The Dark Side of the 21st-Century Gold Rush

Strategic Insights -

As global gold prices have skyrocketed, fuelling a lucrative black market trade, thousands of impoverished wildcat miners are being exploited deep in South Africa's disused mines. Organised crime groups from across sub-Saharan Africa and beyond are piling into illicit mining, feeding a trade worth tens of billions of dollars annually. The precious metal's fungibility has turned mining into a magnet for everyone from Colombian armed groups to those embroiled in Sudan's ruinous civil conflict. In South America, "narco-miners" have emerged, with drug gangs muscling in on legitimate operations and even exporting illicit gold to the world's top trading hubs.

Key Takeaways:

  • The global illicit gold mining industry is worth tens of billions of dollars annually, with estimates suggesting it may be worth as much as $50 billion in 2022 alone.
  • Organised crime groups are embedded in supply chains, with the UN warning that they are making more money from the gold trade than from drugs.
  • In Peru, an estimated 40% of last year's $15 billion worth of gold exports were illegal, with evidence of illicit gold being exported overseas via Italian mafias.
  • In Brazil, small-scale and unauthorized wildcat mining, known as garimpo, has long been an economic lifeblood in places like Itaituba, the country's unofficial gold-laundering capital.
  • The Amazon rainforest has emerged as a hotspot for narco-miners, with organised crime groups using similar logistics, such as light aircraft and clandestine landing strips, for cocaine smuggling and gold mining.
  • In Colombia, Clan del Golfo has muscled in on legitimate gold operations, seizing miles of tunnels with deadly clashes ensuing.
  • The UAE has emerged as a major laundering hub, with refined gold bars from elsewhere being labelled as Emirati before being sold on to hubs like Switzerland and the UK.
  • Much of the gold comes from Africa, where natural riches, conflict, and weak states have combined to make the continent an epicentre of illicit mining.
  • The devastating human toll of illicit gold extraction in the Amazon was brought to the world's attention a few years ago by a crisis among Brazil's Yanomami indigenous people, blamed on violence by trespassing miners.

Statistics:

  • 435 tonnes of gold, worth $31 billion, were smuggled out of Africa in 2022, double the volume from 10 years ago (Source: SwissAid).
  • 40% of Peru's $15 billion worth of gold exports in 2022 were estimated to be illegal (Source: Financial regulator in Peru).
  • 98% drop in illegal mining sites in the Yanomami territory following Brazilian government crackdowns (Source: Brazilian government).
  • 150,000 people have been killed in Sudan's civil war, which has been fuelled by mining profits (Source: UN).
  • 39 workers have been killed over the past three years by criminal gangs robbing gold directly from Poderosa mine in Peru (Source: Peruvian authorities).

Sources:

  • FT Reporters
  • SwissAid
  • The Sentry (Sasha Lezhnev, policy adviser)
  • Amazon Underworld (Bram Ebus, co-director)
  • Brazilian government (Humberto Freire, director of the Amazon and environment at Brazil's federal police)
  • Brazilian federal prosecutor (Andre Porreca)
  • World Gold Council
  • Peruvian authorities
  • UN report
  • Bloomberg News (Simon Marks)