Kaloti Jewellery Group is to build the biggest gold refinery and mint in the Middle East on a site close to the Dubai Multi Commodities Centre, The National can reveal.
The state-of-the-art plant, which is expected to be completed late next year, will cost as much as US$60 million (Dh220.3m) to build.
The new facility, which will be part of the Jumeirah Lakes Towers Free Zone, was unveiled last night as Kaloti celebrated its 25th anniversary.
"This represents a major investment in expanding and upgrading our refining facilities. This will be a state-of-the-art refinery to rival the best in the world," said Munir Kaloti, the chairman of Kaloti Jewellery Group. "It will strengthen our ability to meet the growing international demand for our products as well as give us capacity for growth in the years ahead."
The refinery will have a capacity to produce up to 1,400 tonnes of gold and 600 tonnes of silver and other precious metals a year. The mint department will produce a range of gold ingots and coins made of investment grade 999.9 purity gold, known as four-nine in the trade.
The factory will enable Kaloti to triple its current refinery production and will help the company to meet rising demand.
Global gold refiners and mints have enjoyed a steep increase in business since the start of the economic downturn in 2008. Gold is regarded as a safe haven investment during tough times, a factor that has led the price of the precious metal to almost double from about $890 a troy ounce at the time of the crash in 2008 to around $1,600 today.
The Dubai gold trade has charted a similarly stellar trajectory in the past five years, with the Dubai Multi Commodities Centre cashing in on the yellow metal's increasing popularity. The emirate's gold trade was worth just $6 billion in 2003, according to DMCC data. By 2011, $56bn was traded, made up of $33bn in imports and $23bn in exports.
The Dubai Gold & Commodities Exchange is also planning to launch a spot gold contract by the end of the year, which requires a large presence of physical gold warehoused nearby in order to function.
It is understood that the enlarged Kaloti refinery will have a role to play in the spot gold project.
The new Kaloti refinery will use the latest gold electrolysis technology from Italy and Switzerland as well as the aqua regiaprocess for gold refining. Aqua regia uses a mixture of nitric acid and hydrochloric acid to liquefy gold, enabling the refinery to remove virtually all impurities.
The plant will also have two assaying laboratories, where the precious metal is tested for authenticity and to ensure it meets the "four-nine" investment grade quality.
Gold refining is an incredibly costly process using huge amounts of electricity, gas and chemicals. The Kaloti group insists, however, that the new facility meets the most rigorous environmental standards.
"Our desire to build an energy efficient, socially sustainable refinery fits in with our principal commitment of ensuring the responsible and ethical sourcing of precious metals," said Mr Kaloti.
"We strive to guarantee all metals sourced conform to the highest standards set out by government and trade associations."