Mining in Africa and beyond: Concealed origins

In depth
This article is part of the dossier: Tracking the great gold rush

By Patrick Smith

Posted on Tuesday, 12 January 2021 14:33, updated on Friday, 15 January 2021 10:24
A Congolese miner works at an artisanal gold mine near Kamituga in the east of the Democratic Republic of Congo, August 1, 2018. REUTERS/Djaffar Al Katanty

For years, Eastern DRC has been embroiled in one of the most murderous and complex conflicts in Africa. National forces, local fighters and foreign-backed militias have piled in, battling for political control, resources, borders and ethnic identity.

This is part 2 of a series.

Rampant smuggling and mislabelling of gold consignments to dodge local and national taxes, as well as international attempts to block gold from war zones, have shaped the region’s gold industry. New refineries in the Great Lakes region can process more than 330tn of gold per year.

You now have a supply chain in which gold is smuggled from Congo’s war zones in Ituri and South Kivu to regional refineries,

The UN experts say most of that is smuggled from eastern DRC. ‘Some refineries acted as brokers, used cash payments that evaded tracing, undertook refiner-to-refiner trading that concealed the origin of smuggled gold and used corporate networks, making it difficult to establish beneficial ownership,’ says the report. ‘Most gold trading evaded formal banking networks.’

READ MORE Illicit DRC gold: London Bullion Market must do more to stop it

The biggest operations are the African Gold Refinery (AGR) in Uganda, with a capacity of 219tn a year, and the Aldango refinery in Rwanda, which can process 73tn a year. The UN experts refer to documents showing that Alain Goetz, a scion of a Belgian gold-trading family, founded AGR and has a stake in the Aldango refinery and a Dubai-based company called PGR Gold Trading.

“You now have a supply chain in which gold is smuggled from Congo’s war zones in Ituri and South Kivu to regional refineries,” a former UN researcher told The Africa Report. “After that, it is flown to Dubai for re-refining, where it can be mixed with gold from other sources. Eventually, gold from a war zone in Congo could end up in a gold bullion bar in Switzerland.”

On the DRC’s north-eastern borders, in Sudan, the pattern is similar. Artisanal miners in conflict zones such as Blue Nile, Kordofan and, most of all, Darfur have been producing tonnes of gold, selling it to traders who smuggle it to the Gulf States.

In 2018, Sudan produced about 93tn of gold, mines minister Adil Ali Ibrahim told Reuters in November 2019. That ranked it as the third-biggest producer after Ghana and South Africa. Between 2014 and 2018, Sudan officially exported gold worth $8.6bn, but its main trading partners recorded imports of Sudanese gold worth $12.7bn.

READ MORE Ghana now Africa’s largest gold producer, but reforms await

“The biggest value gap is found in the trade between Sudan and the UAE,” says Lakshmi Kumar, who led a research team for Washington DC-based Global Financial Integrity. That value gap of $4.1bn is most likely due to smuggling. That would be a revenue loss of more than $550m to the state in that period.

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