Gold News

Johnson Matthey Exits Gold & Silver Refining After 160 Years

Longest-standing London Good Delivery refiner sells US and Canada sites to Japan's Asahi...
 
GOLD & SILVER refining will end at Johnson Matthey Plc next March after more than 160 years, as the UK-listed chemicals and technology company sells the brand's last two major bullion refining plants to Asahi Holdings of Japan.
 
The Salt Lake City plant in Utah, USA, and Brampton near Toronto in Canada, are being sold for £118 million ($186m).
 
Asahi Holdings (TYO:5857) was founded in 1952, opening its plant at Kobe, Japan in 1968. Asahi's Saijo plant became a Good Delivery supplier of silver in 2000, and Kobe received Good Delivery accreditation for delivering gold to the London market – heart of the world's wholesale bullion trade – in 2008.
 
Today Asahi said the deal will extend its business to processing "primary" material from North American gold mines, as well as the electronics and other "scrap" its Japanese sites already refine.
 
In its statement on the sale, Johnson Matthey stressed its long-term "focus on areas where we can use our expertise in chemistry [and] high technology solutions."
 
Increasingly focused since the 1950s on catalysis and environmental technologies, Johnson Matthey was formed in 1851 and became Official Assayers and Refiners to the Bank of England – then lynchpin of the global Gold Standard, maintaining the Good Delivery list of acceptable material managed today by trade body the London Bullion Market Association – the following year.
 
Listed on the London Stock Exchange in 1942, Johnson Matthey Plc (LON:JMAT) won the exclusive contract to refine Britain's demonetized silver coinage in 1946. But as the company's platinum and catalyst businesses grew, it sold its UK and Irish jewelry business in 1993, and then sold its Electronic Materials Division in 1999.
 
In 2012 work began at Brampton to increase capacity, anticipating a "new primary refining contract" for mined gold due to start in 2014/15. But Salt Lake City also suffered "operational issues" that financial year, taking the Gold and Silver Refining business to a small loss.
 
In August 2013 both Brampton and Salt Lake City received Responsible Gold accreditation from the LBMA, confirming the "highest level of diligence" in tracing all metal being refined, so as to avoid taking in raw materials from war zones or terrorist control. But January 2014 saw members of the United Steel Workers strike for 18 days at Brampton in protest at Johnson Matthey's 3-year wage offer, despite the union recommending they accept.
 
Sales from Johnson Matthey's Gold and Silver Refining business fell 10% in the financial year 2013/14, and dropped a further 23% in the six months to 30 September.
 
"Underlying operating profit was also down" at that division, Johnson Matthey said in its half-year report, as "falling gold and silver prices adversely affected secondary volumes" of so-called scrap metal from owners of existing above-ground metal.
 
Commenting on today's news of the Brampton and Salt Lake sale, "There are few synergies with the rest of the Johnson Matthey group," the Financial Times quotes one analyst.
 
With 11 plants now accredited by global trade body the London Bullion Market Association, Japan has more Good Delivery gold refineries than any other country. China and Russia come next, each with 8 gold refineries approved to produce Good Delivery bars.
 
The latest annual Gold Survey from data consultancy Thomson Reuters GFMS says Japan's bullion exports "slipped by 10% in 2013 to an estimated 74 tonnes...dominated by flows to Hong Kong at almost 50% of the total."
 
Material from six former Johnson Matthey refineries is today accredited on the LBMA's "former" gold list, with bars from three previous facilities on the former list for silver.
 
"Bars produced by [such] refiners prior to their transfer to this list," explains the Association, "continue to be acceptable as Good Delivery."
 
Gold bars cast with Brampton's current markings were first added to the Good Delivery list in 1961. Salt Lake City output was accredited in 1989. Together, these last remaining Johnson Matthey gold plants are major North American producers of the large 400-ounce bars used in the wholesale and professional investment markets.

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