He and his company, carrying on the legacy of his father and grandparents, buy scrap gold from jewellers, melt it down, and resell it to them as gold bars.

His refineries are located in Tiruchirappalli, Tamil Nadu, and Kochi, the southern state of Kerala. Other relatives in the southern region of India own refineries.

“Every day my refiners on an average melt two to three kilograms of gold,” he says.

There is almost certainly a single tiny refinery in every Indian town that like the ones owned by Salunke. To set it apart from large refiners who use imported, unprocessed gold to manufacture gold bars and coins, this industry is referred to as “unorganised” refining.

An estimated 25,000 tonnes of gold are held by Indian households collectively, some of which are always on the market for sale, especially during periods of high gold prices or weak economic times when people are looking to raise some extra income.

While jewellers have the option to handle returned gold directly, they frequently work with smaller refiners to transform the metal back into bars.

Salunke claims that because his small refiners are efficient and content ot accept cash, local jewellers prefer doing business with them.

“Most jewellers prefer buying gold from us, as we are based in every city with small units. A jeweller can take back his refined gold in a few hours, not like big refiners who will take days to refine the recycled gold.”

Of the 900 tonnes of gold refined in India in 2023, 117 came from recycled sources, according to the World Gold Council.

However, the large industrial gold refiners in India are keeping a close eye on that recycling market.

Favourable import charges on their primary supply of gold, which is imported, unprocessed gold known as gold doré, have encouraged their growth in recent years.

India’s large-scale refiners expanded their annual gold production capacity from 300 to 1,800 tonnes between 2013 and 2021.

However, they struggle to bring in enough raw gold to feed their refineries. In actuality, the Association of Gold Refiners and Mints secretary, Harshad Ajmera, claims that less than half of their refining capability is being utilised.

Large refiners have responded by setting up scrap collection sites in major cities in an effort to recover undesired gold and refine it into premium bars.

“At present most of the recycling of gold is done by the unorganised sector [small refiners] – that has to change,” says Ajmera.

He wants India to become a major global centre for the refining of gold, which would include increasing the importation of raw gold and increasing the share of gold recycling held by large corporations.

The largest centre for transit and gold refining in the world is Switzerland. We want India to be in the same situation as well,” Ajmera declares.

One of the top gold refiners in India, CGR Metalloys processes over 150 tonnes of gold annually.

It boasts the newest technology for smelting and refining gold, just like the major companies, and claims that this is better for the environment and can provide extraordinarily high levels of purity for its gold.

“The refined bullion is analysed to the highest levels of accuracy, on various methods of gold assaying,” says James Jose, managing director at CGR.

In the state of Kerala, three gold recycling facilities have established.

“Indian refineries have enormous capacity, but our overhead is very high. Thus, creating collecting hubs will boost the flow of gold scrap. Jose says, “This will help me increase my output by 30% to 40%.”

The government’s involvement in the refining industry has increased recently. A number of standards, including those related to purity, weight, dimensions, and markings, were introduced for gold bars by the Bureau of Indian Standards (BIS) in 2020.

Refiners with BIS approval are able to sell their bars on the commodity markets.

“The industry is gradually shifting towards greater organisation and efficiency, led by established refineries licensed by the Bureau of Indian Standards, which is setting trusted benchmarks for refined gold products, which will make India a global hub,” says Somasundaram PR, the chief executive of the World Gold Council India.

According to certain statistics, smaller refiners are falling behind. In 2015, between 70 and 75 percent of the recycling business was unorganised; by 2021, this had dropped to between 60 and 65%, according to consultancy Metals Focus.

Salunke claims to know his consumers, thus he is not too concerned about the actions taken by large recycling companies.

“Local jewellers are not willing to pay a recycling cost which is too much beyond what we charge,” according to him.

Additionally, Salunke has been investing in cutting-edge refining technology, much like other smaller refiners.

Nitric acid is no longer being used to cleanse gold; instead, Aqua Regia, which is less polluting, is being used.

“The gold recycled by us is as pure as gold recycled by an organised refinery,” says Salunke. “Now we have a testing facility to check the purity, so it would be wrong to say we cannot refine gold into its purest form.”

(Adapted from BBC.com)

Categories: Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy