Most gold smuggled from Africa is exported to the United Arab Emirates, report says

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The United Arab Emirates has been accused of being a major recipient of gold worth tens of billions of dollars smuggled out of Africa each year, reflecting growing concerns about the illicit trade in the precious metals. region of.

In a comprehensive study, Swissaid estimated that some 435 tonnes of gold worth about $31 billion will be exported out of Africa undeclared in 2022 – a doubling of illicit volumes in a decade to about 40 percent of the world’s production. continent, or 12 percent of world production. mined supply.

The United Arab Emirates, whose main regional trading hub, Dubai, is known for its gold market, accounted for 93 percent of undeclared African exports, according to the NGO report. The next two largest importers were Switzerland and India.

After gold prices hit record highs earlier this year, the figures will intensify scrutiny of illegal mining in conflict zones such as eastern DR Congo and Sudan, as well as the role of the metals industry. precious stones of the United Arab Emirates.

Marc Ummel, one of the report’s authors, said the Financial Action Task Force, the international body that fights money laundering, should reconsider February’s removal of the United Arab Emirates from its “grey list” of countries.

“You shouldn’t be delisted when you have 400 tons coming into your country illegally,” he said. “This is a huge amount of money leaving Africa related to money laundering, conflict and human rights issues that does not benefit the people who mine the gold and try to support their families.”

Emirates Gold, one of the country’s largest refiners, was last year suspended from accessing the Dubai and London gold markets, which require anti-money laundering and responsible sourcing standards. The refiner said at the time that the suspension had nothing to do with its compliance processes and that it had always adhered to responsible sourcing and anti-money laundering practices.

A UAE official acknowledged that there have been “concerns around gold smuggling into Dubai” but said the country had “implemented detailed new regulations for gold and precious metals to effectively mitigate these risks.”

Gold extraction by “artisanal” miners has been a long-standing problem for the gold sector, but it has become more acute after rising metal prices. Gold hit a record high of $2,400 per troy ounce in April as central banks in emerging markets led by China purchased bullion to diversify their reserves away from the U.S. dollar.

Among African nations, Mali, Zimbabwe and Ivory Coast had the highest volumes of undeclared gold production, according to the report.

The United Arab Emirates introduced new regulations on gold refineries in 2023 to improve due diligence in gold sourcing, including detecting and conducting visits to artisanal mines. But the Gulf State has questioned whether its approach of accepting artisanal and small-scale mining is harmful to the people who dig and clear the land.

Gold miners and an engineer from the Coomiuki artisanal gold cooperative chat at the entrance to a mining shaft at the Luhihi gold mine in the eastern province of South Kivu in the Democratic Republic of the Congo.
A gold mine in the eastern province of South Kivu, in the Democratic Republic of the Congo. The country is fighting rebels in its eastern border regions, where a mining belt contains large quantities of gold. © Alexis Huguet/AFP/Getty Images

Last year, Primera, an Abu Dhabi-based gold trader, was granted a 25-year monopoly by the Democratic Republic of Congo to trade and export small-scale “artisanal” gold supplies, in a move aimed at combat smuggling. The Central African country is fighting rebels in its eastern border regions, where a mining belt contains large quantities of gold.

Armed groups, including the M23 militia, control strategic supply chains in Rwanda and Uganda, analysts and Congolese officials say. The US Treasury has said that most of the gold from the Democratic Republic of the Congo was smuggled to neighboring Rwanda and Uganda, where it was refined and exported mainly to the United Arab Emirates.

Kigali has repeatedly denied Rwanda the benefits of what Congo claims is $1 billion a year it loses from the unauthorized export of minerals, adding that its mining sector is “fully regulated and monitored” and that “traceability is mandatory.”

“The Congolese say we stole. . . their gold,” said Rwandan President Paul Kagame in November 2022. Most of what “passes through here doesn’t stay here,” he added. “He goes to Dubai, to Brussels, to Tel Aviv. . . and they accuse us of stealing Congolese minerals. And the destination?

The United Arab Emirates was the main destination for the vast majority of artisanal gold mined in the 18 African countries on the EU list of conflict-affected and high-risk nations, the report added.

However, the UAE official added that the country required all gold refiners to “comply with due diligence regulations for responsible gold sourcing, which are aligned with the OECD due diligence guidance for a responsible supply chain of minerals from conflict-affected and high-risk areas.” ”.

Earlier this year, the United States sanctioned Al-Fakher Advanced Works, a holding company that the Treasury Department says exports gold for the paramilitary Rapid Support Forces that have been fighting the Sudanese army in a brutal civil war.

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