(Bloomberg) -- A Mauritian commodity exchange that plans to start operating in the fourth quarter expects to trade $6.5 billion of gold annually within five years, part of the Indian Ocean island nation’s plan to become a financial gateway to Africa, its chairman said.
The introduction of the Mauritius International Derivatives and Commodities Exchange brings to fruition Prime Minister Pravind Jugnauth’s pledge last year to introduce gold trading to the country. Mauritius’s Financial Services Commission approved Mindex’s license application “in principle,” exchange Chairman Hirander Misra said Monday. Its operations will eventually include derivatives trading, a vault to store bullion and a refinery, he said.
“Investment will be $35 million,” Misra said in an interview in Ebene near the capital, Port Louis. “The vault that we are building is about for 400 metric tons.”
Mindex projects that it will trade 31 tons (997,000 ounces) of gold in 2019, increasing to 156 tons by 2023. Gold for immediate delivery traded at $1,267 per ounce by 12:19 p.m. in Singapore. In April, about $27 billion of gold, or 20.5 million ounces, was cleared on average each day in the London market, according to the London Bullion Market Association.
“We have been very conservative with numbers,” Misra said. “Over a three-year period, it will be about $1.1 billion worth of current market gold traded.”
Mindex’s sponsors include U.K.-based GMEX Group, where Misra is chief executive officer, and Luxembourg’s Five Ring Commodities SA, an independent gold-trading house.
©2018 Bloomberg L.P.