Strategic Acquisition and Value Addition of Gold Resources for India

Sundaravalli Narayanaswami and Anmaya Agarwal

IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: This paper tries to address India's dependency on imported gold, where annual demand (~800 tonnes) (World Gold Council, 2025) vastly exceeds domestic production (~1.5 tonnes) (Ministry of Mines, 2024), leading to high imports and creating significant current account pressure. Our research identifies countries offering below-average import costs while revealing India's underutilized refining capacity—just one LBMA accredited refinery (London Bullion Market Association, n.d.) within an 1,800-tonne capacity industry competing against unorganized operators for limited raw materials (World Gold Council, 2022-a). Through comparative analysis of international models, we present two strategic pathways. Switzerland demonstrates substantial value addition (~40%) through its refineries, transforming gold doré into finished bullion. Alternatively, Japan achieves remarkable export capacity (200 tonnes) despite minimal mining through complete vertical integration—importing gold ores, recycling 500 tonnes of gold scrap annually, and recovering precious metals from electronic waste through its 11 LBMA accredited refineries (London Bullion Market Association, n.d.). Japanese refineries trade gold in interesting ways like securing supply by acquiring stakes in foreign mines (IAMGOLD Corporation, 2017) or developing premium "green gold" through processes that reduce the amount of carbon emitted (ARE Holding Inc., 2024). This research provides crucial insights for Indian policymakers and industry stakeholders to transition from price takers to price setters in global gold markets.

Date: 2025-04-22
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