The UAE is a key gateway to the smuggling of billions of gold from Africa

An analysis by Reuters found that there are billions of dollars of gold smuggling from Africa each year through the UAE, which represents a gateway to markets in Europe, the United States and elsewhere.

Customs data show that the UAE imported $ 15.1 billion worth of gold from Africa in 2016, more than any other country, up from only $ 1.3 billion in 2006.

The total volume was 446 tons with varying purity, up from only 67 tons in 2006.

Much of this gold was not included in the exports of African countries. Five economists interviewed by Reuters said this indicated the transfer of large amounts of gold without payment of tax duties owed to the producing countries.

Reports and studies have already shed light on the black market trade in gold extracted by people, and even children who have no links to any major institutions or dig to extract it without supervision from the authorities.

No one can say a precise figure for the total value coming out of Africa. But the Reuters analysis indicates the magnitude of the figure.

Reuters was able to estimate the volume of illicit trade by comparing the total imports entering the UAE with exports from African countries.

Mining companies in Africa told Reuters they were not exporting gold to the UAE, suggesting that UAE gold imports from Africa could be from other informal sources.

At the global level, irregular gold production methods are being developed through limited extraction. These methods are a source of income for millions of Africans and help some to make an income that can not be dreamed of by traditional activities. However, these methods lead to the leakage of chemicals into rocks, soil and rivers.

African governments - such as Ghana, Tanzania and Zambia - complain of illegal and widespread illicit production and smuggling of gold, sometimes through criminal operations and often at a high human and environmental price.

The banning of banned gold began as a limited activity, but Ghana's President Nana Akufu Addo said at a mining conference in February that the activity had moved from the individual stage to "massive and risky" operations run by criminal gangs under foreign control. Ghana is the second largest African producer of gold.

Not all episodes of this series are against the law. Those who work in the extraction of gold, some of whom work legally, usually sell what they extract from gold to intermediaries.

Brokers either transfer gold directly to the outside world or sell it across Africa's porous borders, which hides the origin of the place it came from before it was moved with travelers out of the continent, often with hand luggage.

For example, the DRC is a major producer of gold, but its official exports account for only a small percentage of its estimated production. Most of them are smuggled into Uganda and Rwanda.

"Of course this is worrisome, but we have little tools to prevent it," said Terry Poliki, director of the government agency in Congo, which records precious metals such as gold, valuations and taxes.

Customs data, supplied to governments by Comtrade, a United Nations database, shows that the UAE has been a major destination for gold from many African countries for years.

By 2015, China (the world's largest consumer of gold) imported more gold from Africa than the UAE imported. However, in 2016 - the latest year of its statistics - the UAE imported twice as much as China imported.

The value of China's imports of gold reached 8.5 billion dollars that year, ranking second by a large margin. Switzerland (the world's gold refining center) came in third place with imports worth 7.5 billion.

Most of the gold is traded in Dubai, which is the center of the UAE's gold industry.

The UAE has announced imports of gold from 46 African countries in 2016. Of these, 25 have not provided Comtrade with their exports of gold to the UAE, but the latter said it had imported 7.8 billion gold.

In addition, the UAE imported gold from most of the other 21 countries much more than those countries said it exported to it.

In total, the UAE said it imported about $ 3.9 billion worth of gold, about 67 tonnes more than those countries said it exported.

"Large amounts of gold leave Africa unchecked in our records, and the UAE is profiting from the unregulated environment," said Franck Mugeni, the AU's industrial development adviser, who founded the unit.

Dubai Customs sent Reuters inquiries to the State Department, which did not respond. The Government Information Office referred the Agency to the Federal Customs Authority, which also did not respond.

All the contradictions in the data - analyzed by Reuters - do not necessarily refer to the smuggling of gold extracted from Africa through the UAE. Minor differences may arise from recording shipping costs, taxes differently or the time lag between the shipment's travel and arrival, or simply a mistake.

Gold industry analysts say part of the trade movement - particularly from Egypt and Libya - may include remanufactured gold. However, in 11 cases, the value of the kilogram declared by the UAE was much higher than that of the exporting country.

"This is a typical case of undervalued exports" to reduce taxes, said Leones Ndikomana, an economist who studied capital flows in Africa.

"It's worth checking," said Matthew Salomon, an American economist who has conducted research into using trade statistics to identify illegal financial flows.

"Through the continuing contradictions - in the trade of certain goods and between certain countries - it is possible to identify the high risks posed by a prohibited activity."

Pollution .. conflict .. thieves
Over the last decade, the temptation to extract gold has increased in the eyes of informal workers because of the high demand for it, and they have used drilling equipment and chemicals to increase returns. Polluted water returns to rivers to slowly poison people living on their water.

For a long time, gold miners have used the easy-to-buy mercury, which is about $ 10 a bottle in size, to extract gold bullion from rough stones before it is drained into water canals.

The toxic effects of mercury damage the kidneys and disorders of the heart, liver, spleen and lungs as well as neurological disorders such as tremor and muscle weakness. Ghanaian researchers and gold miners say cyanide and nitric acid are used in the process.

Industrial mining companies are also responsible for pollution, ranging from cyanide patches to dust-related respiratory problems caused by mining operations.

But more than a dozen countries - including the Democratic Republic of Congo, Uganda, Chad, Niger, Ghana, Tanzania, Zimbabwe, Malawi, Burkina Faso, Mali and Sudan - complained last year of unlicensed mining damage.

Burkina Faso has banned small-scale mining in some areas where al-Qaeda-linked Islamists are active. Earlier this month, the Nigerian government suspended mining in the troubled northwestern state of Zamfara, saying intelligence reports confirmed what it described as "a stark connection" between The activities of armed thieves and miners without authorization.

High prices contributed to the flourishing of this activity. Gold is trading at more than $ 40,000 a kilogram, less than the peak of 2012, but still four times what it was twenty years ago.

Western investors want gold so they can diversify their portfolios. India and China want it for jewelry.

However, most Western companies and banks that finance them avoid dealing in non-industrial gold directly from Africa. They do not want to risk using a metal that may have been used to fund a conflict or involve human rights abuses.

Penalties have been imposed on various traders working in Uganda for dealing in gold smuggled from the DRC.

Destination Dubai
In other countries, including the UAE, these concerns are not a problem. Over the last 10 years, gold from Africa has become of particular importance to Dubai. Comtrade data showed that since 2006 to 2016 imported gold from Africa has increased from 18% to nearly 50%.

The UAE's main commodity market, the Dubai Multi Commodities Center (DMCC), describes itself as "a global gateway to the Middle East for trade in a wide range of commodities." Trade in gold accounts for nearly one-fifth of the UAE's GDP.

However, none of the major industrial firms contacted by Reuters, including Anglo Gold, Ashanti, Seabany-Stillwater and Gold Fields, said they were exporting gold to the UAE.

Reuters has contacted 23 mining companies with activities in Africa, the smallest of which produced around 2.5 tonnes in 2018. Twenty-one companies said they did not send gold to Dubai for refining, and two companies did not reply.

While the major mining companies in South Africa have local gold refining capacity, the main reason other companies have stated that the UAE refineries are not accredited by the London Metals Exchange Association, which sets industry standards for Western markets.

"We are not comfortable dealing with the region" because of concerns about customs, cash and hand-held gold points, Neil Harby, technical director of the association, told Reuters.

Investigators and members of the gold industry say the ease with which smugglers can carry gold in hand luggage on planes traveling from Africa contributes to gold out of pocket. The limited regulation in the UAE means that illicitly extracted gold can be imported legally and exempt from taxes.

African traders told Reuters gold could be imported into Dubai without any documents.

A spokesperson for the Dubai Multi Commodities Center (DMCC) said the center has a strong regulatory framework that includes strict controls on voluntary compliance with social and environmental considerations in dealing with suppliers.

Such controls had been modeled on the International Voluntary Compliance Standards of the Organization for Economic Co-operation and Development (OECD).

In January, Sanjeef Dutta, head of commodities at the Dubai Multi Commodities Center, said the center has strategic ties with most of the gold-producing countries on the African continent. "We are very confident how this production is and how responsible it is."

Over the past 12 months, the Center had established a standard for purification units, which he said was very strict with regard to voluntary compliance with social and environmental criteria in the selection of origin and sustainability rules. "We are demanding export certificates."

Dutta said a "very limited" number of purification units accepted imported gold in handbags, but gave no figures.

Gold commission
Some mining workers in Africa replace their axes and shovels with excavators and crushers, which greatly increases the volume of production.

Regulations are still meager and many incidents occur. In one week in February, three incidents occurred in illegal excavations in Zimbabwe, Guinea and Liberia, which claimed more than 100 lives.

Gold miners often have to hand over a share of their production to a commission for individuals who control an illegal mine, rent equipment, or buy and sell gold.

NGOs such as Global Witness and Human Rights Watch documented child labor, corruption and the links between production and conflict in some of these mines.

In a mine visited by Reuters in Zimbabwe, some workers said they had to hand over some of what they had found before they even left the mine.

Reuters provided analysis to 14 African governments. Five governments said they reflected a concern about the smuggling of gold from their countries and were trying to address the problem. One government said it did not believe gold smuggling was a problem, and other governments declined to comment or did not respond.

Governments across Africa are trying to establish how to manage a sector that provides a livelihood, however risky, to many of its citizens and can be used as a source of income.

Some countries, including Côte d'Ivoire, are taking steps to regulate illegal mining operations. Ghana and Zambia have sent security forces to mining areas to stop operations so that mining workers can be registered and regulated.

Ghana's discomfort to damaging the environment has led to a flood of Chinese-led projects that have arrested hundreds of Chinese miners and expelled thousands in the last six years.

At the end of last month Ghana temporarily banned the import of drilling equipment to try to stop a significant increase in illegal mining using heavy equipment.

In Sudan, one of the continent's biggest producers, the government unveiled a $ 3 billion plan for private banks to work with the central bank to buy gold from small producers and offer prices that reduce the temptation to sell it on the black market.

A Tanzanian parliament report estimated that 90 percent of the annual production of illicitly extracted gold was smuggled out of the country. The government wants the central bank to buy the output.

In March, President John Magofoli launched a plan to set up centers to formalize the trade by opening up regulatory opportunities and markets.

In Burkina Faso, mining minister Omar Idani believes the smuggling of gold from his country to the UAE is widespread.

Idani said that the authorities are being told about the amount of between two hundred and four hundred kilograms of gold out of the 9.5 tons estimated by the government that the proceeds of the production of illegal excavations every year.

Much of the gold is smuggled from Burkina Faso, which has no sea or ocean, to neighboring Togo bordering the Atlantic coast, the minister said. Togo does not impose any real taxes on gold.

Nestor Kosi Agihon, director of mining development and controls in Togo, said that illegal mining operations were "an area that did not properly sink".

At present, Togo did not see any reason to doubt the smuggling of gold through its territory.

"I know that Dubai is the destination of this gold, but I have no details because it is fraudulent," Minister Idani told Burkina Faso in an interview last year.