The London Bullion Market Association, the industry body that sets rules for the world's largest gold market, faces an existential legal battle in a London courtroom next week. The case, brought by families of two men who died at a Tanzanian gold mine in 2019, could have far-reaching implications for how the industry polices its supply chain. The LBMA says the claim has no merit and is confident it will successfully defend it.
However, if the court orders significant payouts, there's a risk of insolvency, according to people familiar with the situation. As a contingency, internal discussions have considered setting up a successor body to maintain core operations. "LBMA disputes that it bears legal responsibility for these tragic deaths," the organization said in a statement. The threat hanging over the LBMA is causing unease among traders and executives who will attend the annual conference in Sorrento, Italy.
Several insiders expect the LBMA to prevail but acknowledge potential seismic consequences. London's role as the standard-setter for the global gold market dates back to 1750 with the Bank of England's creation of the Good Delivery List. The LBMA took responsibility in 1987 and expanded its scope to demand responsible-sourcing rules.
The court case will test whether the association can be held accountable for deaths at North Mara in Tanzania, given that some mine output was sold to a Good Delivery List refiner. Lawyers for Leigh Day argue the alleged human rights abuses could be avoided if rules were properly applied. The claimants allege one man, 23, was fatally shot after police dispersed small-scale miners in July 2019, while another, also 23, was shot in the back as he fled in December. Barrick Mining Corp. declined to comment, and Tanzanian police did not respond to requests.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing