Perth Mint Explains Gold Doping Dispute

A supplied image obtained Friday, May 5, 2017 of Detective Senior Constable Jared Pragnell from the Gold Stealing Detection Unit holding a 1kg gold bar. AAP Image/Western Australia Police

Australia’s official bullion mint, Perth Mint, says there was “no question” about the gold value and purity of its gold bars sold to Chinese customers, which indisputably contained at least 99.99 percent gold “at all times.”

It comes in response to an investigation by the Australian Broadcasting Corporation (ABC), which found the mint may need to recall almost $9 billion worth of gold bars after it was discovered they had been diluted with other metals and allegedly swept the issue under a rug.

Perth Mint is wholly owned by the Western Australian government and is the only mint in the world backed by a government guarantee.

ABC’s Four Corners program said that in 2018, it began “doping” or diluting gold to lower the gold content.

Doping is an industry-wide accepted process due to the nature of the refining process and does not impact the 99.99 percent purity of gold.

A Perth Mint spokesperson told The Epoch Times in a statement that its 1 kilogram (2.2 pounds) gold bars contain up to 0.01 percent of non-gold materials, including silver and copper.

“These purity specifications are aligned with industry standards and akin with those set by the international market authority, the London Bullion Market Association,” the spokesperson said.

In 2021, the Shanghai Gold Exchange (SGE) informed the mint that two of the tested gold bars exceeded its specifications of non-gold content.

“The SGE specifications demand that the non-gold component—that is, 0.01 percent of the bar or 100 parts per million (ppm)—contains no more than 50 ppm silver,” the Perth Mint spokesperson explained.

This means SGE standards exceed that set by the London Bullion Market Association, demanding no more than 0.005 percent silver content.

After SGE flagged the issue, Perth Mint immediately launched a review of its refining practice, including its “doping” process.

The Perth Mint spokesperson said that it now implements processes to ensure that its 1-kilogram gold bars have an average minimum gold purity content of 99.996 percent, above the industry standard of around 99.992 percent.

“As a result of this new practice, which came into effect in December 2021, the maximum non-gold component in a 1-kilogram bar is 0.004 percent—also adhering to the SGE’s non-gold specification standards,” the spokesperson said.

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Reputation on the Line

According to an internal document obtained by the ABC, Perth Mint realised that the entire batch sent to SGE was unlikely to meet its gold standards and noted the potential consequences the incident could have on its reputation.

“If SGE—Gold Corporation’s pre-eminent exchange client—had made public that they had issues with Gold Corporation bars ... the impact of negative public statements on the business could be very significant,” the report allegedly says.

“Based on average understandings of volumes ... it was possible for up to 100 tonnes of stock to be recalled from the Shanghai Gold Exchange for replacement.”

Recalling the 100 tonnes of gold alone is estimated to cost about $8.7 billion, which would then need to be shipped back to Perth, melted, and recast without the extra impurities before reselling.

The internal report said the mint allegedly decided against sending SGE the failed gold purity tests, known as assays.

“CEO [Richard Hayes] confirmed only the compliant assay would be provided to the customer, with the broader burden of proof to be left with the SGE to prove non-compliance,” the report alleged.

A spokesperson for Perth Mint told the ABC that it had received a customer complaint but due to Chinese regulations on exporting gold out of China, the bars had not been returned “and therefore the customer’s concerns could not be verified.”

Premier Says He Was Unaware

Western Australian Premier Mark McGowan said he only became aware of the doping program after watching ABC’s Four Corners.

McGowan held ministerial responsibility for Perth Mint until it was handed to Mines Minister Bill Johnston in April 2021.

“I’m advised mints all over the world ... try to maximise value within the rules,” he told reporters on March 8.

“The Perth Mint tried to maximise value within the rules. For four of the world’s five gold exchanges, the content of silver was fine.”

He also said it was “extremely unlikely” that a taxpayer-funded buyback for the 100 tonnes of gold will occur.

“The advice I have is that is extremely unlikely,” he said.

“But we are working with the Shanghai Gold Exchange. We will make sure we have a continuing great relationship with them.

“Since this issue was identified in 2021, tonnes and tonnes of gold have been bought by the Shanghai Gold Exchange from the Perth Mint.”

McGowan added that the continued government ownership of the mint will be reviewed.