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AngloGold Ashanti in gold loan scheme


[] -- ANGLOGOLD Ashanti swept aside criticism it was too closely involved in developing the downstream gold market unveiling plans to develop African jewellery for Americans and a scheme to fund the working capital of gold jewellery fabricators. These plans come amid a 500 tonne decline in gold jewellery consumption over the last five years to 2,500 tonnes in 2003.

Sam Jonah, AngloGold Ashanti chairman, said the company had been working with partners to create a mechanism for “the competitive financing of working capital through a gold loan scheme”. The project was focused on South African gold fabricators, but it could be applied in other African countries.

In essence, the gold loan scheme sees AngloGold Ashanti guarantee two-thirds of gold leased at competitive rates from a third party bank on behalf of gold jewellers. BAE Systems, the British aerospace company, is joining AngloGold Ashanti in its effort. The onus will be on the jeweller to provide security for the outstanding third of the value of the loan, a hurdle it must tackle after submitting to a due diligence study.

AngloGold Ashanti’s scheme follows an announcement in December that Government had approved the Precious Metals and Diamond General Amendment Bill (Beneficiation Bill). Although the main thrust of the bill effects the diamond industry, it also asks other mining sectors to contribute to developing local industry. Aspects of the mining charter also call for beneficiation.

The key problem for gold fabricators is supplying the quantity required to properly supply international markets. Many jewellers, therefore, do not have the cash flow to buy enough metal. However, AngloGold Ashanti said that South African jewellers were ideally positioned to benefit partly owing to the Africa Growth and Opportunities Act, US legislation that relaxes the 6% import duty for certain African products.

Jonah said the company made no apologies for its interest in the downstream industry: “[T]he message we are being sent by the market is quite clear – nobody, neither Government nor trade organisation, is going to rescue the gold industry from declining consumer trends,” Jonah said.

“It’s going to be up to the producers themselves to play a key role in reversing consumption patterns and restore our product’s place amongst the range of desirable consumer goods,” Jonah said.

Currently, responsibility for marketing gold is the function of the World Gold Council (WGC), an institution that Jonah said was not representative of the fragmented gold industry. Low levels of funding and “an unhelpfully broad mandate” constrained the WGC, Jonah said.

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