‘Industrial scale’ unlawful gold looting costing South Africa R14bn a year

South African gold is being robbed on an “industrial scale”, with research estimating that the country loses about $1bn (around R14.4 bn) through illegal gold mining every year, the Sunday Times reported. According to the report, much of this looting occurred during the height of state capture, in between 2012 and 2016, and it has actually been linked to the supposed decimation southern African Income Services’ (SARS) capability to investigate the illicit economy.

According to the paper, research by the International Initiative Against Transnational Organised Crime (GI) shows large abnormalities in gold trade data.

In one case, Dubai bought 34 lots of gold from South Africa from 2012-2016, but this is not reflected in South Africa’s trading accounts.

In another case studied by the GI, eSwatini (Swaziland) supposedly sold 2.1 lots of South African-mined gold to India in between 2011 and 2016.

Rising commodity costs

eSwatini reportedly earned $40m (around R577m) from the sales, while South Africa was paid only $91 445 (around R1.3 m) for the gold offered to it.

This illegal trade is apparently being driven by increasing product rates, the limited resources of the South African Diamond and Precious Metals Regulator, and the closure of the SARS illicit economy investigative system, according to the Sunday Times.

Former SARS commissioner Tom Moyane apparently closed that unit, but SARS has actually announced that it would be restored.

More research by GI and Columbia University apparently reveals how organised criminal activity rings carry out mining operations on an “industrial scale”.

“Armies” of prohibited miners and global networks of buyers are reportedly being used to smuggle South African gold through locations like eSwatini and Mozambique, to jewellery manufacturing centers in Dubai, Mumbai and Karachi.

The modus operandi is supposedly to melt the illegally-mined gold down with legitimate gold at refineries run by criminal distributes, and after that smuggle it out of the nation by means of pre-owned gold and scrap-metal dealerships.

R7-billion trade

According to Mining Evaluation, South Africa’s unlawful mining trade is approximated to be worth R7bn a year, apparently citing PwC South Africa’s Mine Report 2017. The reasons behind this are thought to be gold’s high worth, the ease of finding prepared buyers and the high variety of deserted gold mines.

In 2015, the South African Person Rights Commission (SAHRC) estimated that there were 30 000 unlawful miners in South Africa.

The Minerals Council of South Africa states prohibited mining and organised criminal offense are intertwined, with prohibited mining being led by international criminal distributes. This typically causes losses not just in income and taxes for South Africa, however also losses in employment opportunities, capital expense, exports and foreign exchange profits.