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Billions of dollars are escaping from Africa each year through the United Arab Emirates in the Middle East – a gateway to the markets of Europe, the United States and the United States. – after a Reuters badysis.
Customs data shows that the United Arab Emirates imported $ 15.1 billion worth of gold from Africa in 2016, more than any other country, compared to $ 1.3 billion in 2006. The weight total was 446 tonnes, with varying degrees of purity, up from 67 tonnes in 2006.
Much of the gold has not been recorded in exports from African states. Five trade economists polled by Reuters said it indicates that large quantities of gold are leaving Africa without paying taxes to the states that produce them.
Earlier reports and studies have highlighted the black trading of gold mined by people, including children, who have no connection to big business and who are digging or embarking on business. task with a minimum of official supervision. Nobody can quantify exactly the total value that leaves Africa. But the Reuters badysis gives an estimate of the scale.
Reuters badessed the volume of illicit trade by comparing total imports to the UAE with exports reported by African states. Industrial mining companies in Africa told Reuters that they were not sending their gold to the United Arab Emirates – indicating that its gold imports from Africa have come from overseas. other informal sources.
Informal methods of gold production, known in the industry as "artisbad" or small scale mining, are developing worldwide. They have helped millions of Africans earn a living and help some people earn more money than they could dream of with traditional jobs. But methods pour chemicals into rocks, soil and rivers. And African governments such as Ghana, Tanzania and Zambia complain that gold is now illegally produced and smuggled out of their countries on a large scale, sometimes through criminal operations, and often at a human cost and high environmental.
Artisbad mining started as a small business. Nana Akufo-Addo, President of Ghana, said at a conference on mining that the "romantic" era of individual mining had given way to operations " large-scale and dangerous "run by criminal syndicates under foreign control. Ghana is the second largest gold producer in Africa.
Everyone in the chain does not break the law. Minors, some of whom work legally, usually sell gold to middlemen. The middlemen steal the gold directly or trade it across the porous borders of Africa, obscuring its origins before the messengers carry it out of the continent, often in hand luggage.
For example, the Democratic Republic of Congo (DRC) is a major producer of gold but its official exports account for only a fraction of its estimated production: most of it is smuggled to neighboring Uganda and Rwanda.
"This is of course worrying for us, but we have very little power to stop it," said Thierry Boliki, director of CEEC, the Congolese government body intended to register, value and tax great value like gold.
The customs data provided by governments to Comtrade, a United Nations database, show that the UAE has been a golden destination of choice for many African countries in recent years.
In 2015, China – the largest consumer of gold in the world – imported more gold from Africa than the United Arab Emirates. But in 2016, the last year for which data are available, the United Arab Emirates imported nearly double the value taken by China. With African gold imports worth $ 8.5 billion that year, China was far behind. Switzerland, the world's gold refining center, is in third place with a value of 7.5 billion dollars.
Most of the gold is trading in Dubai, where the gold mining industry of the UAE is located.
The UAE said it imported gold from 46 African countries in 2016. Of these, 25 did not provide Comtrade with data on their gold exports to the UAE. But the UAE said it imported $ 7.4 billion worth of gold.
In addition, the UAE imported much more gold from most of the 21 other countries than those exported by these countries. In total, he said he imported $ 3.9 billion worth of gold, or about 67 tonnes, more than what countries said they were sending.
"There is a lot of gold leaving Africa without being included in our archives," said Frank Mugyenyi, senior adviser on industrial development at the African Union, which created the unit. minerals from the organization. "The UAE is taking advantage of the unregulated environment in Africa."
The Dubai Customs Administration forwarded Reuters requests to the UAE Ministry of Foreign Affairs, which did not respond. The United Arab Emirates government media office referred Reuters to the federal customs authorities in the United Arab Emirates, who also did not respond.
Any discrepancies in the data badyzed by Reuters do not necessarily suggest that gold mined in Africa is smuggled through the UAE. Shipping taxes and operating taxes reported differently, a delay between the departure and arrival of the cargo or simple errors may also present small differences. And gold badysts say that part of the trade, particularly from Egypt and Libya, could include recycled gold.
But in 11 cases, the value per kilo that the UAE has declared importing is significantly higher than that recorded by the exporting country. This, said economist Léonce Ndikumana, who has studied capital flows in Africa, is a "clbadic case of under-invoicing of exports" aimed at reducing taxes.
Matthew Salomon, an American economist who has studied the use of trade statistics to identify illicit financial flows, said the issue deserved close scrutiny. "Persistent divergences in the trade of particular goods and between particular countries … can identify significant risks of illicit activity," he said.
Pollution, conflicts and bandits
Over the past decade, strong demand for gold has encouraged informal miners to use digging equipment and toxic chemicals to improve their performance. Contaminated water is returned to the rivers, slowly poisoning people who need it.
Smaller miners have long used mercury – easy to buy at around $ 10 for a bottle the size of an inch – to extract gold beans from the ore before emptying it. The toxic effects of mercury include damage to the kidneys, heart, liver, spleen and lungs, as well as neurological disorders such as tremors and muscle weakness. Cyanide and nitric acid are also used in the process, according to researchers and miners in Ghana.
Industrial mining companies are also responsible for pollution, ranging from cyanide spills to respiratory problems related to dust generated by mining activities. But nearly a dozen states, including the DRC, Uganda, Niger, Ghana, Tanzania, Zimbabwe, Malawi, Burkina Faso, Mali, Sudan, and Chad complained during years of damage caused by unauthorized mining.
Burkina Faso has banned small-scale mining in some areas where al-Qaeda-linked Islamists are active. Earlier this month, the Nigerian government suspended mining in the state of Zamfara, in the northwestern northwestern part of the country. between the activities of armed bandits and illegal minors.
High prices fueled the boom. Today, gold is trading at over $ 40,000 per kilogram, which is lower than the peak reached in 2012, but four times higher than it was two decades ago.
Western investors want gold to diversify their portfolios; India and China want it for jewelry. But most Western companies – and the banks that finance them – avoid dealing directly with non-industrial African gold.
They do not want to risk using metal that could have been exploited to finance a conflict or that would have resulted in human rights violations, for example in the DRC or in Sudan. Various Ugandan traders have been punished for smuggling gold out of the DRC.
Destination Dubai
In other states, including the United Arab Emirates, these concerns are less serious. In the last ten years, Africa's gold has become increasingly important to Dubai. From 2006 to 2016, the share of African gold in gold imports reported by the United Arab Emirates increased from 18% to nearly 50%, according to data from Comtrade.
The Dubai Multi-Commodities Center (DMCC), the UAE's main commodities market, is featured on its website as "your gateway to global commerce". The gold trade accounts for almost one-fifth of the UAE's GDP.
However, none of the major industrial companies touched by Reuters – including AngloGold Ashanti, Sibanye-Stillwater and Gold Fields – said they were sending gold. Reuters contacted 23 mining companies operating in Africa. The smallest of them produced about 2.5 tons in 2018: 21 of them said they did not send metal to Dubai to be refined, the other two did not answered.
While large South African miners have local refining capacity, the main reason cited by other producers is that no UAE refinery is accredited by the London Bullion Market Association (LBMA), the benchmark in the sector for western markets.
The LBMA is "not comfortable with relations with the region" because of concerns over customs weaknesses, cash transactions and hand-carried gold. said his technical manager, Neil Harby, to Reuters. Investigators and gold-mining stakeholders say the ease with which smugglers can carry gold in their carry-on baggage leaving Africa allows gold to go out in an unregistered manner. . And a regulation limited to the UAE means that the gold extracted informally can be imported legally, free of tax.
Gold can be imported to Dubai with little documentation, African traders told Reuters.
A spokesman for DMCC said it has a strong regulatory framework with strict rules on responsible sourcing. These are aligned with the international reference for responsible sourcing defined by the Organization for Economic Co-operation and Development (OECD).
Sanjeev Dutta, head of raw materials at DMCC, said in January that the center was establishing strategic relationships with most of the gold-producing countries of the African continent, "and we are very confident as to how this production is carried out and to which it is responsible ".
In the past 12 months, he said, DMCC has strengthened a refinery standard, called Dubai Good Delivery, which is very stringent in terms of responsible sourcing and sustainability. "We follow issues ranging from responsible purchasing to sustainable development, to human rights, etc.," he said. "We require export certificates."
A "very limited" number of refineries accept imported gold as hand luggage, said Dutta, without providing figures.
The UAE is the main destination of African gold. But Africa's largest exporters are not always the biggest gold producers, according to trade data.
Gold to take away
Some African miners exchange their picks and shovels for excavators and crushers, increasing production volumes exponentially.
Regulations are rare and accidents are common. In one week in February, three illegal mining accidents in Zimbabwe, Guinea and Liberia killed more than 100 people.
Miners often have to give up part of their production, as a commission, to people who control a pit, drop equipment, or buy and sell gold.
NGOs such as Global Witness and Human Rights Watch have documented child labor, corruption and conflict links in some of these mines. In a Reuters-visited Zimbabwe mine, people said they had to hand over some of their discovery even before being allowed out of the pit.
Reuters presented its badysis to 14 African governments. Five of them said that this reflected a concern about gold being smuggled out of their country and which they were trying to address. One of them said that they did not think that gold smuggling was a problem for them. Others declined to comment or did not answer.
Governments across Africa are trying to find a way to manage a sector that, whatever its risks, is a livelihood for many of its citizens and could be exploited as a source of revenue.
Some, including Côte d'Ivoire, are gradually taking steps to regulate their informal mining operations. Ghana and Zambia have sent security forces to the mining areas to put an end to operations so that miners can be registered and regulations are put in place. Ghana, concerned that projects led mainly by Chinese people are harming the environment, has arrested hundreds of Chinese miners and expelled thousands in the last six years.
At the end of last month, Ghana temporarily banned the import of hydraulic shovel equipment to try to stop illegal mining with heavy machinery.
In Sudan, one of the continent's largest producers, the government unveiled a $ 3 billion plan providing for private banks to work with the central bank to buy gold from artisbad miners, offering prices that make sales on the black market less attractive. .
A Tanzanian parliamentary report estimated that 90% of the annual gold production extracted informally went out of the country illegally: the government wants the central bank to buy it. In March, President John Magufuli launched a plan to create poles where trade would be formalized by providing access to financing and regulated markets.
In Burkina Faso, the Minister of Mines, Oumarou Idani, believes that his country is making large-scale gold flow to the United Arab Emirates. The government estimates that only 200 to 400 kg are reported to the authorities on the 9.5 tonnes of gold mined annually by informal miners, he said.
Much of the gold is smuggled from Burkina Faso to its neighboring country on the Atlantic coast, Togo, according to the minister. In Togo, virtually no tax is imposed on gold.
Togo's Director of Development and Mining Control, Nestor Kossi Adjehoun, said that informal mining is "an area we have not yet understood," he added.
"I understand that Dubai is the destination of this gold," his Burkinabe neighbor, Minister Idani, told Reuters at a meeting last year. "But as (trade) is fraudulent, I do not have any details."
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