Bolivia’s Epcoro Aims for $1 Billion in Gold Purchases to Support Central Bank

Bolivia’s state gold trader, Epcoro, aims for $1 billion in gold purchases this year, quadrupling last year’s totals to support the central bank’s struggling reserves. Despite major economic challenges, gold offers a critical avenue for generating hard currency, and Epcoro has started making significant gold acquisitions from local producers.

Bolivia’s newly established state gold trading company, Epcoro, aims to significantly elevate its gold purchases to $1 billion this year to bolster the central bank’s gold reserves. Chief Executive Officer Pablo Cesar Perez noted that Epcoro has acquired one ton of gold from local producers this year, compared to a total of 2.4 tons last year. The company expects to sell approximately 10 tons to the central bank, capitalizing on the current high global gold prices attributed to ongoing inflation concerns.

Epcoro was formed as a response to the financial challenges faced by the government-controlled central bank, which has nearly exhausted its cash and gold reserves. The government has recently suspended fuel subsidies for various groups, leading to increased economic strain. Production issues from the declining gas fields in Bolivia have intensified the dollar shortage, complicating transactions for both importers and exporters amidst a backdrop of 13% inflation.

To acquire gold, Epcoro must negotiate with producers willing to accept the declining local currency, the boliviano. The depreciation complicates sales, yet it presents an opportunity as miners struggle to find dollar-paying buyers. Notably, Bolivia’s gold exports sharply decreased by 72% last year, despite an increase in global prices, resulting in a significant portion of the gold supply redirected to Epcoro.

While Perez did not disclose specific figures related to Epcoro’s transactions, he explained that the pricing difference between international gold rates and payments in bolivianos indicates the firm’s appeal to local miners, especially since cash payment is provided upfront. Perez defended the legality of gold origins, amidst claims from opposition lawmakers alleging that the central bank might inadvertently be involved in laundering illegally extracted gold.

Selling gold is a strategy for the central bank to acquire necessary hard currency. By the end of last year, international reserves stood at $1.98 billion, predominantly in gold. According to Perez, Epcoro has supplied around 13% of the gold purchased by the central bank from mid-2023 to 2024, though he acknowledged that the firm has yet to serve as the major supplier envisioned. Epcoro looks to enhance its role and demonstrate its contribution to increasing the value of Bolivia’s gold resources.

Epcoro, Bolivia’s state gold trading firm, is set to increase its gold purchases to bolster the central bank amid economic challenges. Despite facing currency depreciation and operational hurdles, the company aims to sell a significant quantity of gold, thus improving national reserves. Upholding legal standards and cash transactions, Epcoro aspires to establish itself as a pivotal player supporting Bolivia’s economic stability.

Original Source: www.mining.com