Exclusive: Gold worth billions smuggled
out of Africa
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[April 24, 2019]
By David Lewis, Ryan McNeill and Zandi Shabalala
NAIROBI, (Reuters) - Billions of dollars'
worth of gold is being smuggled out of Africa every year through the
United Arab Emirates in the Middle East – a gateway to markets in
Europe, the United States and beyond – a Reuters analysis has found.
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.
Previous reports and studies have highlighted the black-market trade in
gold mined by people, including children, who have no ties to big
business, and dig or pan for it with little official oversight. No-one
can put an exact figure on the total value that is leaving Africa. But
the Reuters analysis gives an estimate of the scale.
Reuters assessed the volume of the illicit trade by comparing total
imports into the UAE with the exports declared by African states.
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
Artisanal mining began as small-time ventures. But the "romantic" era of
individual mining has given way to "large-scale and dangerous"
operations run by foreign-controlled criminal syndicates, Ghana's
President Nana Akufo-Addo told a mining conference in February. Ghana is
Africa's second-largest gold producer.
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.
For example, Democratic Republic of Congo (DRC) is a major gold producer
but one whose official exports amount to a fraction of its estimated
production: Most is smuggled into neighboring Uganda and Rwanda. "It is
of course worrisome for us but we have very little leverage to stop it,"
said Thierry Boliki, director of the CEEC, the Congolese government body
that is meant to register, value and tax high-value minerals like gold.
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.
(GRAPHIC: UAE and Africa's gold - https://tmsnrt.rs/2IpuIRY)
Most of the gold is traded in Dubai, home to the UAE's gold industry.
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 organization's minerals
unit. "UAE is cashing in on the unregulated environment in Africa."
The Dubai Customs Authority referred Reuters' queries to the UAE foreign
ministry, which did not respond. The UAE government media office
referred Reuters to the UAE federal customs authority, which also did
Not all the discrepancies in the data analyzed by Reuters necessarily
point to African-mined gold being smuggled out through the UAE. Small
differences could result from shipping costs and taxes being declared
differently, a time-lag between a cargo leaving and arriving, or simply
mistakes. And gold analysts say some of the trade, especially from Egypt
and Libya, could include gold that has been recycled.
But in 11 cases, the per-kilo value that the UAE declared importing is
significantly higher than that recorded by the exporting country. This,
said Leonce Ndikumana, an economist who has studied capital flows in
Africa, is a "classic case of export under-invoicing" to reduce taxes.
Matthew Salomon, an American economist who has researched the use of
trade statistics to identify illicit financial flows, said the issue
deserves scrutiny. "Persistent discrepancies in the trade of particular
goods and between particular countries ... can identify significant
risks of illicit activity," he said.
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
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
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.
Western investors want gold so they can diversify their portfolios;
India and China want it for jewelry. But most Western companies – and
the banks that finance them – avoid handling non-industrial African gold
directly. They are unwilling to risk using metal that may have been
mined to fund conflict or that may have involved human rights abuses in,
for instance, DRC or Sudan. Various Uganda-based traders have been
sanctioned for handling gold smuggled out of DRC.
[to top of second column]
An artisanal gold miner holds a gold nugget at an unlicensed mine in
Gaoua, Burkina Faso, February 13, 2018. Picture taken February 13,
2018. REUTERS/Luc Gnago
In other states, including the UAE, these concerns have been less of
a problem. 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.
The UAE's main commodity marketplace, the Dubai Multi-Commodities
Centre (DMCC), calls itself on its website "your gateway to global
trade." Trading in gold accounts for nearly one-fifth of UAE's GDP.
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.
While the big South African miners have local refining capacity, the
main reason others gave is that no UAE refineries are accredited by
the London Bullion Market Association (LBMA), the standard-setter
for the industry in Western markets.
The LBMA is "not comfortable dealing with the region" because of
concerns about weaknesses in customs, cash transactions and
hand-carried gold, its chief technical officer Neil Harby told
Reuters. 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
Gold can be imported to Dubai with little documentation, African
traders told Reuters.
A DMCC spokesman said it has a robust regulatory framework that
includes strict responsible sourcing rules. These are aligned with
the international benchmark for responsible sourcing laid out by the
Organisation for Economic Cooperation and Development (OECD).
Sanjeev Dutta, head of commodities at DMCC, said in January that the
center is building strategic relationships with most gold-producing
countries on the African continent, "and we are very confident of
how that production is done and how responsible" it is. Over the
past 12 months, he said, DMCC has firmed up a standard for
refineries, called Dubai Good Delivery, which he said is very strict
on responsible sourcing and sustainability. "We track right from
responsible sourcing to sustainable development, things like human
rights etc.," he said. "We demand export certificates."
A "very limited" number of refineries accept gold that has been
imported as hand luggage, Dutta said, but gave no figures.
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
Often, miners must surrender a cut of their output, as commission,
to the people who control a pit, let out the equipment, or buy and
sell the gold. NGOs such as Global Witness and Human Rights Watch
have documented child labor, corruption and links to conflict at
some of these mines. At one mine in Zimbabwe visited by Reuters,
people said they had to hand over some of their find before they
would even be allowed out of the pit.
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
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
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.
A Tanzanian parliamentary report estimated that 90 percent of annual
production of informally mined gold is smuggled out of the country:
The government wants the central bank to buy this up. In March,
President John Magufuli launched a plan to establish hubs where the
trade would be formalized by offering access to financing and
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 neighbor Togo, according to the minister. In Togo,
virtually no taxes are imposed on gold.
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 neighbor, Minister Idani, told Reuters in an interview
last year. "But since (the trade) is fraudulent, I have no details."
(Additional reporting by John Ndiso in Nairobi, Tim Cocks in
Ouagadougou, Ed McAllister in Dakar, Chris Mfula in Lusaka, Giulia
Paravicini in Kinshasa, MacDonald Dzirutwe in Battlefields,
Zimbabwe, John Zodzi in Lome, Fumbuka Ng'wanakilala in Dodoma, Maha
El Dahan in Dubai, and Peter Hobson in London; Edited by Sara
Ledwith, Alexandra Zavis and Richard Woods)
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