Author:  Reuters is the news and media division of Thomson Reuters. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world’s media organizations, and directly to consumers at Reuters.com and via Reuters TV

Date of publication April 24, 2019

Organization website’s  www.reuters.com

Link to the original document

As artisanal mining and fraudulent gold trading in Africa represent many security, environmental, humanitarian and health challenges, WATHI has chosen to share this article from a Reuters survey. This document provides information on the situation of non-regularized gold mining activities in various African countries as well as its key issues and challenges for the continent.

According to this Reuters analysis, billions of dollars of gold are escaping from Africa each year through the United Arab Emirates, known to be a gateway to markets in Europe, the United States and beyond. This fraudulent trade has an impact on the economies of the producing countries as most part of this gold is not recorded in state exports. While it may be hard to quantify its total value, Reuters’ analysis gives some estimations.

Customs data shows that the United Arab Emirates imported $ 15.1 billion worth of gold from Africa in 2016, compared with $ 1.3 billion in 2006. Reuters assessed the volume of illicit trade by comparing total imports in the UAE with exports declared by African states.

This article also highlights the development of illicit activities around gold mining in Africa, often with significant human and environmental costs. In addition, it is mentioned that the toxic chemicals used to increase mine yields also contaminate the water that is thrown back into rivers that end up later on contaminating the population.

Pourquoi avons-nous choisi ce document ?

Considérant que la problématique de l’exploitation artisanale et du commerce frauduleux de l’or en Afrique renferme d’autres défis sécuritaires, environnementaux, humanitaires et sanitaires, WATHI a choisi de partager cet article issu d’une enquête de Reuters. En effet, ce document informe sur la situation de l’exploitation non régularisée de l’or dans différents pays africains ainsi que sur ses enjeux et défis pour le continent.

D’après cette analyse de Reuters, des milliards de dollars d’or s’échappent d’Afrique chaque année par le biais des Émirats arabes unis au Moyen-Orient, une passerelle vers les marchés d’Europe, des États-Unis et au-delà. Ce commerce frauduleux a un impact sur les économies des pays producteurs car, une grande partie de cet or n’est pas enregistrée dans les exportations des États. S’il n’est pas évident de chiffrer exactement la valeur totale qui quitte l’Afrique à travers ce commerce illicite, l’analyse de Reuters donne une estimation.

Les données douanières montrent que les Émirats arabes unis ont importé pour 15,1 milliards de dollars d’or d’Afrique en 2016, contre 1,3 milliard de dollars en 2006. Reuters a évalué le volume du commerce illicite en comparant les importations totales aux EAU avec les exportations déclarées par les États africains.

En outre, cet article met en exergue le développement d’activités illicites autour de l’exploitation de l’or en Afrique, souvent avec des coûts humains et environnementaux importants. Il est mentionné que les produits chimiques toxiques utilisés pour accroître le rendement dans les mines, contaminent l’eau qui est renvoyée dans les rivières empoisonnant lentement les populations.

Governments across Africa are trying to work out how to manage a sector that, whatever its risks, provides a livelihood for many of their citizens, and which could be harnessed as a source of revenues. From this document emerges the need for governments and for civil society to take this phenomenon more seriously.

Political and legal measures must be taken to combat the fraudulent trade in gold in its various dimensions; tax losses, capital flight, environmental degradation and the conflicts it engenders. In order to maintain control over this sector, it is essential to regularize mining through the implementation of sound regulatory frameworks with strict rules. Governments must also strengthen their borders whose porosity facilitates the flow of contraband.

Quelles leçons pour les pays de la zone WATHI ?

Les gouvernements à travers l’Afrique tentent de trouver un moyen de gérer un secteur qui, quels que soient ses risques, constitue un moyen de subsistance pour bon nombre de ses citoyens et qui pourrait être exploité comme source de revenus. De ce document ressort la nécessité pour les gouvernements et pour la société civile de prendre en compte plus sérieusement ce phénomène.

Des mesures politiques et juridiques doivent être prises pour lutter contre le commerce frauduleux de l’or sous ses différentes dimensions; les pertes fiscales, la fuite des capitaux, la dégradation de l’environnement et les conflits qu’il engendre. Pour parvenir à garder le contrôle sur ce secteur, il est primordial de régulariser l’exploitation minière par la mise en place de cadres réglementaires solides avec des règles strictes. Les gouvernements doivent également renforcer leurs frontières dont la porosité facilite la circulation de la contrebande.

Selected excerpts from the document

Customs data shows that the UAE imported $15.1 billion worth of gold from Africa in 2016, more than any other country and up from $1.3 billion in 2006. The total weight was 446 tonnes, in varying degrees of purity – up from 67 tonnes in 2006. Much of the gold was not recorded in the exports of African states. Five trade economists interviewed by Reuters said this indicates large amounts of gold are leaving Africa with no taxes being paid to the states that produce them.

Industrial mining firms in Africa told Reuters they did not send their gold to the UAE – indicating that its gold imports from Africa come from other, informal sources. Informal methods of gold production, known in the industry as “artisanal” or small-scale mining, are growing globally. They have provided a livelihood to millions of Africans and help some make more money than they could dream of from traditional trades. But the methods leak chemicals into rocks, soil and rivers.

And African governments such as Ghana, Tanzania and Zambia complain that gold is now being illegally produced and smuggled out of their countries on a vast scale, sometimes by criminal operations, and often at a high human and environmental cost.

Not everyone in the chain is breaking the law. Miners, some of them working legally, typically sell the gold to middlemen. The middlemen either fly the gold out directly or trade it across Africa’s porous borders, obscuring its origins before couriers carry it out of the continent, often in hand luggage.

The customs data provided by governments to Comtrade, a United Nations database, shows the UAE has been a prime destination for gold from many African states for some years. In 2015, China the world’s biggest gold consumer imported more gold from Africa than the UAE. But during 2016, the latest year for which data is available, the UAE imported almost double the value taken by China. With African gold imports worth $8.5 billion that year, China came a distant second. Switzerland, the world’s gold refining hub, came third with $7.5 billion worth.

The UAE reported gold imports from 46 African countries for 2016. Of those countries, 25 did not provide Comtrade with data on their gold exports to the UAE. But the UAE said it had imported a total of $7.4 billion worth of gold from them. In addition, the UAE imported much more gold from most of the other 21 countries than those countries said they had exported. In all, it said it imported gold worth $3.9 billion – about 67 tonnes more than those countries said they sent out.

“There is a lot of gold leaving Africa without being captured in our records,” said Frank Mugyenyi, a senior adviser on industrial development at the African Union who set up the organisation’s minerals unit. “UAE is cashing in on the unregulated environment in Africa.”

Pollution, conflict and bandits 

Over the past decade, high demand for gold has made it attractive for informal miners to use digging equipment and toxic chemicals to boost the yield. Contaminated water is returned to rivers, slowly poisoning the people who need the water to live.

Small-scale miners have long used mercury easy to buy at around $10 for a thumb-sized vial to extract flecks of gold from ore, before sluicing it away. Mercury’s toxic effects include damage to kidneys, heart, liver, spleen and lungs, and neurological disorders, such as tremors and muscle weakness. Cyanide and nitric acid are also being used in the process, according to researchers and miners in Ghana.

Industrial mining companies have also been responsible for pollution, ranging from cyanide spills to respiratory problems linked to dust produced by mining operations. But almost a dozen states including DRC, Uganda, Chad, Niger, Ghana, Tanzania, Zimbabwe, Malawi, Burkina Faso, Mali and Sudan have complained in the past year about the harms of unauthorised mining.

Burkina Faso has banned small-scale mining in some areas where al Qaeda-linked Islamists are active, and earlier this month Nigeria’s government suspended mining in the restive northwestern state of Zamfara, saying intelligence reports established what it called “a strong and glaring nexus” between the activities of armed bandits and illicit miners.

Strong prices have fueled the boom. Today, gold trades at over $40,000 per kilo, which is below a peak from 2012 but still four times the level of two decades ago.

Destination Dubai

Over the last decade, gold from Africa has become increasingly important for Dubai. From 2006 to 2016, the share of African gold in UAE’s reported gold imports increased from 18 percent to nearly 50 percent, Comtrade data showed.

Small-scale miners have long used mercury easy to buy at around $10 for a thumb-sized vial to extract flecks of gold from ore, before sluicing it away. Mercury’s toxic effects include damage to kidneys, heart, liver, spleen and lungs, and neurological disorders, such as tremors and muscle weakness

However, no big industrial companies reached by Reuters including AngloGold Ashanti, Sibanye-Stillwater and Gold Fields say they send gold there. Reuters contacted 23 mining companies with African operations, the smallest of which produced around 2.5 tonnes in 2018: 21 of them said they did not send metal to Dubai for refining, the other two did not respond.

Investigators and people in the gold industry say the ease with which smugglers can carry gold in their hand-luggage on planes leaving Africa helps gold flow out unrecorded. And limited regulation in UAE means informally mined gold can be legally imported, tax-free.

Gold to go

Some African miners are swapping their pickaxes and shovels for diggers and crushers increasing production volumes exponentially. Regulation remains scant, and accidents are frequent. In one week this February, three accidents at illegal mining operations in Zimbabwe, Guinea and Liberia claimed the lives of more than 100 people.

Reuters presented its analysis to 14 African governments. Of them, five said it reflected an existing concern about gold being smuggled out of their countries that they are trying to address. One said they did not think gold smuggling was a problem for them. The rest declined to comment or did not respond.

Governments across Africa are trying to work out how to manage a sector that, whatever its risks, provides a livelihood for many of their citizens, and which could be harnessed as a source of revenues.

From 2006 to 2016, the share of African gold in UAE’s reported gold imports increased from 18 percent to nearly 50 percent

Some, including Ivory Coast, are taking gradual steps to regulate their informal mining operations. Ghana and Zambia have sent security forces into mining areas to halt operations so miners can be registered and regulations put in place. Ghana, concerned that a rush of mainly Chinese-led ventures is harming the environment, has arrested hundreds of Chinese miners and expelled thousands in the past six years.

At the end of last month, Ghana temporarily banned the import of excavator equipment to try to stem a surge in illegal mining using heavy machinery.

In Sudan, one of the continent’s biggest producers, the government has unveiled a $3 billion plan for private banks to work with the central bank to buy gold from small-scale miners, offering prices that would make it less attractive to sell on the black market.

In one week this February, three accidents at illegal mining operations in Zimbabwe, Guinea and Liberia claimed the lives of more than 100 people

In Burkina Faso, Oumarou Idani, minister of mines, believes his country is leaking gold to UAE on a massive scale. Of the 9.5 tonnes of gold the government estimates informal miners dig up each year, just 200 to 400 kg are declared to the authorities, he said.

Much of the gold is smuggled from landlocked Burkina Faso to its Atlantic coast neighbour Togo, according to the minister. In Togo, virtually no taxes are imposed on gold.

Investigators and people in the gold industry say the ease with which smugglers can carry gold in their hand-luggage on planes leaving Africa helps gold flow out unrecorded

Togo’s director of mining development and controls, Nestor Kossi Adjehoun, said informal mining is “an area that we have not properly figured out.” For now, he said, Togo saw no reason to suspect gold was being smuggled through the country. “I understand that Dubai is the destination for this gold,” his Burkina Faso neighbour, Minister Idani, told Reuters in an interview last year. “But since the trade is fraudulent, I have no details.”

Source photo: Reuters