MMTC refinery eyes 100-tonne gold output in two years

The MMTC-promoted bullion refinery plans to become the largest refiner of gold and silver in the country. It has the capacity to refine 100 tonnes of gold and 600 tonnes of silver, which it plans to fully utilise within a couple of years, says Rajesh Khosla, managing director of MMTC Pamp India.

Hindustan Zinc Ltd (HZL) produced 408 tonnes of silver in 2012-13 and plans to produce 500 tonnes in the current financial year. While HZL produces silver as a by-product of zinc, which is mined in the country, MMTC imports concentrates and refines these. Together, these companies meet around a third of the country's silver demand. India's silver demand in 2012 was 3,234 tonnes.

MMTC Pamp refined and sold 45 tonnes of gold and 15 tonnes of silver in 2012-13. "In a year or two, we plan to fully utilise our gold and silver refining capacities. However, the plans depend upon sourcing gold and silver dore, " said Khosla.

The company is in touch with large mines abroad to procure gold and silver dore, which also requires fulfilment of stringent know-your-customer) norms and compliance with London Bullion Market Association's responsible gold guidelines.

The government has fixed the excise duty for gold refined from gold dore at five per cent, while the refined gold import duty is six per cent. This has been done to encourage domestic refineries, generate direct and indirect employment, and to bring state-of-the-art manufacturing technology to India, rather than importing pure gold.

Khosla said the duty differential was not so attractive to encourage domestic refineries to produce more due to the high working capital requirement and high cost for funding dore imports, acquiring technology, security and insurance, and other expenses.

Banks provide working capital on commercial terms, but he wants "preferential treatment for bullion refineries in terms of bank funding to make domestic refining attractive to imports".