Bloomberg News

Metalor Set to Complete Singapore Gold Refinery by Year-End (1)

June 13, 2013

Metalor Technologies SA, based in Switzerland, expects to complete its gold refinery in Singapore by the end of this year as the country seeks to expand its share of global bullion trading.

The precious-metals processor cast its first one-kilogram gold bar in Singapore this week, Chairman Scott Morrison said. The $15 million refinery will have a capacity of about 150 metric tons a year, he said on Bloomberg Television’s “First Up” With Susan Li.

Gold slumped 17 percent this year, entering a bear market in April, as an improving U.S. economy spurred a rally in equities and undermined some investors’ faith in the metal as a store of value. Singapore removed a 7 percent sales tax from investment-grade precious metals last year in a bid to boost trading, while Deutsche Bank AG and JPMorgan Chase & Co. have opened vaults in the city. The plunge in April stoked a buying frenzy for bars, coins and jewelry from China to India.

“Right now, we can’t keep up with the demand in terms of investors in Asia purchasing gold,” said Morrison. “The amount of physical gold that is being sold to the investment community is quite substantial.”

Premiums in Singapore over London prices touched a record $7 an ounce last month because of shortages in supply, according to Brian Lan, managing director at bullion dealer GoldSilver Central Ltd. in the city. The London price fell 14 percent in two sessions through April 15, the most since 1983.

Growth Plan

Cash bullion was little changed at $1,387.55 an ounce by 5:29 p.m. in Singapore today. While prices are up about 5 percent from a two-year low of $1,321.95 on April 16, they’re still 28 percent below the record $1,921.15 in September 2011.

“We already have a well-established refinery in Hong Kong and a smaller one in mainland china,” said Morrison. “Singapore is really our expansion plan in the Asia-Pacific area.” The company also has refining operations in the U.S. and Switzerland, according to its website.

Banks are adding to storage in Singapore. Deutsche Bank started a vault with the capacity to hold as much as 200 metric tons, its largest outside London, it said this week. JPMorgan opened a vault at the FreePort in 2010.

Gold trade in the city reached 74.6 tons in the seven months through April from October, when Singapore removed the precious-metals tax, according to International Enterprise Singapore, the external trade agency. That was little changed from 72 tons a year earlier, its data show.

The country is targeting 10 percent to 15 percent of world demand flow in the next five to 10 years, according to Kathy Lai, assistant chief executive officer at IE Singapore, in March 2012. Total demand worldwide was 4,405.5 tons in 2012, according to the World Gold Council.

Scrapping the tax was a first step toward developing trade in Singapore and the Metalor refinery is another, IE Singapore said in an e-mail June 11. It will take time to create the infrastructure and build the sector, it said.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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