Xetra-Gold holdings: sustainable and resource-friendly

News Arnulf Hinkel, financial journalist – 09.03.2020

“More than a security” is the product slogan for the Xetra-Gold bearer note, and for good reason: each bearer note is backed by one gram of physical gold. The gold holdings which serve as collateral just recently surpassed 210 tonnes and are currently valued at around €10 billion. But what do the Xetra-Gold holdings actually consist of? What is the origin of the bullions? In times of increasingly scarce resources and in view of the fact that climate change is progressing more rapidly and strongly than previously suspected, ESG (environmental, social, governance) aspects are growing increasingly important not only in daily life, but also in terms of financial investments.

Umicore: exclusive supplier of Xetra-Gold

The issuer of Xetra-Gold, Deutsche Börse Commodities, was founded in 2007 as a joint venture of German banks Commerzbank, Deutsche Bank, DZ Bank, Bankhaus Metzler and the Swiss Bank Vontobel, as well as Umicore AG & Co. KG, the German subsidiary of a global materials technology and recycling group. As the only non-financial company involved in the joint venture, it exclusively supplies all gold bars for Xetra-Gold, both for the physical gold held in custody to back up the bearer notes as well as the gold needed for delivery to investors who wish to redeem their securitised amount of gold. The production processes of Umicore are therefore essential to the sustainability and climate compatibility of the Xetra-Gold portfolio. After all, gold mining is not exactly known for its eco-friendliness.

100 tonnes of gold produced annually through recycling alone

The history of Umicore goes back more than 200 years, to the merger of several mining and smelting companies. Headquartered in Belgium, the Group is now one of the world’s leading recycling companies with 11,100 employees worldwide. According to its own statements, the company has been able to reduce its CO2 emissions by around 1 million tonnes in recent years thanks to innovative technologies. The bullion production process ensuring the smallest ecological footprint possible is certainly the recycling of electronic waste and old gold jewellery. According to Dr Christian Hagelüken, recycling expert at Umicore, 1 kilo of fine gold can be extracted from 4 tonnes of old smartphones. This may not sound very impressive. However, considering that the alternative is to extract 200 tonnes of ore, it becomes clear how effective recycling can be, especially when it comes to producing gold. Annually, Umicore produces around 100 tonnes of gold by recycling electronic waste and scrap gold. This figure is likely to increase considerably in the future; up to 1.8 billion smartphones are purchased worldwide every year while only a fraction of the old phones is being recycled so far.

Gold bars made from mined gold are certified

Recycling gold alone is not enough for Umicore to meet the demand for bullions, and mined gold is thus also used for production. For its efforts to minimize the eco footprint of this part of its gold production, Umicore was certified by the Responsible Jewellery Council. Gold bullion producers receive this certificate only if they meet certain uniform standards along the entire production chain. These standards comprise environmental factors as well as an ethical, socially responsible and human rights-compliant corporate policy, which are often not a matter of course for gold mines in emerging markets.
The Xetra-Gold holdings, which are supplied by Umicore, adhere to the highest ecological production standards possible today. In the future, improving and expanding recycling options will enable Umicore to further cut down CO2 emissions.

> Video: Production of precious metal ingots at Umicore

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