Epcoro, Bolivia’s state gold trader, plans to purchase $1 billion in gold this year to aid the central bank’s reserves. Having acquired a ton of gold so far, the firm targets selling around 10 tons to the bank as inflation pressures mount. Established amid a financial crisis, Epcoro seeks to navigate challenges related to currency depreciation and legal scrutiny while attempting to fulfill its mission as the primary gold supplier.
Bolivia’s newly-established state gold trading company, Epcoro, intends to significantly increase its gold purchases this year, targeting $1 billion to strengthen the central bank’s dwindling reserves. Epcoro has already acquired one ton of gold from small-scale producers in Bolivia, up from a total of 2.4 tons last year. Chief Executive Officer Pablo Cesar Perez stated, “We have a projection to sell around 10 tons to the central bank this year,” given the current elevated global gold prices.
The formation of Epcoro emerged from a crisis within the government-controlled central bank, which has faced depleting cash and gold reserves due to financial pressures from fuel subsidies. Consequently, the government has recently reduced fuel subsidies, adversely impacting miners and farmers who rely on these supports. Amid a backdrop of declining investment in gas fields, Bolivia is currently experiencing a dollar shortage and escalating inflation, reaching a multi-decade high of 13%.
Epcoro is tasked with sourcing gold from producers who are willing to sell in Bolivia’s depreciating currency, the boliviano. This endeavor is viable, as many miners are seeking buyers capable of paying in dollars. Interestingly, Bolivia’s gold exports dropped by 72% last year, despite rising metal prices, with significant supplies now directed to Epcoro, although specific figures were not disclosed by Perez.
Perez remarked on the different pricing between international gold prices in dollars and those paid by Epcoro in bolivianos, noting that Epcoro offers immediate cash payments, an appealing option for miners. He has defended the legality of the gold sourced by Epcoro amidst opposition claims suggesting potential laundering of illegally-mined gold from the Bolivian Amazon.
Selling gold provides a critical opportunity for the central bank to acquire hard currency. By the end of the previous year, the central bank held $1.98 billion in international reserves, predominantly in gold. Notably, around 13% of all gold purchased by the central bank between mid-2023 and 2024 originated from Epcoro. However, Perez admitted that the firm has not yet fulfilled its envisioned role as the principal gold supplier to the central bank, asserting, “But we will be able to demonstrate that we are contributing to adding value to our gold.”
Epcoro’s establishment marks a strategic effort by Bolivia to enhance its gold reserves amidst financial challenges faced by the central bank. With plans to quadruple purchases in 2023 and a goal of selling approximately ten tons of gold, Epcoro positions itself as a crucial player in the nation’s gold market. The company aims to support the country’s economic needs while navigating legal and economic complexities.
Original Source: www.mining.com
