United Nations to launch study of illegal mining

August 25, 2014

In South Africa, according to a front-page story in The Wall Street Journal on Aug. 24, the number of illegal miners is very close to the number of people legally employed by the mining sector, 150,000. These miners, working in some 4,400 abandoned mines in the country are affecting the gold mining sectors bottom line. In 2010, the most recent year available, the government estimated losing $500 million in tax and export revenue from gold illegally mined and sold in the black market, compared with about $2 billion it raises annually in corporate taxes from all mining companies.

To combat the illicit trade of precious metals in South Africa and elsewhere around the world, a United Nations body will launch a global study in September to look at the role organized crime plays in the production and distribution of metals such as gold, The Wall Street Journal reported.

The study will look at producing and consuming countries of the metals across the world. The goal is to understand the scope and scale illegal mining and illegal trade of precious metals play in the global economy, says Jonathan Lucas, director at the United Nations Interregional Crime and Justice Research Institute. "Organized crime plays a role in the chain from mining precious metals to the marketplace," said Lucas. "Countries are losing significant funds."

South Africa's Chamber of Mines, a body that represents mining companies, estimates that the country loses about 5 percent of its potential annual mineral output to illegal mining activities, equivalent to around $2 billion.

The illegally mined gold, police officers say, is traded into South Africa's jewelry market and into the global precious metal pipeline mixing with legally mined metal. The specifics of that trade route, though, remain murky. That is what the UNICRI hopes to shed more light on, said Lucas.
The report will pull in experts from different countries and run from September to either December or January. The team will present a report that looks at the whole illegal mining and illicit precious metal trading chain with recommendations on how countries and companies can combat the problem.


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