Perth Mint accused of diluting its gold bars with silver and copper before selling to China

Australia’s biggest gold refinery the Perth Mint has found itself in the middle of a doping scandal after allegedly diluting its bullion with silver and copper before selling to China.

Owned by the Western Australian Government, Perth Mint was outed this week by a Four Corners investigation claiming it diluted up to $8.7 billion worth of bars between 2018 and 2021 bound for the Shanghai Gold Exchange (SGE).

The SGE — a key buyer of Perth-produced gold — is believed to have raised complaints in 2021 about two gold bars which did not meet its strict purity specifications during standard metallurgical assaying.

The mint has confirmed that all gold sold during that period had exceeded the minimum 99.99% industry standard; however, it had breached Shanghai’s tougher specifications which require that 0.01% of the non-gold component cannot contain more than 50 parts per million of silver.

Now, the world’s largest refiner of newly-minted gold could be made to recall up to 100 tonnes of stock to Perth for re-casting without impurities at taxpayer expense.

Doping program

The 124-year old Perth Mint introduced its doping program in 2018, whereby non-gold metals such as silver and copper are added to the mix to lower the overall gold content.

This program was expected to save the organisation around $620,000 a year – equating to a small fraction of the mint’s annual turnover, which was reported to be $22 billion last financial year.

Documents show some personnel at the mint had raised concerns the gold bars produced from 2018 to 2021 might not meet SGE standards but the doping program continued.

Too much silver

The program was immediately stopped following SGE’s complaints that two of the bars it had received contained too much silver and not enough gold.

An internal investigation by Perth Mint found one of two bars had allegedly failed to meet China’s standards – raising the possibility that the entire batch had similar defects.

The mint opted to not send through failed assay tests to SGE prior to shipment.

It replaced one of the bars but left SGE to prove that the other bars were similarly tainted.

Diluting gold is generally tolerated by the industry, with the provision the bars retain 99.9% purity.

Compliance breach

Perth Mint’s doping scandal comes after allegations it breached the industry’s compliance regime by selling $27,000 in gold last year to a notorious WA bikie, who used only his driver’s licence.

The mint is required to conduct extensive checks on higher-risk customers, which includes examining how funds are sourced.

If it is found to have breached any laws, it could be fined hundreds of millions of dollars which would ultimately be paid by WA taxpayers as the mint is the only refinery in the world underwritten by a government.

High-risk target

Perth Mint is a high-risk target for money laundering as gold can be very difficult to trace to its point of origin if melted or moved.

Last year, financial crime regulator AUSTRAC (Australian Transaction Reports and Analysis Centre) appointed an external auditor to examine concerns about the mint’s compliance with anti-money laundering and counter-terrorism financing obligations.