[SINGAPORE] The growth of the gold sector in Singapore will create about US$0.5 billion in value-added to the economy, and add 1,000 professional, managerial, executive and technical jobs here by 2020.
Senior Minister of State for Trade and Industry Lee Yi Shyan said this yesterday at the official opening of the greenfield gold refinery by Swiss-based Metalor Technologies, which also marked the return of a gold refinery to Singapore shores.
"The refinery here will allow for increased cost efficiency among bullion traders in Asia," said Mr Lee. "This is because Singapore is strategically located in the heart of South-east Asia, and lies at the nexus of gold trading supply chain between the two largest consumers of gold - India and China."
It was for the same reason Metalor itself had decided to make the $19 million investment in Singapore, its CEO Hubert Angleys said, besides the large supply deficit of gold in the region. The removal of the 7 per cent Goods and Services Tax (GST) on investment-grade precious metals bullion in Oct 2012 was also a key push factor for the firm, he added.
The new refinery is the group's fifth worldwide and third in Asia; Metalor also has a refinery each in Hong Kong and China.
The one in Singapore will have a production capacity of between 50 and 150 tonnes a year, which can be changed depending on market demand. The plant, which occupies 2,600 square metres in the Jurong industrial area, will hire 60 staff. It will also start producing silver products by the end of the year.
Metalor Singapore is currently in the process of being accredited by the London Bullion Market Association (LBMA) to be added onto the latter's good delivery list - an international standard for the quality of gold and silver bars - for gold.
With the closer proximity, Asian bullion traders will benefit from lower freight costs and faster delivery, said Metalor Singapore country manager Gilles Robert.
In the gold market where prices can move very rapidly based on sentiment, "a day cost can be significant", he said. "This is the type of speed the market is moving at."
The refined gold bars will be able to support the physical delivery of the newly launched Singapore Exchange gold kilobar contract announced on Wednesday. Metalor expects the development to benefit the group at least indirectly.
"Obviously it contributes to the sector by bringing interest to Singapore," said Mr Robert. "If the gold is in Singapore, it needs to be treated one way or another, and we are here."
The refinery marks "a new beginning" for the Singapore gold market, Metalor Group chairman Scott Morrison told the LBMA Market Forum here on Wednesday, noting that the Republic had a strong history of gold distribution to South-east Asia and also had another refinery previously.
In 1983, German multinational company Degussa invested $3 million in a project to help companies recover gold from electronic scrap, eventually turning this into a gold refining operation that cast its own kilobars for sale to local banks. The refinery was added to the LBMA list in 1988.
However, with the introduction of GST in 1994 and a general loss of interest in gold as an investment asset class, the active Singapore gold market seen in the 1970s and 1980s slowly declined.
The refinery ultimately wound up in 1998, as its synergies with Degussa's other Asian businesses declined, the firm said then. The refinery had a production capacity of 50 tonnes of refined gold and over 30 tonnes of silver annually in 1990. Degussa's precious metals unit has since been sold to Umicore Group, a Belgian technology-focused precious metals group.