‘Scrap gold market will be huge in India’

MMTC-PAMP is the first and the only London Bullion Markets Association-accredited gold and silver refinery in the country.

The company, a 27:73 joint venture between state-owned MMTC and Switzerland-based PAMP SA, has invested around ₹220 crore to set up its refinery near Gurgaon.

In Pune for the 11th India International Gold Convention, Rajesh Khosla, Managing Director, MMTC-PAMP, spoke to BusinessLine on refining and other issues facing the bullion market. Edited excerpts from the interview:

Why has no one else thought of setting up a bullion refinery in India?

I am puzzled why no one took the initiative for setting up a refinery. Perhaps it was because it became easy to import refined gold.

But the arithmetic is wrong. Refining it locally leads to economic value-add and also creates jobs. India imports around 900 tonnes annually, and we have a capacity for 100 tonnes (last year we did 42 tonnes). I wish more refineries are set up, because that is the only way forward.

Interestingly, there are no regulatory hurdles or approvals required for setting them up as they fall under the automatic investment route and 100 per cent foreign ownership is possible.

Given the global scramble for dore bars, is there any alternative source for raw material?

Availability of dore is always a constraint. Of 2,900 tonnes mined globally every year, nearly 900 tonnes has to be refined in the four countries in which it is mined. So, around 70 refineries globally vie for the remaining 2,000-odd tonnes.

Given the demand-supply gap, from a long-term perspective we have to look at scrap. There is a huge global trade in scrap.

Has MMTC-PAMP taken any steps in this direction?

There is an estimated 25,000 tonnes of gold in the country and scrap can be big. We ran two collection centres in Delhi on a trial basis last year and collected 30 kg from each. People can bring in their scrap gold — it is weighed, melted, homogenised and tested for purity right in front of them in less than an hour. A nominal fee is taken for refining it.

It took us 18 months to perfect the technology as it is difficult to homogenise on a smaller scale. We believe we have it now and we have the confidence to do this for housewives.

A plan to expand such centres across the country is on the anvil and we want to open three or four every year. We want to make it possible for people to be able to book an appointment online.

You have been a votary of gold monetisation schemes. What is the progress on this?

We need to create a new currency — gold. The idea is to have a gold account as an add-on to a rupee savings bank account where people can deposit their gold and get a fixed percentage more of gold at the end of, say, three years.

A survey we conducted of 6,000 people in 25 cities and 60 per cent said they would make use of the facility if provided. The software is in advanced stage of being readied and we will test it next month.

We are in discussions with logistics companies … there is a lot to sort out. For instance, how will banks and the regulator react, and what will be the taxation issues? All the stakeholders need to be incentivised. We are trying to fine-tune the arithmetic.

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