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ESG & Precious Metals Provenance : The Use Case For Digital Gold

By Jeffrey Premer, CEO, Vaultex

DIGITAL GOLD ENABLES TRANSPARENCY AND TRACEABILITY – A METHOD OF “TRACK AND TRACE” THROUGH THE SUPPLY CHAIN.

Digital gold enables transparency and traceability – a method of “track and trace” through the supply chain. This is achieved by providing provenance proof using a distributed ledger and corresponding technologies that further increase the benefits of digital gold. Provenance proof has been the focus of investor concerns and its integrity has been a key component of a recent World Gold Council survey, in which over 1 in 4 participants see provenance as a major concern. The use of digital gold in secondary trading markets has highlighted a potential solution to storing permanent digital records of any particular bullion’s provenance.

Additionally, environmental, social and governance (ESG) issues are a concern among investors. The environmental cost of proof-of-work blockchains, such as bitcoin, has become an important consideration for investors in their investment process. Providers of secondary markets today need to lower this carbon cost by using distributed ledgers that address this concern. This is achieved by using alternative consensus mechanisms built into ledger-based technology solutions for primary and secondary markets.

Asset managers report that the biggest challenges around ESG data are the lack of standards, data availability and data inconsistency. The use of public distributed ledgers with a secondary market infrastructure, and subsequent access to integration and pricing, enables broader access to ESG data, which up until now has been one of the biggest roadblocks. The impact of regulation like the European Union’s Sustainable Finance Disclosure Regulation and the establishment of regulated secondary markets will allow access and development of the industry as investors demand more disclosure. Ultimately, the secondary market will allow the emergence of products, such as carbon-offset precious metal products, to flourish and establish a benchmark for future ESG investment growth.

The ESG rating and carbon footprint of precious metals production vary considerably across different mine sources and supply chains. Mining as an industry consumes 11% of total global energy consumption. Open pit mines emit on average around 0.79 tCO2e and underground mines 0.47 tCO2e. Open pit mines process roughly five times the number of ore at an average grade of around 1.05 g/t Au, versus 3.25 g/t Au for underground mines, according to S&P. Gold mining’s carbon footprint also varies dramatically from region to region (see the following chart).

Fig. 1: Regional gold production (tCO2 footprint).

Data as of Aug. 11, 2021. tCO2 = tonnex of CO2 equivalent. Sources: S&P Global Market Intelligence; company sustainability reports.

Considering gold producers currently do not purchase voluntary carbon offset credits, and furthermore that refiners do not purchase voluntary carbon offset credits for gold that they mine, ESG conscious investors who want to allocate a portion of their portfolio to gold would need to buy voluntary carbon offset credits on the market, which is impractical for most investors. One solution is to create a secondary exchange to trade allocated spot gold contracts with the average gold carbon footprint certified offset credit attached to the digital gold representing the allocated gold, i.e., 1 kilobar with 25 tCO2 offset credits attached. This “Green Gold” would trade at the combined price of gold and carbon offset credits.

In summary, carbon offset spot gold products would provide a near to mid-term solution for ESG-centric investors who want to invest in precious metals, and this is what Vaultex will provide upon launch. In the long term, the market could develop ESG and CO2 footprint track and trace mechanisms and offset the CO2 footprint of individual supply chains and price that into the supply pricing. Until then, investors should have the option to trade in CO2 offset precious metal products.

JEFFREY PREMER is the founder and CEO of Vaultex Exchange Pte Ltd., a Singapore based allocated spot gold and commodities exchange launching this fall. Jeffrey has extensive experience as an entrepreneur, team builder and company scaler in a variety of industries, including finance, software and electronic hardware development, supply chain management, telecom and infrastructure. He has been advising companies, venture funds and family offices in Asia for over 25 years.

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SECRETARIAT SBMA-Emily-Oh

Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

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Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
Clara Chang joins SBMA as the Marketing & Communications Executive, enriching the team with her extensive experience in content creation, social media management, and digital marketing. Prior to joining SBMA, Clara held the position of Marketing Executive at her previous job. She holds two bachelor’s degrees from the University at Buffalo, one in International Trade and another in Geographical Information Science. Her core duties will include maintaining the SBMA website, managing the quarterly Crucible newsletter, among other responsibilities.

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Mr John Levin

Global Metals
TD Securities
John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

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Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

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Margaret Wong

BUSINESS DIRECTOR

Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

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Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

Ms Pawan Nawawattanasub

Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

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Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

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Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

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Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

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Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

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Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

Raman is Executive Director and Head of Commodities Sales, APAC, for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

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Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

Andrew Clarke is the Head of BGS (Brink’s Global Services) for Singapore, Indonesia, Malaysia and Brunei. He has held various leadership positions throughout his career in secure logistics and risk management with Brink’s, which started in Hong Kong in 2010. Andrew relocated to Singapore in 2018 to expand the precious metals line of business along with Brink’s portfolio of services and industries.

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Mr Kazuya Naoki

Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

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Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

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Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
KL YAP is the General Manager of Metalor Technologies (Singapore) Pte Ltd’s Singapore Refining Business Unit. He joined Metalor in 2013, initially in Refining Sales. In 2014, he became Refining Business Unit Manager, leading the development of a new precious metal refinery. KL was Vice Chairman of SBMA from 2017 to 2021, now serving as Chairman. With a degree in business commerce, finance, and marketing, he brings prior experience from refinery and heavy industries.