Kaloti accepted to Shanghai International Gold Exchange

Kaloti has a refinery in Sharjah, above, and is adding a new $60 million Dubai refinery later this year. Delores Johnson / The National

Kaloti Precious Metals has been identified as a member of the Shanghai International Gold Exchange (SGEI), which was set up last year by China to increase the country’s influence over gold trading.

The Dubai-based Kaloti, which is one of the world’s largest gold traders, said it had announced its membership as soon as it was made official by SGEI, even as it began trading on the exchange last September.

Kaloti has a refinery in Sharjah and is adding a new US$60 million Dubai refinery later this year, which will be one of the world’s largest with a capacity to refine up to 1,400 tonnes of gold and up to 600 tonnes of silver.

Membership in the SGEI will give access to a market that the Chinese government has created to boost the international trade of gold denominated in the Chinese currency, the yuan. Daily volumes at the SGEI, which is located in the Shanghai Free Trade Zone, have already reached as high as 31 tonnes.

China is the largest producer and consumer of gold in the world, but its pricing is still dominated by exchanges in the US and Europe.

China’s domestic gold mines produced 428 tonnes in 2013, while the country also imported 1,540 tonnes of gold in the same period. Foreign investors are allowed to use “offshore” yuan to trade gold on the exchange.

“This membership ensures we are aligned with the significant shift in the gold industry towards the east, and particularly towards China, where physical demand for gold has increased majorly over recent years,” said Munir Kaloti, the chairman of Kaloti.

“Later this year, our new refinery located in Dubai will be operational, adding to our overall capacity and capabilities and enabling us to serve the growing global markets around the world – and in China in particular.”

Kaloti is licensed by the Dubai Multi Commodities Centre Authority and is listed on a number of exchanges, including Comex and the Dubai Gold and Commodities Exchange.

It has faced controversy over gold trading ethical standards and last month was delisted from the DMCC’s “Dubai Good Delivery” list for failure to comply with the DMCC’s standards.

That followed an international media storm early last year, when a Dubai-based auditor for EY, who had been working on a DMCC-compliant audit for Kaloti, resigned and went to the media with accusations that Kaloti did not comply with standards related to conflict gold and money laundering.

Kaloti has denied the allegations.

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