African Gold Council launched to keep gold value on the continent

The African Gold Council (AGC) was launched at the Investing in African Mining Indaba on Wednesday with the aim of building an economic eco-system on the continent around gold, instead of simply exporting the mined yellow metal in unprocessed form.

Beneficiation of the continent's mineral wealth is a buzzword among policy-makers at the Mining Indaba in Cape Town this year. AGC CEO Jude Uzonwanne said the AGC, an organisation that is independent from the World Gold Council, would work towards making the yellow metal a cornerstone of value and beauty in Africa again, putting it back into the role it had many years ago, when many Africa tribes adorned the metal for beauty, and as a store of wealth.

In more practical terms, the advocacy agency planned to promote the gold eco-system on the continent through initiatives such as promoting the metal as an additional central bank reserve asset, as a gift among people, as a backing for assets such as ETF's (exchange traded funds) and digital tokens, for jewellery, and for industrial purposes.

Speakers at the launch said that with there only being one gold refinery on the continent at present, Rand Refinery in South Africa, mined gold was mostly exported, where it was minted into more higher purity bars, or where it was made into jewellery or used for other industrial purposes. Gold jewellery sold in Africa is mostly designed and produced elsewhere in the world, using gold that has been mined and exported from Africa. There were no global African brands Local jewellers wishing to design with gold also often complained there is no way for them to access gold.

Uzonwanne said they would for instance, consider an advertising campaign to promote the giving of gold as a gift, and in this way Africans would be able to invest in gold as a store of wealth.

Franklin Edochie, President and Acting Head of Metals and Minerals at the Africa Finance Corporation, said that in the past 12 to 24 months, and possibly due to the rising gold price, plans have been announced to open new gold refineries in Cote d'Ivoire, Ghana, Tanzania and Nigeria, all aimed at enhancing value-added production of the minerals, but also as a mechanism to aggregate artisanal gold production.

He said it would be important for at least one of these refineries to get London Bullion Market Association (LBMA) certification, as gold with this certification typically carries a higher price.

Tamsin Freemantle, a Capital Markets Development practitioner and consultant, said one option to consider was to get gold producing companies to collaborate on building the gold eco-system on the continent, in that they could considering developing and or sharing transport systems, infrastructure and refinery capacity.

She said Africa had 39 stock exchanges but only a handful were sufficiently liquid to be considered as good sources of capital for new gold projects. She said one way to put artisanal gold mining into the formal economy was for these miners to organise themselves into some kind of association.

Jon O'Callaghan, from Montt Capital which operates in Nigeria, addressed the difficulty of financing gold exploration in Africa. Institutional funders typically do not finance gold exploration projects because of the high risk involved. O'Callaghan said the gold mining industry in Nigeria was different from other African countries, in that it was mostly artisanal.

Traditionally, junior gold mining companies could obtain risk capital from the Australia or Toronto stock exchanges, but this option was not available to artisanal miners, so instead, retail investors were being attracted to finance gold exploration in Nigeria. Otherwise, the best other way to attract capital for gold exploration was through listing on a stock exchange.

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