Business
Global gold recycling fell to 7-year low in 2014: Report
New Delhi, March 5
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.