India’s central bank has announced a partial lifting of the ban on gold dore imports by refineries. Dore is a gold ore concentrate that also contains silver and other metals.
Effective immediately, refiners can import up to 15% of their gross annual need of dore over the first two months of the year. These imports are still subject to the 8% import tax and the “80/20 Rule,” which says that 20% of all gold imports must be re-exported before any more imports are allowed. Refiners will be allowed to import 5x the amount they export, subject to their government license.
This is welcome news not only to refiners, who have been limited to re-melting scrap gold, but also to the small and medium-sized jewelry business, many of whom have had to close or lay off the majority of their workers. Indian gold refiners have been operating at only 25% capacity, due to a lack of ore.
Gold import restrictions, put in place to combat a Current Accounts Deficit that was cripplin the country, managed to curb gold imports by 80% in November, to $1.5 billion from $5.4 billion. It has been noted by many that these official numbers are misleading, due to the tidal wave of gold smuggling through 2013.
In related news, the Indian Finance Minister has called for more domestic gold exploration and production. One opposition politician noted that there are known deposits in India, but domestic mining companies lack the technology to exploit them. The Finance Minister acknowledged that red tape has blocked sale of these mines to foreign companies who have the know-how to put the mines into production.