After the Bell: Smoking out an alternative to the ‘surrender or starve’ strategy on SA's illegal miners

21 Nov 2024

The big profits from illegal gold mining surge to the criminals at the top who launder the precious metal into a ‘clean asset’. These are the masterminds who need to be ‘smoked out’.

As the standoff around an abandoned gold mine at Stilfontein in North West rumbles on with an unknown number of “zama zamas” still underground, the World Gold Council happened to release a global report on artisanal gold miners this week.

“Silence is Golden: A Report on the Exploitation of Artisanal Gold Miners to Fund War, Terrorism and Organised Crime” makes some sensible recommendations for addressing this scourge. It’s a deep shaft to sink, but an alternative must be found to a blunt “surrender or starve” strategy aimed at smoking out the miners at the bottom of sprawling criminal syndicates.

The World Gold Council report is a salient reminder for South Africans that illegal gold mining is a vast global industry spun from a complex web of transnational organised crime.

“Artisanal and small-scale gold mining comprises about 20% of all annual gold supply, and 80% of employment in the sector,” says the report.

It provides income for an estimated 15 million to 20 million people, often ruthlessly exploited, in 80 countries, and indirectly supports 270 million people.

But the big profits surge to the criminals at the top who launder the precious metal into a “clean asset”. These are the masterminds who need to be “smoked out”, but the report pointedly notes that there is “... a dangerous inertia in enforcing the law against the most nefarious criminals involved”.

Targeted sanctions required

Among the proposals outlined, the report calls for governments to “... implement targeted, secondary sanctions against high-level individuals and companies involved in the smuggling and laundering of gold”.

In South Africa’s case, such sanctions could be aimed at the likes of alleged Zimbabwean gold and tobacco smuggling kingpin Simon Rudland.

The grounds to initiate such action are clearly compelling: The South African Revenue Service has carried out search-and-seizure operations that have laid bare Rudland’s network of smuggling, laundering and VAT scams.

But as my colleague Pauli van Wyk has pointed out, the Hawks and National Prosecuting Authority (NPA) have been missing in action. This undermines South Africa’s efforts to exit the Financial Action Task Force greylisting by June 2025.

Read more: Why are the Hawks and NPA not acting on the gold and tobacco mafia?

The World Gold Council report also calls for governments to “... require international hubs and major refineries to collate country-level data to build up a clearer picture of Artisanal and small-scale gold mining imports and exports, and its corresponding financial flows”.

Another proposal is for the Financial Action Task Force to “... develop a specific framework with key performance indicators that need to be satisfied for any international hub in the gold trade to avoid the ‘black list’ and ‘grey list’”.

Such initiatives are needed to staunch the flow of illicit gold and the cash it generates.

But many governments lack the capacity or political will to take such action.

Lesotho is a case in point that highlights the gaping holes in any nets cast over illegal mining, as well as the continued exploitation of that country’s rural poor, which has deep historical roots in the Witwatersrand.

Most of the zamas in South Africa hail from Lesotho and Mozambique — the legacy of an industrial meat grinder known as the mining sector’s migrant labour system. The zamas represent a swelling underclass spawned by the dramatic decline in the use of foreign labour in South Africa’s mines and the failure of Lesotho and Mozambique’s economies to industrialise.

Read more: How the twilight of South Africa’s migrant labour system spawned a social apocalypse

South Africa’s mines once employed almost 500,000 foreign workers. That number, according to the last available data I could find, stood at 35,000 in 2022.

Remittances from the wages of Lesotho nationals working in South Africa’s mines amounted in 1987 to an astonishing 236% of the country’s GDP. They now equal 21% of GDP, according to World Bank data — a “remittance shock” without parallel in modern global economic history.

But this is probably a mammoth-sized underestimate. The data are largely based on remittances that can be traced through the formal sector and channels such as bank transfers.

The zamas don’t move money around in a transparent way — in the mountain kingdom, cash is king. As the World Gold Council report notes, artisanal miners provide direct and indirect support to many others.

A lot of the money they make from their arduous and dangerous trade is taken back to Lesotho in cold hard cash — a lifeline of support for poor rural communities. And rands do not have to be exchanged as the Big 5 currency is legal tender in Lesotho, pegged at one to one to the Lesotho Loti.

The prevailing view in South Africa is that the zamas are violent criminals who, in the memorable words last week of Minister in the Presidency Khumbudzo Ntshavheni, need to be “smoked out”.

Read more: ‘We will smoke them out’ – Ntshavheni talks tough amid scepticism over number of zama zamas trapped underground

The zamas are certainly linked to a lot of violence, including armed attacks on mining operations. Aside from disused shafts, they gain access to active mines run by publicly listed companies by intimidating security staff.

A senior mine union official once described it to me like this: if you are security personnel responsible for access to a mine, someone might show you pictures of your wife and children, and say something along the lines of “Nice family you have there, it would be too bad if something happened to them.”

But lower- or mid-level “dons” carry out most of this dirty work. The men below ground in Stilfontein, like tens of thousands of others, are the descendants of the men who once toiled in South Africa’s mines for a pittance.

Viewed through this prism, another picture emerges: men whose fathers, grandfathers and so on were brutally exploited under apartheid by South Africa’s mining industry are still being used and abused.

But it is not a racist state in collaboration with “legitimate” corporations engaged in labour practices that were frankly criminal who are still milking their muscle.

After being dispatched to the dustbin of history by South Africa’s mining industry, the zamas are now prey to criminals operating in the shadows, rather than in the open. And their rural kin back home still depend on their wages.

Appalling conditions

Instead of displaying a callous indifference to their plight, a certain amount of empathy can surely be shown to men who — because of their hard historical circumstances — spend weeks or months at a time underground in appalling conditions.

This is not something that anyone does by choice. What else are they supposed to do? Herd goats in the mountains or beg on the streets of Maseru?

The World Gold Council report also recommends that efforts be made to formalise artisanal mining. This is not original, but so long as there is gold to extract, someone is going to take a chance.

Against the backdrop of the Stilfontein siege, the bottom line is that there are two things to keep in mind. The first is that the top brass who pull the strings are living in luxury on the surface.

The second is that the zamas are just the latest wave of men from underdeveloped countries such as Lesotho and Mozambique who have been compelled to go underground by dint of their limited economic choices. Resolving the zama problem will require jailing the bosses and providing economic opportunities to the grunts. DM

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Targeted sanctions required

Appalling conditions