Global gold recycling fell to 7-year low in 2014: Report

Gold recycling fell to a seven-year low in 2014 and is expected to remain at low levels in 2015, a report here said.

The report, "The Ups and Downs of Gold Recycling: Understanding Market Drivers and Industry Challenges," written and published by the World Gold Council and The Boston Consulting Group (BCG) was released on Thursday.

"This is partly a result of gold prices being lower than they were several years ago, leading to less 'distress selling' as a result of greater economic stability, and the depletion of near-market gold recycling materials," it said.

The report analyses the economic drivers of the global gold recycling market and highlights important future industry trends.

"The decline in recycling in 2014 was widespread across both developing and industrial countries, although more severe in the latter. Looking forward, we expect recycling to remain low in 2015, and possibly decrease further given that a large portion of near-market supply has been flushed out in recent years," Alistair Hewitt, head of Market Intelligence at the World Gold Council said.

"Industry players in the gold recycling market face a complex blend of challenges and opportunities. Chief among the challenges is overcapacity, particularly in waste electrical and electronic equipment recycling which has nearly doubled over the past 10 years," Matthias Tauber, partner and managing director, The Boston Consulting Group, said.

"To succeed, companies must rethink their competitive strategies and operating models - including leveraging economies of scale through M&A and strengthening their operational excellence and reputation among customers," he added.

The report showed that between 1995 and 2014, recycled gold accounted for, on average, about a third of total supply. An analysis of recycling data from 1982 to 2012 revealed that price fluctuations accounted for around 75 percent of the changes in recycling volumes and that economic shocks can boost recycling by up to 20 percent.

"While India can't increase its local supply through mining, it certainly has the ability to increase supply through recycling. Currently only 0.5 percent of total stocks are recycled in India, but the recent policy announcement introducing a standard India gold coin, bonds and a new monetisation scheme rightly seek to address varied consumer preferences linked to gold, which are also likely to impact recycling," Somasundaram PR, managing director, India, World Gold Council said.