How murky gold trade fuels wars, gangs and terror attacks

• Soaring gold price drives illegal industry
• Miners are exploited; nature is degraded
• Gangs shift from drugs into artisanal gold sector

LONDON - The illicit trade in gold from artisanal mining is feeding conflicts from Ukraine to Sudan, funding terrorism, fuelling organised crime and subjecting the world's poorest people to horrendous violence.

This is the picture painted by the World Gold Council (WGC) in a report urging concerted international action to clean up the booming sector.

The artisanal and small-scale gold mining (ASGM) industry now produces an estimated 20% of the world's gold, up from 4% in the 1990s, and possibly accounts for 80% of the global gold mining workforce, said the 'Silence is Golden' report.

Millions of people across more than 80 gold-producing countries - most in Africa, Latin America and Asia - rely on ASGM to survive, but criminal gangs, armed groups and corrupt officials have increasingly muscled in.

The report's author, former British deputy prime minister Dominic Raab, said the proliferation of these illicit networks now presents a serious threat to international security.

What is ASGM and where does it happen?

Artisanal operations can run from a lone operator panning a river bed to a rudimentary setup with thousands of miners.

An estimated 15 million to 20 million people work in ASGM.

Big producers include Burkina Faso, Colombia, Democratic Republic of Congo (DRC), Ghana, Indonesia and Mali.

While some ASGM is formalised, estimates suggest 80% exists in the shadow economy.

Artisanal miners – including young children - often work in highly dangerous conditions, at risk of mercury and cyanide poisoning as well as pit collapses.

Without a safe supply chain and often lacking access to legal buyers for their gold, miners are also easy prey for armed groups and criminal gangs.

The international gold price has increased by more than 40% in the last two years, further fuelling criminal interest.

Who is exploiting artisanal miners?

A major beneficiary is the Russian mercenary Wagner Group, the WGC said.

Last December, researchers estimated that the Wagner Group and Russia had earned more than $2.5 billion from illicit gold mining since the 2022 invasion of Ukraine - money that could prop up Moscow's war machine.

The illicit trade is also fuelling Sudan's civil war, root of the world's worst humanitarian crisis.

Both sides have plundered gold to fund their military with most of it ending up in the United Arab Emirates, experts say.

Across Africa's Sahel region, Raab said affiliates of Islamic State and Al Qaeda were targetting artisanal miners, using extortion as part of their expansion strategy.

The United States has also flagged concerns that illicit gold is funding conflict in the Great Lakes region in Africa.

Many Latin American criminal groups have rapidly moved into gold, as it is more lucrative and less risky than trading drugs.

The value of illegal gold exports from Colombia and Peru now exceeds that of their cocaine exports.

Those benefitting include Colombia's powerful Clan del Golfo drug cartel and the ELN and dissident FARC guerrilla groups.

The trade also robs countries of income and tax revenues. One estimate suggested the cost to Sudan was almost $2 billion in one year alone.

Where does the gold end up?

Most African gold ships via the UAE, Switzerland and India. Other major gold hubs include Hong Kong, Miami and Turkey. 

The development organisation Swiss Aid estimates that 435 tonnes of gold was smuggled out of Africa in 2022, worth nearly $31 billion, most of it originating from ASGM.

There have been serious cases of money laundering involving gold smuggled into the UAE.

A global watchdog for financial crime placed the gold trading hub on its "grey list" of countries at risk of illicit money flows in 2022, but removed it this year following reforms.

Smuggling operations can be sophisticated; the WGC even cited a case where gold had been melted into small plane parts.

How does this impact the miners?

Raab said mine workers risked murder, rape and torture "on a horrific scale" by a range of predators.

In the Central African Republic, Wagner mercenaries have taken control of gold mines in return for providing President Faustin-Archange Touadera with security services, he said.

Miners who stood in their way were killed.

Human trafficking and debt bondage are also common in ASGM.

In Peru, gangs traffic thousands of women and girls, some as young as 12, to work in brothels for illegal miners.

What other dangers do small miners face?

A major hazard is poisoning from mercury, which is used to separate gold from ore.

The mercury pollutes land, rivers and the air, entering the food chain. Cyanide is sometimes used as an alternative.

ASGM accounts for up to 40% of global mercury emissions, according to the United Nations.

Mercury can damage the nervous system, kidneys, liver and immune system, and has been linked to birth abnormalities.

One woman in the Philippines told Context she still had high levels of mercury in her blood seven years after ending mining.

Haphazard safety standards can also trigger landslides or pit collapses.

Under-age labour is widespread, with children as young as eight employed in often high-risk work.

Aside from pollution, illegal gold mining also damages the environment through deforestation.

In Brazil, wildcat miners have stripped clean whole tracts of protected Indigenous land in the Amazon rainforest.

What can be done?

The report calls for greater international cooperation to arrest and prosecute the exploiters. Governments should also use sanctions, travel bans and asset freezes to disrupt business.

Other recommendations include a push to integrate responsible artisanal miners into legal supply chains, offering workers a path out of poverty and choking organised crime.

The report said the expansion of central bank gold purchasing schemes could be a game-changer.

It also called for greater transparency in supply chains and renewed scrutiny of gold refineries and trading hubs.

(Reporting by Emma Batha; Editing by Lyndsay Griffiths.)