Gold industry raises bar to secure trust in global supply chain

Red-hot prices are stoking a surge in illegal gold mining, raising alarms about the laundering of illicit metals into the legal market.

In South Africa, this issue has been thrown into sharp relief by the “surrender-or-starve” siege at an abandoned mine near Stilfontein in North West.

So, how does the gold industry ensure the integrity of its supply chain? How do investors, central banks and other consumers know their gold is not tainted by blood?

The World Gold Council (WGC) is trying to address this vexed issue with a digital database of gold bars that can trace their source and assure they have been responsibly sourced.

“The WGC is working with representatives across the gold supply chain to develop a robust, resilient and globally recognised database of gold bars that will expand the ‘trusted ecosystem’ and provide assurance that the gold has been responsibly mined and responsibly supplied,” Sibanye-Stillwater chief executive Neal Froneman said in prepared remarks at the African Mining Indaba in Cape Town a week ago. .

“Investors need to know that the gold they buy is authentic and responsibly sourced. A digital database will help to prove that it is,” said Froneman, who is also the chairperson of the WGC.

“Using blockchain to map gold from mine to vault, the Gold Bar Integrity programme will prove the provenance and authenticity of gold bars, starting with the 400oz bar market but expanding in time to a broader range of formats, including smaller bar sizes and coins,” Froneman said.

“Ultimately, the programme aims to create a database of legitimate gold and reduce the value of gold that is not in the database – including gold that is illegally mined.”

This could deal a blow to the transnational organised crime syndicates that are behind the trade in illegal gold, which is often laundered through refineries in places such as Dubai.

“As the sector continues to grow, we believe it is important to raise awareness of the potential to formalise responsible artisanal and small-scale gold mining (ASGM), which could improve the lives of those working in the sector and reduce environmental harm; and to take international action to address criminality and illicit financial flows,” Froneman said.

Bringing ASGM miners into the emerging database will be challenging, but it would give their trade an important stamp of legitimacy. Such mining accounts for an estimated 20% of global gold production, but about 85% of it takes place outside formal networks.

“The challenge is identifying responsible artisanal gold mining. You need to do that before you can bring it into the responsible bar ecosphere,” John Mulligan, head of sustainability at the WGC, told Daily Maverick in an interview on the sidelines of the Indaba.

There is no silver bullet for addressing this issue, and in South Africa, the bar is raised by the depths and dangers of the gold mines strewn across the Witwatersrand in Gauteng, among other issues.

Froneman told Daily Maverick that Sibanye’s security costs in South Africa now amounted to about R1-billion a year. Daily Maverick had insight into the company’s data on security incidents and arrests by its security teams from 2022 to 2024 – illegal miners target both disused and operational mines.

Incidents numbered 9,677 in 2022, 10,290 in 2023 and 10,391 in 2024. Arrests show a similar trajectory, rising from 5,140 in 2022 to 6,304 in 2024.

Going after gangsters

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.