Nonregulation of mining industry causes illegal mining to thrive, says expert
Gold extracted from beneath the earth illegally, is quickly moved through a sophisticated value chain and absorbed into the legal market.
FILE: A cave where illegal miners seek refuge from Atok Village inhabitants' outcries. Picture: Jacques Nelles/Eyewitness News
JOHANNESBURG - Some energy and mining researchers have labelled illegal mining in South Africa as a multilayered and unregulated industry that continues to thrive.
Gold extracted from beneath the earth illegally is quickly moved through a sophisticated value chain and absorbed into the legal market.
Other sources claim numerous kingpins allegedly buy off councillors and cops to ensure their operations remain stable.
A researcher at the University of Cape Town (UCT) and the Bench Marks Foundation, Dr Nteboheng Phakisi-Portas, explained how the value chain of illegal mining works.
“You have the negotiator who visits the mining site. This negotiator is the middleman between the buyer and seller. The middleman will visit the site and negotiate on behalf of the buyer.”
She said through their investigations and research, they found that the buyers are often legitimate dealers and mining companies.
“Gold will then be sold to a licenced dealer and then ends up being injected into the formal economy and finally you’ll have this gold being sold to the international market.”
South Africa is yet to sign the artisanal and small-scale mining policy into law, which will legitimise the illegal mining industry, enabling it to contribute to economic growth.
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CENTRAL BUYING AGENCY
Experts said the government should look at establishing a central buying agency for gold.
This is included in submissions proposed for the artisanal and small-scale mining policy, which sets out regulations for illegal miners to legitimise their operations.
A second version of the draft policy was signed off by Minerals, Resources and Energy Minister Gwede Mantashe in 2021, but it has yet to be signed into law.
Lead researcher at Bench Marks Foundation, David van Wyk, said a central buying agency would seclude illicit syndicates from buying gold.
“The central buying agency can pay the artisanal miners slightly less than the global price of gold, let's say 80% than the global price of gold, so they can retain the other 20% so they can pay for services to artisanal miners, such services such as safety and basic equipment.”