Gold financing scheme aiding jewellery manufacturers

Posted on October 28th, 2014

Gold financing scheme aiding jewellery manufacturersSouth Africa is home to some of the deepest mines in the world and accounts for almost 50% of the world’s found gold reserves.

According to the Chamber of Mines of South Africa, gold mining has been valued at close to $4 billion and continues to provide consistent yields. The mining sector created more than 1 365 892 jobs just two years ago.

Mining is a capital and labour intensive enterprise,  in an effort to assist, government offers capital and operational loans to qualifying gold jewellery manufacturers.

The scheme is capitalised by the Department of Trade and Industry (the dti) and is managed by the Industrial Development Corporation (IDC).

The gold loan scheme

The Gold Financing Scheme was set up to provide working capital loans to gold jewellery manufacturers. The working capital loans under the scheme are provided at a fixed interest rate of 3% per annum.

Gold financing scheme can loan up to the minimum of R3 million and funding is only available for manufacturing activities taking place in South Africa.

At the beginning of this month the country’s minerals beneficiation industry received a cash injection of R100-million under the scheme to benefit emerging and established jewellery manufacturers.

The industry

The latest figures, according to the Minister of Trade and Industry Rob Davies, indicate that there are about 1 000 jewellery manufacturers left in the country and that production is down to 3 500 kilograms per annum, from 7 500 kilograms in 2004.

While local jewellery exports stood at R467-million in 2013, imports exceeded R1-billion – compared to exports of R466-million against imports of just R280-million in 2004.

Who benefits?

The gold financing scheme is extended to existing gold jewellery manufacturers who require a minimum of 4kg and a maximum of 10kg of gold.

Requirements and criteria

The dti uses a strict criteria to determines qualifying businesses for loans, but most importantly, government considers that the gold mining enterprise must have economic merit and have a secured contract.

The client needs to possess requisite statutory approvals and documents for handling precious metals. Security is required, such will be determined on a case-by-case basis.

The client must comply with the IDC’s normal funding requirements such: have adequate insurance against gold loss and acceptable physical security and metals management systems.

Manufacturers are expected to make their own financial contributions as well but this is determined on a project-by-project basis.

How to apply

Jewellery manufacturers that require the funding need to follow normal application process by submitting documents online or to IDC offices.