Gold theft costing SA billions

Published Oct 11, 2004

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Gold theft is costing South Africa's economy an estimated R2-billion annually, with organised crime syndicates smuggling about 40 tons of gold out of the country each year.

Industry insiders claim South Africa loses 10 percent of its annual gold production to organised crime. Some say this estimate is "optimistically conservative".

Well-organised and structured crime syndicates are operating in the Free State and Johannesburg's West Rand goldfields, conducting well-planned gold theft operations.

A syndicate buyer who operates from Johannesburg, claims to deal in about R200-million worth of stolen gold each year.

"The gold theft is driven by foreign demand for illicit gold. Considering the large financial value of a small amount of gold, it is a low risk venture producing vast sums of money," said the retrenched miner, who asked not to be named.

The former mine captain said gold theft is rife. "No mine is safe. And as more miners are being retrenched, gold theft is increasing."

South Africa produced 373 074kg of gold in 2003, and research has shown that the 10 percent theft estimate could well be exceeded.

Chamber of Mines of South Africa spokesman Anton van Achterberg warned that no scientific data existed to support the 10 percent theft estimate.

"Mines are facing a serious threat, but the exact figures are not known and any such figure is based on guesswork," he said.

Van Achterberg said mines were reluctant to divulge figures, "but there is concern within the industry about the scope of the problem".

A Gold Fields spokesperson said mining houses refrained from divulging the figures to discourage further theft. "Gold theft is a lucrative business. If the true extent of it is known, mining companies will have difficult questions to answer."

Anglo-Gold Ashanti, South Africa's largest gold producer, said "gold theft is a major cause of concern, particularly when the scope of the illegal mining operations is considered".

Institute for Security Studies researcher Peter Gastrow said gold theft by organised crime should be a cause for concern.

"These are sophisticated and well-organised criminal groups to whom the stolen gold is channelled and who then dispose of it internationally or locally," said Gastrow.

Of particular concern, said Gastrow - who completed a study into gold theft for the mining industry - was the fact that gold thieves launched full-scale mining operations underground, using either productive shafts or shafts no longer in production. "Groups of individuals are known to obtain illegal access to mines to mine and remove gold-bearing ore from underground shafts."

These individuals were mainly retrenched miners who had gained considerable experience and knowledge about the mining process.

The illegal miners sold the gold-bearing ore to a middleman for between R55 per gram of gold content. He then disposed of it for about R60 per gram. Illegal smelting houses sold solid gold lumps to buyers for about R65 per gram. These buyers were usually agents for organised crime syndicates. This gold was then sold to the syndicates, most of which were Gauteng-based, for about R70 000 per kilogram.

Through a global network, the gold was filtered into India, Dubai, Pakistan and Europe by the syndicates, who earned about R80 000 for each kilogram sold.

Captain Danie Meyer of the police Diamond and Gold Branch, said the gold was smuggled out of the country in shipping containers or by air.

The top level structures of the syndicates were difficult to infiltrate, he said.

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