NewsCentral AfricaMining: A Golden Voyage

Mon,12Nov2018

Posted on Wednesday, 26 August 2015 15:48

Mining: A Golden Voyage

By Gregory Mthembu-Salter in Kisangani

The Africa Report traces the typical route that a gram of gold takes from an artisanal mine in eastern DRC, via refining in Dubai to a wedding ceremony in India

More than 100tn of gold dug from the earth by Africa's artisanal miners flows to the United Arab Emirates (UAE) for refining and to be turned into jewellery. Much of it then travels to India.

Indian households are estimated to be holding 20,000tn of gold

Production from an artisanal mining pit can be just a few grams per day, often in the form of tiny flecks, from which the surrounding ore must be painstakingly removed using mercury. Diggers sell these small volumes of gold to local traders, though in some countries, like the Democratic Republic of Congo (DRC) and Côte d'Ivoire, armed groups and/or the state's armed forces find multiple ways to take a cut before sales take place.

The traders then typically transport the metal to the nearest gold-trading hub. In eastern DRC, the main gold-trading towns are these imports, making it less important to earn a margin on the gold's purchase too.

Gold is usually smuggled across the DRC's eastern land borders and makes its way to regional gold-buying hubs, like Kampala, Bujumbura and Nairobi.

When traders in these hubs have accumulated a few kilos of gold, by now refined to more than 90% purity, they distribute it to carriers who take the gold in their hand luggage and fly to Dubai.

There are many gold refineries in Dubai, with a growing number popping up in the Sharjah Free Zone. Most of the gold arriving into the UAE is refined by one of three big refineries: Kaloti, Al Etihad and Emirates Gold. The rest is refined by smaller operations or makes its way to Dubai's legendary gold souk.

Tonnes of Kisangani, Aru, Butembo and Bukavu. There, the small-scale traders sell to larger traders, who in
many cases have pre-financed their purchases from diggers. In trade circuits, gold worth thousands of US dollars can easily be concealed in a person's pockets.

Often, these traders buy the gold at or near global market prices. One reason is that because the gold is then smuggled, there is no need to earn a margin in order to pay export taxes.

Another reason can be that the trader is laundering money and is more concerned about concealing its origins rather than making a profit. Another common reason is that the trader's main purpose in trading gold is to earn foreign currency and use this to buy goods, usually from China.

In these cases, the profit is usually made on selling these imports, making it less important to earn a margin on the gold's purchase too.

Gold is usually smuggled across the DRC's eastern land borders and makes its way to regional gold-buying hubs, like Kampala, Bujumbura and Nairobi.

When traders in these hubs have accumulated a few kilos of gold, by now refined to more than 90% purity, they distribute it to carriers who take the gold in their hand luggage and fly to Dubai.

There are many gold refineries in Dubai, with a growing number popping up in the Sharjah Free Zone. Most of the gold arriving into the UAE is refined by one of three big refineries: Kaloti, Al Etihad and Emirates Gold.

The rest is refined by smaller operations or makes its way to Dubai's legendary gold souk. Tonnes of gold are traded in the souk every day, typically with few questions asked about its origins.

The UAE officially exports more than 200tn of gold a year to India, worth around $9bn. The World Gold Council reckons that smugglers take an additional 200tn into India each year to evade its hefty import taxes.

Much of this is said to come from the UAE. In India, most gold ends up as jewellery and is a key component of many social occasions, particularly weddings. Indian households are estimated to be holding 20,000tn of gold between them, worth a staggering $814bn at 2014 prices.



Show More Articles from This Author

Subscriptions Digital EditionSubscriptions PrintEdition

FRONTLINE

NEWS

POLITICS

HEALTH

SPORTS

BUSINESS

SOCIETY

TECHNOLOGY

COLUMNISTS

Music & Film

SOAPBOX

Newsletters

Keep up to date with the latest from our network :

subscribe2

Connect with us