SA fingered as a major transit hub for illegal gold exports with a tally of R657bn

In 2023, SA produced 110 tons of gold while the neighbouring Zimbabwe produced 37 tons, although most of it was informal and was smuggled out illegally, according to an investigation by Al Jazeera. SUPPLIED.

Swissaid has shone the spotlight on South Africa for its role as a major transit hub for illegal bullion exports from the region with over $35 billion (R657bn) worth of gold smuggled out of Africa.

Switzerland-based Swissaid runs development policy projects and raw materials is a focus area.

In a report entitled “On The Trail of African Gold” and released on Friday, the Bern-based non-governmental organisation said that between 321 and 475 tons of gold from the informal sector was smuggled out of Africa each year.

This translates to a value of between $24bn (R451bn) and $35bn (R658bn), with gold smuggling from Africa to countries such as the United Arab Emirates (UAE) said to be rising.

In 2023, SA produced 110 tons of gold while the neighbouring Zimbabwe produced 37 tons, although most of it was informal and was smuggled out illegally, according to an investigation by Al Jazeera.

South Africa has now been stamped as a major transit hub for the gold produced and smuggled from other African countries such as Zimbabwe.

“Smuggled gold from neighbouring countries for example Zimbabwe passes through South Africa,” Swissaid said in the report.

Swissaid said that for almost every year between 2014 and 2022, exports of gold from South Africa into non-African countries were “higher than the aggregate of total declared gold production” in South Africa.

Exports of gold from the country into non-African countries such as UAE were also higher than imports of gold into SA and undeclared informal gold production in SA.

“The vast majority of gold exports from African countries to South Africa consist of industrial gold sent to Rand Refinery, a refinery based near Johannesburg that is the only one in Africa to be certified by the London Bullion Marketers Association (LBMA),” noted the report.

Rand Refinery, one of the largest single-site precious metals refining and smelting complexes in the world, had responded to Swissaid during the compilation of the report, detailing the quantities of gold it has refined in recent years.

It said it refined 302 tons at an average purity of 82% for the in the fiscal year September to August 2017/2018, and 298 tons for the 2018/2019 year.

For the year 2019/2020 it said it refined 272 tons of gold, and 296 tons at 75% purity for the 2020/2021 year.

“The refinery explained that half of the gold it processes generally comes from South Africa and the other half from other countries, the vast majority of which are African,” noted the report.

Swissaid concluded that the 133 to 149 tons of gold exported annually from African countries to South Africa between 2017 and 2021 corresponded to around half of the gold processed by Rand Refinery.

According to the report, the UAE Ministry of Economy told Swissaid that the country “cannot be held accountable for other government’s export records” and stressed that it had “adopted measures to curb money laundering in the gold sector”.

“Only our own, where we have sophisticated technologies and systems to track and verify the data,” the UAE said.

South Africa is among the top gold producers on the continent, while the JSE hosts the biggest bullion stocks.

However, of late, companies have been migrating corporate offices and listings from the JSE, with AngloGold Ashanti moving its primary listing to New York last year.

The South African gold mining industry is clearly in peril, as it has suffered the worst consequences of load shedding, meaning that South Africa could only account for 4% of global bullion output at 110 tons in 2022, down from 132 tons in 2018.

“The long-term outlook on production volumes of gold in South Africa remains subdued due to lower grades, higher complexity in extraction and increased costs,” said PwC in a recent report.

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