chief strategy officer Peter Bouwer said.

He declined to give details, saying the plan was at a very early stage.

The lack of high-purity gold refining capacity in China posed an opportunity for Rand Refinery, Bouwer said.

“China already has a huge refining capacity, both in a handful of large-scale refiners listed with the London Bullion Market Association, and a huge number of small- or micro-scale refiners,” he added.

“The challenge facing especially the smaller refineries is the technology and experience to produce high-purity gold.”

High-purity gold is keenly sought for use in jewellery, which accounts for two-thirds of China’s gold demand.

China is the top gold producer, with output of a record 360.957 tons last year, versus 198 tons by South Africa, Thomson Reuters GFMS data show.

Rand Refinery’s Chinese refinery would rely on locally sourced scrap and doré, an unrefined alloy of gold with variable quantities of silver and smaller amounts of base metals, Bouwer said.

Rand Refinery, the biggest supplier of bullion to China, was likely to ship about 100 tons of gold kilo bars into China this year, similar to last year, chief executive Howard Craig said last month.

China’s consumer gold demand stood at 576.9 tons in the first three quarters, down slightly from 580.3 tons in the corresponding period last year, the World Gold Council said.

Bouwer expected China’s gold demand to improve. “I have confidence in China’s ability to recover,” he said. – Reuters