Bolivia’s Epcoro aims to purchase $1 billion in gold this year, quadrupling its previous output. The firm has already acquired one ton from small producers, with plans to sell 10 tons to the central bank. Economic turmoil, including reduced fuel subsidies and a dollar shortage, has created operational challenges, yet Epcoro’s role is critical in stabilizing the central bank’s reserves.
Bolivia’s new state gold trading firm, Epcoro, aims to enhance the nation’s gold reserves, planning to purchase approximately $1 billion worth of gold this year. The company, under the leadership of CEO Pablo Cesar Perez, has already secured one ton of gold from local small-scale producers, compared to 2.4 tons for the entirety of last year. Epcoro is projected to sell around 10 tons to the central bank this year, capitalizing on the current high gold prices fueled by inflation concerns.
Established a year ago due to a crisis in the government-controlled central bank, Epcoro intends to alleviate the bank’s dwindling cash and gold reserves. The central bank, plagued by financial troubles partly due to rising fuel subsidies, recently announced a reduction in fuel support for various sectors, including miners and farmers. This has compounded the ongoing economic challenges in Bolivia, characterized by diminished gas production and a significant dollar shortage, creating hurdles for importers and exporters.
Epcoro’s challenge includes persuading gold producers to transact in the declining local currency, boliviano, particularly since miners are encountering difficulties in finding dollar-paying buyers. Additionally, despite the surge in gold prices, Bolivia’s exports of gold plummeted by 72% last year to around $687 million. While some of this gold now flows to Epcoro, Perez did not disclose specific amounts.
Disparities exist between the international gold price and Epcoro’s payment rates in bolivianos, yet the company positions itself favorably for miners by offering cash upfront. Compliance with legal standards concerning the origin of gold has been defended by Perez amid allegations that the central bank might be facilitating the laundering of illegally sourced gold from the Amazon.
Selling gold is one avenue for generating essential hard currency to support the central bank, which reported just $1.98 billion in reserves at year-end, of which 96% was in gold form. Approximately 13% of gold acquired by the central bank between mid-2023 and 2024 originated from Epcoro, indicating its growing influence, despite Perez acknowledging the firm has not yet attained its ultimate role as the main supplier of gold to the central bank.
In conclusion, Bolivia’s Epcoro is set to significantly increase its gold purchases this year to help bolster the central bank’s reserves amidst ongoing economic challenges. The state trading firm aims to navigate currency issues and a complex market, focusing on small-scale producers and seeking to ensure compliance with legal gold sourcing. Despite the challenges posed by the economic situation, Epcoro’s strategic plans reflect an effort to stabilize Bolivia’s monetary standing through gold sales.
Original Source: www.mining.com
