Now before anyone starts panicking too much over the above headline, Perth Mint gold bars have always been refined to at least 99.99% purity and still are.
However, the Shanghai Gold Exchange (SGE) has a more stringent standard which the Perth Mint claimed to meet.
The SGE is the Perth Mint’s biggest customer so that is something of a big deal.
Unfortunately, from 2018 onwards, the Mint started “doping” its gold bars with tiny amounts of copper and silver. This pushed them dangerously close to the SGE’s higher specification limit.
Apparently, in September 2021 the SGE found that two gold bars from Perth Mint it had tested, allegedly contained too much silver.
One of the bars seems to have failed a purity test before it was shipped, but they sent it anyway.
It then failed a purity test in Shanghai.
Rather than inform the Chinese exchange of the previously failed test, Perth Mint opted to not send through the failed assay result.
The reason, according to an internal investigation was that the Mint was terrified of the reputational damage it would sustain if it were found out.
Perhaps they might have thought more about that before watering down their gold bars.
The savings from this dodgy practice netted them a measly $620,000 a year.
This is a tiny fraction of the mint’s turnover of almost $22billion last financial year.
Now, up to $9billion worth of gold that the Perth Mint sold to China could be recalled.
It would then have to be melted down, re refined and then sent back.
The Perth Mint, which is the largest refiner of newly mined gold in the world, is owned by the WA government and so it is WA’s long suffering taxpayers who will be on the hook for this one.
WA Premier Mark McGowan was the minister responsible for the Perth Mint for four years until March 2021.
The mint started ‘doping‘ its gold in 2018 and the practice stopped in September 2021 when the bars were discovered by the SGE.
Those are not good optics for a State Premier.
They are also not good optics for Australia in the eyes of our largest trading partner and strategic military competitor.
According to the ABC:
“In the same week as this crisis was unfolding behind closed doors at the Perth Mint, it was announced that Mr Hayes [the CEO of The Perth Mint at the time] would be retiring early due to illness. He did not respond to Four Corners’ questions or a request for an interview.”
I expect he’ll be leaving with a substantial golden handshake.
Wouldn’t that be ironic?