High gold prices quicken Africa’s push for local refining

Africa’s gold-producing countries are stepping up investment in domestic refineries as governments look to capture more value from the metal, strengthen foreign-exchange earnings, reduce inflation and gain greater control over a commodity trading at historically high prices.

Spot gold was trading at $4,181.59 an ounce on October 2, according to Reuters, and was on course for a second consecutive weekly decline, with prices down more than 2 percent for the week. The metal fell about 6 percent in September but remains above $4,000 an ounce, after reaching a record $5,594.82 in late January.

The elevated price means the economic value at stake is significant for African producers, particularly as governments seek to move beyond exporting gold doré and capture more of the refining, assaying, trading and financial activity around the commodity.

Burkina Faso opens first refinery

Burkina Faso made the latest move, inaugurating its first gold refinery in Ouagadougou on Monday. The Raffinor-BF facility cost more than 11 billion CFA francs ($19 million) and has an initial capacity to process 164 tonnes of gold a year, with plans to increase that to 515 tonnes.

The West African nation produced about 94 tonnes of gold last year, meaning the planned capacity could eventually accommodate gold from other producers in the region.

President Ibrahim Traoré said the country wanted greater control over what happens to its mineral resources after extraction. “We want to refine all our metals on site…We want to have control of the entire value chain,” he said.

The country is not starting this process from scratch across the continent. South Africa has been refining gold for more than a century. Rand Refinery was established in 1920 after South African producers sought to stop sending crude bullion to London for further processing. It remains a major regional refiner and an LBMA-accredited refiner.

Ghana moves from industry push to regulation

Ghana is now trying to deepen its own refining industry. The Ghana Gold Board, or GoldBod, began refining artisanal and small-scale mining gold at Gold Coast Refinery in February under an agreement to supply up to one tonne of gold doré a week. Gold Coast Refinery has a refining capacity of more than 80 tonnes a year, while South Africa’s Rand Refinery is providing technical, operational and commercial support as the Ghanaian facility seeks to meet international standards.

The push has since moved from an industrial initiative to a regulatory requirement. GoldBod directed licensed self-financing aggregators to refine gold doré in Ghana before export, with the rule taking effect on September 1. Unrefined doré is no longer eligible for export approval under the new regime.

GoldBod has also tightened the way gold purity is determined. From October 1, X-ray fluorescence, or XRF, became the definitive method for determining the purity of gold doré purchased by GoldBod and its licensed buyers, replacing the water-density method as the basis for pricing and payment.

GoldBod expects to generate $1.4 billion in foreign exchange in September, with up to $700 million earmarked for commercial banks and another $700 million potentially available to the Bank of Ghana for reserve accumulation under the Ghana Accelerated National Reserve Accumulation Programme. Africa’s top gold producer has also agreed to buy 30 percent of the gold output of large-scale mining companies from July. GoldBod says the doré purchased under the arrangement will be refined locally, then shipped to an LBMA refinery for melting and stamping before being delivered to the Bank of Ghana as part of the country’s gold reserves.

Joseph Nnanna, chief economist at the Development Bank of Nigeria, said the value African countries derive from gold would increasingly depend on what happens after extraction. “Gold, like any other natural resource, can only deliver sustainable value when it is processed along a full value chain,” he told BusinessDay. “Building strong value chains is essential for achieving sustainable economic growth.”

DRC joins the refining push

The Democratic Republic of Congo is also moving to bring more of its gold value chain onshore. The country launched its first pilot gold refinery in Kalemie, Tanganyika province, in March. Called DRC Gold Refinery S.A., the facility is a partnership between state-owned DRC Gold Trading S.A. and private company Lunga Mining.

The refinery has an estimated capacity of 500 to 600 kilogrammes of gold a month and covers the value chain from gold purchasing to refining and the production of bullion. Congolese authorities said the facility is intended to strengthen local processing, improve control over gold production and create more value within the country.

The project is also part of a broader effort to formalise the country’s gold trade, bringing artisanal miners and traders into a more transparent system while improving traceability and reducing the role of illicit gold channels. The DRC is seeking to position itself as an exporter of refined gold, with the refinery designed to produce bullion with purity of up to 99.9 percent. Ivory Coast is also targeting a 2027 gold refinery start as it seeks a top producer spot.

For Nigeria, the shift matters mainly as a template and a warning. A country that refines before export keeps the assaying, trading and reserve-building activity at home, the same logic behind Ghana’s plan to route up to $700 million into Bank of Ghana reserves from a single month of gold flows.