Tracking Africa’s Billions of Dollars in Smuggled Gold

Tracking Africa’s Billions of Dollars in Smuggled Gold

$XAU

The high prices are luring Africans into prospecting for gold. 

Billions of dollars’ worth of gold is being smuggled out of Africa every year through the United Arab Emirates(UAE) a gateway to markets in Europe, the United States and beyond.

Customs data shows that the UAE imported $15.1-B worth of gold from Africa in Y 2016, more than any other country and up from $1.3-B in Y 2006. The total weight was 446 tonnes up from 67 tonnes in Y 2006.

Much of the gold was not recorded in the exports of African states, 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 who have no ties to big business, and dig or pan for it with little official oversight. No 1 can put an exact figure on the total value that is leaving Africa.

Analysts 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 say 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 cost.

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 2nd-largest gold producer.

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 borders.

For example, Democratic Republic of Congo (DRC) is a major gold producer but 1 whose official exports amount to a fraction of its estimated production: Most is smuggled into neighbouring 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 UN database, shows the UAE has been a prime destination for gold from many African states for several years.

In Y 2015, China, the world’s biggest gold consumer imported more gold from Africa than the UAE. But during Y 2016, the latest year for which data is available, the UAE imported almost 2X the value taken by China. With African gold imports worth $8.5-B that year, China came 2nd. Switzerland, the world’s gold refining hub, came 3rd with $7.5-B worth.

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 Y 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-B 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-B 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 a senior adviser on industrial development at the African Union who set up the organisation’s minerals unit. “UAE is cashing in on the unregulated environment in Africa.”

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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