Skip to main content
Welcome to
super saver spring
offer ends april 20
save over $140
save over 85%
$0.99
per week for 24 weeks
Welcome to
super saver spring
$0.99
per week
for 24 weeks
// //

Hoarded bangles and rings are melted down to rejoin the bullion market in new jewellery or bars and coins – and that is bringing extra work to refiners, many of which operate out of family-owned shops in Mumbai.

DANISH SIDDIQUI/Reuters

Laxmibai Karanure sifts through the heavy bangles and necklaces that make up her life savings, working out which pieces to sell from the 100 grams of gold she holds to tide her family over during the drought at their farm.

The 55-year-old Karanure's heirlooms will add to a booming recycling trade, which could account for up to half of India's consumption this year and boost a fledgling refining industry.

The surge in recycling also comes as India looks set to be overtaken by China as the world's biggest consumer of gold, after a hike in import duties in March and a rapidly weakening rupee pushed local gold prices to record highs.

Story continues below advertisement

The potential for recycling is huge with India's 1.2 billion people estimated to have stored up about 20,000 tonnes of gold in the form of jewellery, coins and bars, according to an estimate from industry body the World Gold Council – about three times the holdings of the U.S. Federal Reserve Board.

"We have no other option but to sell our gold in these tough times," said Ms. Karanure, speaking from her village in Chikkodi in Karnataka.

She could get nearly 150,000 rupees ($2,800) from the sale of her bangles and necklaces, a vital source of income after drought this year has slashed rural incomes.

The Bombay Bullion Association (BBA) estimates the supply of recycled gold in India will hit 300 tonnes in 2012, up about five-fold from 2011 and the highest in more than a decade.

"There won't be new demand from farmers and scrap will flow in the market," said Prithviraj Kothari, president of the BBA, made up of 400 bullion dealers and traders. "In coming years, 50 per cent of the requirements will be met through scrap."

Other traders and analysts agreed. Harshad Ajmera of Kolkata-based J.J. Gold House estimates scrap supply at 200 tonnes this year.

India's scrap market in 2011 was only 58.5 tonnes, or 6 per cent of total gold demand of 969 tonnes, but it is being boosted as consumers balk against paying a 4-per-cent import tax and with the local price of gold near a record high of 32,421 rupees per 10 grams.

Story continues below advertisement

Farmers in India are the biggest buyers of gold, which they use as savings in the absence of a functional bank network.

This year, because of a drought in parts of the country, they are having to cash in gold to pay off loans taken out to purchase fertilizer and seeds, which have in many areas failed to produce a crop.

The hoarded bangles and rings are melted down to rejoin the bullion market in new jewellery or bars and coins – and that is bringing extra work to refiners.

The BBA estimates refining capacity is currently at about 100 tonnes a year in India, which for decades has relied on imports from South Africa, Australia and Switzerland for most of its requirements.

Much is done with simple machines in the back of family-owned shops in gold markets such as Zaveri Bazaar in Mumbai.

But bigger refiners plan to expand.

Story continues below advertisement

Harmesh Arora, director at the National Indian Bullion Refinery in Mumbai, said the firm is planning to expand capacity from the current 30 tonnes a year.

Further expansion of the refining industry in India will emerge only after there is more readily available supply of dores, a crude form of gold recovered from mines which is often used by foreign refineries, he said.

Industry officials are also calling on the government to provide incentives to local refiners through special loans for expansion and to restrict coin imports by banks.

Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies