Overview of Commodities – Metals

Session Outline
• Introduction to Base Metals
• Major Sources of Base Metals
• Industrial uses of various Base Metals
• Major Base Metal Markets in the World
• Supply Chain
• Factors Influencing Base Metal Prices
• Overview of Base Metals Markets in India
• Introduction to Precious Metals
• Major Producers and Consumers of Gold
• Price influencing factors of gold
• Role of London Bullion Markets Association (LBMA)
on Prices, Standards and Refining
• Producers and Consumers of Silver
• LBMA and Silver Prices
• Silver and its various uses
• Overview of gold & Silver Markets in India
2
Aluminum Factsheet
• Aluminum is an excellent reflector of heat, light
and electromagnetic waves
• Aluminum's light weight and strength makes it
particularly suitable for all means of
transportation
• Aluminum's thermal conductivity is remarkable
and promotes its use in diverse manufacturing
sectors
• One of the most versatile of all the metal.
Aluminium may be cast by all known foundry
methods
• Aluminium of corrosion resistant
• Can be alloyed with diverse metals to improve
certain properties.
• Aluminium in its purest form and certain alloy
are excellent electricity conductors
• Aluminium takes colour well and is suitable for
all types of printing
3
 Aluminum Factsheet

Aluminium Forms
• Flat-rolled Aluminium
• Castings
• Extrusions
• Forgings
• Rod and Bar
• Utensils
• Wire
• Ingots
• Pigments and Powder

4
Aluminium Production Process

5
Global Aluminium Production – Major
Producers

6
 Key Global Players

• Rusal
• Rio Tinto Alcan Inc
• Nosk Hydro ASA
• Emirates Global Aluminium PJSC
• Vedanta Limited
• Nalco
• Kennametal India Limited
• Gujarat Foils Limited
• Aluminium Bahrain (Alba)

7
 Domestic Aluminium Balance Sheet

India Primary Vs Secondary Aluminium – 3.7 MMT ( 77%) Vs 1.1 MMT (23%)

India: Basic Customs Duty on Aluminium Bars and Rods – 7.5 % IGST – 18 % Social
Welfare Surcharge – 10%

8
 Indian Aluminium Production Vs Global – A
Comparative Outlook
Metal Cost Breakup US$/t
Captive Power Costs, Rs/kWh
2000
India 1800
3.10
1600
1400
1200
1000
subsidies and cheaper grid tariffs
Xinjiang
1.3 800
(Xinfa) provided by various provincial
600
Shandong 400
1.8
(Hongqiao) 200
Ningxia 0
2.0
(Qing on ia, China Canada India Russia Norway ME
Gansu (Chalco,
2.5
the exact opposite
Power Alumina of China
Raw Materials Labour Other Cash Cost
Dongxing)
Sichuan Figure 11: Breakup of Metal Cost (US$/t)
2.8
(Qimingxing)

Qinghai (all) 2.9

9
Major Primary Aluminium Producers in India

1.29 Mill Tons 4,40,00 Tons

(19%) (6%)

3.68 Mill Tons

(53%)

10
Aluminium Consumption – India Vs Global

11
Aluminium Historical Price Trend and World
GDP

12
Global Aluminium Stocks and Prices

13
 Aluminium Vs Energy

To produce one tonne of primary aluminium metal, a smelter requires 14500 units of
power, which is generated by burning 11.7 tonnes of coal.

14
Trade Tensions and Aluminium Prices Rusal Ban
and China Export Tax
London Metals Exchange
three-month futures for
aluminum have jumped to
$2,245 a metric ton as of
Wednesday's settlement, up
13% from April 6, 2018,
settlement at $1,988

15
 Copper Factsheet
Butcopper’sbenefitsextendbeyondmechanical characteristics:
Copper is essential to the health of plants, animal and humans.
Deficiencies,aswell asexcesses,canbedetrimental tohealth.
Antimicrobial Properties. Due to copper’s antimicrobial
properties, copper and copper alloy products can be used to
eliminatepathogensandreducethespreadofdiseases. The World Copper Factbook 2019
Key Physical Properties of Copper
Recycl ing. Copper is one
opper Properties and Benefitsof the most recycl e d of all metals.
Virtually all products made from copper
Chemical Symbol Cu can be recycled and

recycledcopperlosesnoneofitschemical orphysical properties.

Atomic Number

Atomic Weight
29

63.54

Energy Efficiency. Copper can improve the efficiency of energy

Density 8960 kg m-3

Melting point 1356 K

productionanddistributionsystems.
pecific Heat cp (at 293 K) 0.383 kJ kg-1 K-1

hermal conductivity 394 W m-1 K-1

Coefficient of linear expansion 16.5 x 10-6 K-1

oung's Modulus of Elasticity 110 x 109 N m-2

lectrical Conductivity (% IACS) 1.673 x 10-8 ohm-m 16

But copper’s benefits extend beyond mechanical characteristics:
Crystal Structure Face-Centered Cubic Copper is essential to the health of plants, animal and humans.
per Factbook 2019

Long Term Availability of Copper

Global Copper Reserves
2018 World Copper Reserves & Mine Production 1/
(undiscovered resources not including deep sea nodules and land based and
of submarine massive sulfides contained copper)
d,
re
ly Total Resources
on (identified and undiscovered)
5,600 million tonnes (Mt)

es
nd
nd Identified Resources
st 2,100 Mt
ne
to

Reserves
the 830 Mt
the

or Mine Capacity
ally 24.1 Mt
ing Mine
be Production (not to scale)
mic, 20.6 Mt
ied
es,
ally
hat 1/ Source: USGS (resources/reserves data) and ICSG (capacity/production data)

17
Copper Production Process

18
Copper in Various Forms

19
 Global Refined Copper Production – By Major
Countries
The World Copper Factbook 2019

Copper Smelter Production by Country: Top 20 Countries in 2018

Thousand metric tonnes copper
Source: ICSG
China
Japan
Chile
Russian Fed.
Zambia
Korean Rep.
United States
Poland
India
Germany
Australia
Bulgaria
Peru
Canada
Iran
Spain
Kazakhstan
Mexico
Indonesia
Sweden

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000

In 2018, China accounted for over 40% of world copper smelter production, followed by Japan (8%), Chile (6%) and Russian Federation (5%).

Note: Capacity data reflects production capabilities not necessarily production forecasts

International Copper Study Group 19

20
 World Refined Production Trends
The World Copper Factbook 2019

Refined Copper Production

World Refined Copper Production, 1960 2018

Thousand metric tonnes copper
Source: ICSG
25,000

20,000

15,000

10,000

5,000

0
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

Refinery Primary Refinery Secondary Refinery SX-EW

With the emergence of solvent extraction electrowinning (SX EW) technology, refined copper produced from leaching ores has increased from less
than 1% of world refined copper production in the late 1960’s to 16% of world output in 2018.

International Copper Study Group 21

21
 ternationally include:

Copper concentrates

Global Trade in Copper and Copper Products

Copper blister and anode
Copper cathode and ingots
Copper scrap and
per Factbook 2019
Copper semis
opper powders and compounds are also traded globally, but typically in
much smaller quantities. In additional, copper is contained in end use
roducts that are traded globally including automobiles, appliances,
n,ectronic equipment and other products. Changes in trade regulations, such
sm import duties or export quotas, can have significant impacts on the
irternational trade of copper. For more information about the international
edade of copper and changes in regulations that can affect the trade of
opper, please contact the ICSG Secretariat at mail@icsg.org1

Gross weight.
Exports
n and Imports might not match due to transit time, under-reporting or product
misclassification
se
s,
nternational
h Copper Study Group 31
he
al
of

22
 Copper Stocks, Price & Usage
The World Copper Factbook 2019

Copper Stocks, Prices and Usage (Jan 2001 Jun 2019)

Thousand metric tonnes copper and US cents/pound
Source: ICSG
3,375 450

3,000 400

2,625 350

2,250 300
Thousand metric tonnes, copper

Price LME (US cents/pound)

1,875 250

1,500 200

1,125 150

750 100

375 50

0 0
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Exchanges Producers Merchants Consumers 3 mth m oving average copper usage seasonally adjusted Price LME (UScents/pound)

23
International Copper Study Group 37
Copper Uses – India Vs Global

24
India Copper – Balance Sheet
I dia Pe Ca i a C e C m i c e l l
Expected to increase to 1.5 kg by 2025

(kg/person)

5.82 5.64

0.60

China USA India

Domestic Copper Consumption to Increase

Refined Copper Consumption

(Lakh tonnes)

6.7 6.5 6.3 7.0

5.0 5.6

FY14 FY15 FY 16 FY17 FY18 FY 19

Copper consumption grown at a CAGR of 5.8% from FY13 to FY18.

25
India Copper Imports

26
 Growth Drivers
Antimicrobial
Copper is gaining popularity as an alternative to plastic in medical applications, such as sterile table tops an
d medical cart handles
Aquaculture
Marine aquaculture nets and pens made with copperalloy mesh are emerging as an effective solution to impor
tant problems facing the near-shore fish farming industry
Electrical Propulsion
Powering EVs require changes to the electrical infrastructure that will benefit from copper
Renewable Energy
Copper plays important roles in clean energy systems from wind to solar thermal plants
Seismic Energy Dissipation
Earthquake damage can be controlled through the use of copper-based devices that absorb energy to li
mit building motions
Ultra-conductive Copper Components
Progress is being made in the methods of incorporating nanocarbon materials into copper in
a way that promises to deliver large efficiency improvements in electrical energy transmission and distrib
ution networks
Electrical Vehicles (EVs)
To reduce carbon emissions. Rising number of EVs is expected to result in increased copper usage .

27
 Electric vehicles (EVs) contain approximately four times more
major forms of transportation depend on copper to perform
copper than conventional cars. It is used in batteries, windings and
al functions. Copper and Electric Vehicles copper rotors used in electric motors, wiring, busbars and
charging infrastructure.
Copper nickel alloys are used on the hulls of
EVs boats
contain typically four times
and ships to reduce marine befouling,
copper than that of
thereby reducing drag and improving fuel
conventional vehicles
consumption.
- Batteries
- Windings
Automobiles and trucks rely on copper motors,
- Copper Rotors
wiring, radiators, connectors, brakes and
- theWiring
ings. Today, average internal combustion engine contains
ut 22.5 kg- (50Charging
lbs) of copper,Infra
while luxury cars on average
ain around 1,500 copper wires totaling about 1.6 km (1 mile)
2018 – 5 Mill EVs estimated
ngth.
Charger – 0.7 kg
Fast Charger – 8 kg

It is estimated that globally over 5 million electric vehicles were on

the road in 2018. In an effort to reduce carbon emissions it is
expected that the use of EVs will continue to rise. The demand for
EVs is also expected to increase as a result of technology28
World GDP Vs Copper Prices

29
Impact of Stocks on Copper Prices

30
Nickel Factsheet

31
 Nickel – Profile
• Nickel occurs in nature principally as oxides, sulphides and silicates.
• Nickel is the fifth most common element on earth with its highest concentrations
found in the core and the lowest in the earth´s crust.
• Nickel ores are mined in about 33 countries on all continents, and are smelted or
refined in about 30 countries.
• Primary nickel is produced and used in the form of ferro-nickel, nickel oxides, NPI,
nickel sulphate and other chemicals, and as more or less pure nickel metal.
• Nickel is also readily recycled in many of its applications, and large tonnages of
secondary or "scrap" nickel are used to supplement newly mined ores.

32
 Nickel – Market Overview
• Nickel occurs in nature principally as oxides, sulphides and silicates.
• Market for nickel is expected to expand at a CAGR of more than 5% (2020-25).
• Major factor driving the market studied is rising demand for corrosion resistant
alloys in the oil & gas industry.
• Volatility in the supply demand scenario is expected to hinder the growth of the
market studied.
• Growing popularity of electric vehicles is likely to act as an opportunity in the
future.
• Asia-Pacific dominated the market across the globe with the largest consumption.

33
Nickel - Fundamentals
Supply
• Mine production: Growth is set to
slow this year.
• Refined production to grow at a
stronger pace on higher ore availability
from Indonesia and an attractive
international price.
Demand
• Robust demand outlook amid strong
stainless steel production and production
of car batteries in EVs.

• The biggest winner of EV revolution –

battery chemistries will be increasingly
nickel-intensive.

34
Estimated World Nickel Ore Reserves

35
World Nickel Mine Production Trends

36
World Nickel Usage (1995-2017)

37
Global Stainless Steel Production (in 1000 MT)

38
Primary Nickel Producers

39
 Nickel Usage
• Nickel is used in over 300,000 products for
consumers in form of over 3000 alloys.
• Primary Nickel Metal Market Segmented in to:
o Stainless Steel
o Nickel Alloy
o Plating
o Battery Material
• It is also a high-end material used in
construction, automobiles, petrochemicals,
fabrication and welding, power and renewable
energy, electronics, transportation and water
sectors.
• Stainless steel industry is the biggest user of
primary nickel and scrap nickel followed by
alloys.
40
 Nickel Usage

• Stainless steel industry accounted for approximately 75% of all primary nickel
usage and also consumed nearly 900,000 tonnes of scrap nickel (2017).
• The battery industry accounted for 3.7% with the remainder used by the other
above-mentioned industries.
41
Nickel – Competitive Landscape

42
India Nickel Imports (country-wise)

43
India Nickel Imports (year-wise)

44
 Price (US$/MT)

13,750
23,750
33,750
43,750
53,750
63,750

3,750
Jul/00
Feb/01
Sep/01
Apr/02
Nov/02
Jun/03
Jan/04
Aug/04
Mar/05
Oct/05
May/06
Dec/06
Jul/07
Feb/08
Sep/08
Apr/09
Nov/09
Jun/10
Jan/11
Aug/11
Nickel Price (LME)

Mar/12
Oct/12
May/13
Dec/13
Jul/14
Feb/15
Sep/15
Apr/16
Nickel Price Movement (LME)

Nov/16
Jun/17
Jan/18
Aug/18
Mar/19
Oct/19
May/20
45
 Price (US$/MT)

11,500
13,500
15,500
17,500
19,500

7,500
9,500
Aug/15
Oct/15
Dec/15
Feb/16
Apr/16
Jun/16
Aug/16
Oct/16
Dec/16
Feb/17
Apr/17
Jun/17
Aug/17
Oct/17
Dec/17
Feb/18
Apr/18
Nickel Price (LME)

Jun/18
Aug/18
Oct/18
Dec/18
Feb/19
Apr/19
Jun/19
Aug/19
Oct/19
Dec/19
Feb/20
Nickel Price Movement & Stock Levels(LME)

Apr/20
Jun/20
46
Zinc Factsheet

47
 Zinc - Profile
• Zinc is a slightly brittle metal at room temperature and has a blue-silvery
appearance when oxidation is removed.
• Zinc is a bluish-white, lustrous, diamagnetic metal, though most common
commercial grades of the metal have a dull finish.
• Metallic zinc is produced by roasting the sulfide ores and then either leaching the
oxidized product in sulfuric acid or smelting it in a blast furnace.
• A little more abundant than copper, zinc makes up an average of 65 grams (2.3
ounces) of every ton of Earth’s crust.
• Leading early 21st-century producers of zinc are China, Australia and Peru.
• At present, zinc is the world’s fourth most widely consumed metal after iron,
aluminum and copper.
• It has strong anti-corrosive properties and is well connected to other metals.
• Used in many commercial industries and major uses of zinc metal are
in galvanizing iron and steel against corrosion and in making brasses and alloys
for die-casting.
48
 Zinc – Mining Process
• The zinc mining process is conducted primarily underground, with more than 80%
of all zinc extracted beneath the Earth’s surface.
• 8% of zinc is mined in open pits, with the remaining 12% being mined through both
methods.
• Once it’s removed from the earth, the concentrate is roasted at a temperature of
950 degrees Celsius, causing zinc, sulfur and iron oxidization.
• After the zinc and iron oxides are reduced to powder form and leached with diluted
sulfuric acid, the solution is neutralized and contaminants are removed via
filtration.
• In the foundry, the zinc goes on to take its final form.

49
Zinc Smelting

50
Zinc – Smelting Process

51
World Zinc Production & Consumption (000 tonnes)

52
 World Zinc Production & Usage (000 tonnes)

Production
• China occupies the first place in case
of mine production accounting for
about 34% and 40% in terms of metal
production.
• Australia takes the second place with
about 12% of mine production
followed by Peru with 10%.
• U.S. with 6% and India with 5.5%
share in total mine production in the
world.

53
 Uses of Zinc

Manufacturing
, construction
material
Solar cells,
nuclear Alloy (mixed
reactors with copper to
form Brass)

Micronutrients Galvanizing
for people, Uses of (Iron or steel
plants and Zinc to avoid
animals rusting)

Oil based
paints, Die casting
additive to industry
rubber Cosmetics
and
pharmace
uticals

54
 Domestic Zinc Market
• There is huge end-demand for zinc in India, particularly since the galvanizing
sector continues to deliver strong growth.
• Country’s investment in infrastructure is also driving end-demand for zinc, and
this momentum is likely to continue for many years.
• Vedanta Limited is India’s largest and world’s second largest zinc miner.
• Vedanta Ltd. zinc operations currently hold 72% market share in India’s Zinc
industry.
• Vedanta Ltd owns 64.9% stake in Hindustan Zinc Limited (HZL), while the GoI
retains a 29.54% stake.
• India’s zinc ore resources are estimated at 385 million tonnes. There are two
primary producers of Zinc.
– Hindustan Zinc Limited (HZL),
– Binani Industries, with smelting capacity of 38000 tonnes per annum

55
India Zinc Market Segmentation

56
India Zinc Imports (US$ million)

57
 Zinc – Price Influencing Factors
• Global supply of zinc is a major price determining factor.

• Substitutes can also greatly influence the demand for zinc. Metals such as
aluminum and magnesium are alternatives as die-cast materials.

• Production and refining methods for zinc are also influencing prices as these
processes are becoming ever increasingly cost-effective.

• This will increase the supply of available zinc and thus lower the price of this
metal.

• Limited remaining deposits can cause difficulties on the supply of zinc in the
future.

• Zinc has a lower return yield which is why very limited budget is spent on the
exploration of new zinc deposits.

58
 Price (US$/MT)

1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
4,500.00
5,000.00

500.00

0.00
Jul/00
Feb/01
Sep/01
Apr/02
Nov/02
Jun/03
Jan/04
Aug/04
Mar/05
Oct/05
May/06
Dec/06
Jul/07
Feb/08
Sep/08
Apr/09
Nov/09
Jun/10
Jan/11
Aug/11
Mar/12
Zinc Price Movement (CME)

Oct/12
May/13
Dec/13
Jul/14
Feb/15
Sep/15
Zinc Price Movement (CME)

Apr/16
Nov/16
Jun/17
Jan/18
Aug/18
Mar/19
Oct/19
May/20
59
Zinc Price Movement & Stock Levels(LME)

60
Zinc Stocks & Prices

61
Lead Factsheet

62
 Lead - Profile
• Lead is mentioned often in early biblical accounts.
• The Babylonians used the metal as plates on which to record inscriptions.
• The Romans used it for tablets, water pipes, coins, and even cooking utensils; lead
poisoning was recognized in the time of Augustus Caesar.
• Lead metal can be classified as either primary or secondary.
• Primary lead is produced directly from mined lead ore; secondary lead is produced
from scrap lead products (such as automobile batteries) which have been recycled.
• Annual production is approximately 8 million tonnes, half of which is primary lead.
It is rare to find pure deposits of lead in nature though.
• The majority of the deposits are mixtures of minerals, hence lead ore is usually
obtained as a byproduct of other metal mining such as zinc, silver or copper.
• In fact, lead ore is a main source of silver and contributes substantially towards the
world's total output.

63
Lead Smelting Process

64
Lead Smelting Process

65
World Lead Production & Consumption (000 tonnes)

66
End Use of Lead

67
 Domestic Lead Market
• Lead is exported as well as imported both in the form of concentrates as well as
various forms such as:

• Lead waste • Lead • Refined lead

• Scrap • Worked lead
and scrap unrefined unwrought

• Lead and alloys • Lead and alloys • Antimonial

• Pig lead • Alloys
including scrap unwrought lead
• Major export destinations: China for ore & concentrates while South Korea, Saudi
Arabia and Malaysia for metal alloys.
• Major import sources: Ireland, South Africa, Senegal and Morocco for ore &
concentrates whereas UK, UAE, Australia, South Korea, and US for Lead and
alloys.
– Major industrial sectors using Lead in India are:
– Batteries with 74% share
– Pigments & other compounds with 9%
– Rolls & extrusions with 8%
– Alloys with 3%

68
Domestic Lead Production (in 1,000 mt)

69
Lead – Price Influencing Factors
Largely
governed by
Int. markets
& Price
trends

Global Govt.
Economic policies on
Conditions Price trade
Influencing
factors of
Lead

Geopolitical Growth and

conditions of performance
major of major
producing utilizing
countries industries
70
 Price (US$/tonne)

1350
1850
2350
2850
3350
3850

350
850
Jul/00
Feb/01
Sep/01
Apr/02
Nov/02
Jun/03
Jan/04
Aug/04
Mar/05
Oct/05
May/06
Dec/06
Jul/07
Feb/08
Sep/08
Apr/09
Nov/09
Jun/10
Lead Price Movement (CME)

Jan/11
Aug/11
Mar/12
Oct/12
May/13
Dec/13
Jul/14
Feb/15
Sep/15
Apr/16
Lead Price Movement (CME)

Nov/16
Jun/17
Jan/18
Aug/18
Mar/19
Oct/19
May/20
71
Lead Price Movement & Stock Levels(LME)

72
Lead Price Movement & Stock Levels

73
Base Metal Market - Competitive Landscape

74
 Steel - Overview
• At 51.3%, China is the world’s largest producer of steel.
• India was the world’s second-largest steel producer with production standing at
111.2 million tonnes (MT) in 2019.
• With a total contribution of 5.9%, India has overtaken Japan to become the second
largest producer of steel.
• Production of steel has kept pace with its global usage.
• In 2018, the global usage of steel stood at 1712.1 MT, up from 1632.5 MT in 2017.
• Per capita consumption of steel increased to 224.5 kg in 2018 from 216.3 kg in
2017.
• Since 2008, domestic production has gone up by 75% while domestic steel demand
has grown by around 80%.
• Domestic export and import of finished steel stood at 8.24 MT and 6.69 MT,
respectively, in FY20P.

75
World Crude Steel Production (Million Tonnes)

76
Steel – GDP & Production Rate Comparison

77
Domestic Steel Industry – Journey So Far

78
Domestic Crude Steel Production (Million Tonnes)

79
Sector-Wise Domestic Demand for Steel

80
Export value of base metals from India (FY2019) in US$ million

81
Gold Ore Reserves by Countries

82
Major Gold Producers

83
Gold Refining Simplified

84
Various Gold Products

85
Historical Gold Price Movements

86
Central Bank Reserves

87
Current Global Gold Demand Trends

88
India Gold Imports and Consumption

89
 Gold Prices Movers and Shakers
• Global Crisis – Financial Crisis, Geopolitical Turmoils, Currency Crisis, etc.
• Inflation – Currency values may change based on inflation but what an ounce can
buy commodities will stay stable
• Interest Rates – Lower rates – Investors prefer Gold and higher the rates investors
chase debt instruments
• Currency Rate – Gold provides a proxy hedge to currency exposures
• Economic Instability – Investors flock to gold as value of paper money is instable
• Production/Demand/Consumption
• Central Bank Reserves - Central banks have been adding to gold reserves as
growth slows, trade, geopolitical tensions rise, and some nations seek to diversify
away from the dollar
• Jewelry Demand

90
Gold Prices and Currency Rates

91
Gold Price Vs Real Interest Rates

92
The end of this phase was marked by rising gold demand,
gold imports and gold prices. In 2007, demand totalled
771.1 tonnes. It peaked at 1001.7 tonnes in 2010, reduced
slightly in subsequent years, but remained between
India’s Gold Policy Regime
850 –950t. At the same time, the gold price more than
trebled and the current account deficit (CAD) began to
spiral out of control. (For more information on the
macro-economic back-drop, please see Chapter 1)
Review of gold policy since 1947
Restriction (1947–62)
Foreign Exchange Regulation Act (FERA) introduced
in 1947
Nationalisation of Kolar gold mine at Mysore took
place in 1956
Replacement of the proportional reserve system with
the minimum reserve system for currency issue in 1956
First Gold Bond Scheme introduced in 1962.
Prohibition (1963–1989)
Gold Control Rules (1963)
Gold (Control) Act (1968)
Gold Bonds 1980 (March, 1965)
National Defence Gold Bonds 1980 (October, 1965)
Voluntary Disclosure of Income and Wealth
(Amendment) Ordinance (1975)
Gold auctions (1978).
Liberalisation (1990–2011)
Gold Control Act 1968, repealed in June 1990
NRI Scheme introduced in March 1992
Scope of Special Import License (SIL) scheme
expanded to include gold in April 1994
In 1997, seven banks were authorized to import
gold – a number that was later increased to twenty
banks. Gold Deposit Scheme (GDS) launched by
State Bank of India in 1999
Gold Deposit Scheme (GDS) launched by State Bank
of India (1999)
Banks permitted to sell gold coins in 2002, extended
to India Post in 2008.
138 RBI/2013–14/148, A.P. ( DIR Series) Circular No.15, 22 July 2013.
139 RBI/2013–14/187, A.P. ( DIR Series) Circular No. 25, 14 August 2013.
4. Intervention (Period of high customs duty
and 80:20 policy)
The deterioration of the current account deficit threatened
to affect the country’s credit rating. Global uncertainties
– caused by quantitative easing and the European crisis,
which affected India’s exports and investment flows –
and an unfortunate convergence of adverse domestic
governance issues were the primary triggers.
Intervention (2012 – 2013)
Duty hike to 10% from 2% through repeated increases
between January 2012 and August 2013
Introduction of the “80:20 rule”, an export obligation
of 20% on importers of gold138
Ban on import of gold coins and sales through
banks and post offices139
Reducing the loan that can be given against gold as
collateral from 75% to 60% of the value (LTV ratio).140
Transparency (2014 – end-2016)
Removal of “80:20,” an export obligation of 20% on
importers of gold (November 2014)
Ban lifted on import of gold coins (November 2014)
Gold Deposit Scheme of 1999 withdrawn and
relaunched in new form as Gold Monetisation Scheme
(November 2015)
Launch of first ever National gold coin – Indian Gold
Coin (November 2015)
Sovereign Gold Bond Scheme launched
(November 2015)
PAN (Tax Number) made mandatory on jewellery
purchases above Rs200,000 (January 2016)
Introduction of 1% Excise duty on Jewellers above
Rs120mn turnover (April 2016)
Demonetisation of INR500 and INR1,000 notes
(November 2016)
Removed 1% excise duty on branded gold coins with
purity of 99.5% (December 2016)
New Bureau of Indian Standards (BIS) Act introduced
that makes Hallmarking mandatory, effective
1 January 2017.
93
 Association.

Distractors of India Gold Prices Vs Global Prices

Chart 36: India's gold price can differ greatly from the LBMA Gold Price (previously the LBMA fix)
US$/oz
200
21 January 2013 13 August 2013
Import tax increased Import tax increased
to 6% from 4% to 10% from 8%
150
22 July 2013 28 November 2014 Period of
Introduction of Removal of 80:20 weak
80:20 policy policy demand
100 1 January 2016
PAN card mandatory on
jewellery purchases
above 2 lakhs
50

-50 5 June 2013

Import tax increased
to 8% from 6%

-100
13

13

14

14

15

15

16
01

01

01

01

01

01
20

20

20

20

20

20

20
r2

r2

r2

r2

r2

r2
h

ne

ch

ne

ch
be

be

be

be

be

be
c

c
ar

ar

ar

ar
Ju

Ju

Ju
em

em

em

m
M

M
ce

ce

ce
pt

pt

pt
De

De

De
Se

Se

Se
Source: World Gold Council

94
India Customs Duty Regime

95
 Drivers of Gold Prices in India
Long-term factors

1.5 billion
Gold demand and household income

+1 %
Gold demand and gold price

- 0.5 %

The Indian middle class

is expected to rise to
For a 1% increase in income, For a 1% increase in prices,
547 million by 2025 gold demand rises by1% 0.5%

The rise of the young, Indian, middle-class worker

is expected to lead to increased gold demand

Indian culture supports gold As the population becomes more Higher household incomes
demand across religions urbanised, earning power increases boost gold demand

Short-term factors

Gold price Excess

changes rainfall
For a 1% For a 1% increase in the gold price, A 1% increase in monsoon rainfall
increases by 2.6% demand will decrease by 0.9% above the long-run average, boosts
gold demand by 0.5%

Investors around the world turn to A good monsoon can increase crop
‘ yields, sweep money into the rural
economy and boost gold demand.

96
Global Mine Production of Silver in metric tonnes

97
Leading silver producing countries worldwide (2018)
in million Ounces

98
Top Silver Producing Countries/Companies

99
Export World Silver Supply & Demand in million ounces

100
Silver Physical Surplus/Deficit

101
World Silver Supply/Demand

102
Silver Prices & US$

103
Silver Price Movements

104
Gold/Silver Ratio

105
Correlations Of Changes In Daily Prices

106
Silver Prices Against Other Benchmarks

107
Domestic Silver Imports

108
Domestic Industrial Fabrication

109
 Useful References
a) https://www.icsg.org/

b) https://www.aluminum.org/

c) http://www.world-aluminium.org/

d) http://www.ilzsg.org/

e) https://www.worldsteel.org/

f) http://indsteel.org/

g) https://www.gold.org/

h) http://www.lbma.org.uk/

i) https://www.silverinstitute.org/

j) https://www.ibja.co/

k) http://ibma.co.in/
110
 Assignments for Students
A. Analyze the price trends of all the metals discussed today along with 5 major
price influencing factors and study the relationships

– Prices of metals can be downloaded from World Bank of Index Mundi

(Group 3)

B. Analyze the fundamentals of Platinum and Lithium and price influencing factors
for both the metals.

111
Thank You

112