supply chain of gold

Topics: Gold, Supply chain management, Supply chain Pages: 5 (770 words) Published: April 26, 2014
Supply Chain Of Gold

Name - Kunal Rana
Student ID - 4648789
Words - 750.

The supply chain for gold goes through 4 distinct phases to reach the end consumers.

Mining.
Refining.
Manufacturing.
Retailing

Mining –

The gold mines are the suppliers of gold to the world, gold mining is the process of extracting gold ores from the earth’s surface using various techniques such as underground mining, long hole stopping etc. as well as extracting the majority of the mined gold from it’s ores and then further purifying it by smelting and cooling it to create `dore’ bars of up to 92% purity to be transferred to the next phase.

Refining –

From the mines, the dore bars are transferred to refineries worldwide to be refined into pure gold of at least 99.5%purity levels,” In the Miller Process, chlorine gas is bubbled into the molten gold. The impurities within the gold separate from it and form chlorides, which concentrate on the surface of the molten metal. It is then relatively easy to pour off the purified gold, which is about 99.5% pure”(World Gold Council, 2014), additionally they use electrochemical processes to achieve the up to 99.9% extremely pure levels in gold refining.

Manufacturing –

This involves the transformation of the refined gold from a commodity into several different products such as jewelry, mobile phone parts, medical implants etc. since gold is an extremely important and useful commodity with various applications in the modern world, with jewelry as the leading product for which gold is used for.

Retailing –

The gold products such as jewelry is then sold to the end consumers all over the world with India, the leading market for gold globally and china being the fastest growing market for gold jewelry in the world. “India has traditionally been the largest market for gold jewelry in the world, absorbing a staggering 746 tonnes of gold in 2010, while China has seen stunning growth rate over the past decade accounting for some 400 tonnes in 2010.” (World Gold Council, 2014).

The traditional supply chain can be applied to the supply chain for gold as they are very similar, the traditional supply chain is the flow of goods form the suppliers to the manufacturers to the distributors and then to the retailers to finally reach the end consumers as well as the flow of information in both directions in the supply chain. The Mining and refining phase of gold supply chain can be categorized as the supply of the raw materials for production according to the traditional supply chain, making up the first phase. The manufacturing process and phase is the same in both the supply chains, while the distribution part of the supply chain is also covered in the retailing phase of the supply chain for gold as well as the transfer of good to retailers which is then sold to the end consumers when applied to the traditional supply chain.

Some of the problems that may exist in the supply chain of gold could be –

Gold mining causes a lot of land degradation as well as pollution from the mining activities which release high volumes of mercury into the air which necessitates the need for more responsible and ethical gold supply chain management, only dealing with ethical suppliers as well as monitoring the suppliers activities and using clear supplier selection policies.

Due to gold being globally sourced from the available gold mines, difficulties in transportation, delays as well as miscommunication might occur due to language barriers due to the suppliers being located in a country with a different native language. This can be overcome by conveying clear and concise information and coordinating the activities throughout the supply chain.

Difficulties in transporting huge amounts of dores from the mines to refineries as well as the high costs...


References: World Gold Council. (2014). Supply Chain. Available: http://www.goldfacts.org/en/supply_chain/refining/. Last accessed 6th Feb 2014.
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