The London Bullion Market Association (LBMA) is set to increase fees paid by its members as the industry body seeks additional funding to support its expanding role in the global precious metals market.
According to Bloomberg, the LBMA, which oversees the Good Delivery List that sets widely used standards for gold refiners, is looking to raise more revenue from licensing and membership fees.
“For us to continue and grow our mandate, we need resources to do that,” LBMA CEO Ruth Crowell said at a press conference during the association’s annual gathering in Sorrento, Italy.
The LBMA will also allow members to pay their dues in advance as part of the changes.
Licensing and membership fees currently account for around 50% of the association’s revenue.
Tanzania case approaches
The changes come as the LBMA prepares to stand trial over its alleged legal responsibility relating to the deaths of two artisanal miners at the North Mara gold mine in Tanzania in 2019.
The two miners were shot and killed by security personnel after entering the mine, which is now operated by Barrick Mining (TSX:ABX).
Families of the victims subsequently filed a lawsuit against the LBMA, alleging it was negligent in awarding a Responsible Gold Certificate to a Good Delivery refiner that processed gold from North Mara.
The LBMA denied those accusations and believes the claim has no merit, stating that it is confident it will successfully defend the case.
Several traders, refiners, and responsible-sourcing experts privately told Bloomberg they expect the LBMA to prevail.
However, they have not ruled out the possibility that an adverse ruling could have significant consequences for the London gold market and the wider bullion industry.
Those familiar with the LBMA have told Bloomberg that a significant damages award could risk leaving the industry body insolvent.
Wider implications
A ruling against the LBMA could potentially open the door to similar claims against other organisations that oversee approved-producer systems, Bloomberg reported.
That could include the London Metal Exchange, which operates a comparable system requiring metal producers to meet certain standards before their brands can be delivered against LME contracts.
The LBMA’s Good Delivery List also extends well beyond the London physical gold market.
Futures exchanges, including those operated by CME Group (NASDAQ:CME), use the list to help determine which refiners can supply gold eligible for delivery against their contracts.
Hong Kong’s newly established gold clearing system also intends to use the LBMA Good Delivery List, according to the association.
Write to Jackson Chen at Mining.com.au
Main Image: LBMA
