Dubai aims to grab 39% of world’s gold business by 2020
Dubai (May 11) Growth in gold demand is shifting east, to Asia’s fast-growing economies. But key industry activities such as refining and clearing remain dominated by the west. Dubai wants to change that -- with plans to build one of the world’s largest gold refineries.
One of the world’s largest gold refineries is being built on the outskirts of Dubai and when it’s completed next year, the $60 million U.S. dollar refinery may help shift the balance of power in the world’s gold industry.
Nearly 40 percent of the world’s physical gold trade passed through Dubai last year but its refining strength remains weak, according to the Dubai Multi Commodities Centre Switzerland dominates that aspect of the sector and refines about 70 percent of the world’s gold.
The refinery is expecting that gold demand in Asia will continue to grow in the future. But that expected growth isn’t a sure thing. India, for one, imposed a record 10 percent import tariff on gold in a bid to reduce its current account deficit. China’s gold imports, meanwhile, fell by a third in the first quarter.
Kaloti said he sees little risk of a long-term interruption to growth as his firm’s precious metals output and trade have improved 25 to 35 percent annually for the past 25 years.
Another source of frustration is endorsement. The London Bullion Market Association runs a Good Delivery List of certified refineries. Some feel the system favors Western companies. That could change, though, with Dubai’s refining capacity expansion and developments in exchange based trading. Dubai’s proximity to the growing economies in the east also would put it in a strong position to challenge Europeean dominance.