Zama zamas try their luck, hit R14bn a year gold bonanza

SA’s illegal mining industry, operated by zama zamas or illegal gold miners, was one of the most lucrative with an output of more than R14 billion a year, according to a recent report.

The report by Enact, a project of the Institute for Security Studies, Interpol and the Global Initiative against Transnational Organised Crime, revealed that illegal mining operations were organised by criminal syndicates and were responsible for billions of rands in lost tax revenue and threatened physical infrastructure and public safety, causing a security headache for companies.

“The Minerals Council South Africa estimates lost sales, taxes and royalties of R21 billion a year through illegal mining,” said Alan Martin, an independent researcher and technical advisor specialising in illicit mining.

“Enact research indicates that zama zama outputs are more than R14 billion a year, one of the biggest sources of illicit gold on the continent. The majority of it – at least 34 tons between 2012 and 2016 – is exported to Dubai, while more enters international markets via neighbouring countries.”

Martin said the zama zamas were emblematic of a changing SA mining landscape.

“They are a direct by-product of the unanswered socio-economic inequalities faced by one of Africa’s leading economies. While SA remains one of the continent’s principal gold producers, its reserves are declining. As the industrial gold sector becomes less economically viable over the long term, artisanal mining is increasing,” he said.

The report stated while the Mineral and Petroleum Resources Development Act of 2002 acknowledged artisanal miners, it was deaf to realities in the sector.

Instead of criminalising the miners, the target should be the syndicate bosses behind this lucrative illegal industry.

“Illegal mining is principally carried out underground in industrial shafts, not in open pits. In essence, mining occurs within large-scale mines, not separate from them,” said Martin.

Apart from unsafe, exploitative and precarious working conditions, the zama zamas also faced a diverse range of dangers, including extortion, murder, forced migration, money laundering, corruption, racketeering, drugs and prostitution.

Martin said a solution for the zama zama phenomenon required a paradigm shift among stakeholders and government to formalise zama zama activity into the legal supply chain.

“The government should centralise the gold buying system through which licensed scrap metal dealers purchase and process precious metals. Doing so would interrupt the syndicates’ control of the illicit market.”

A gold buyer would purchase at the daily spot price, offering the zama zamas true market value for their gold and thereby incentivising them to operate within a formalised and legal framework.

“Refining charges should be competitive with international market rates,” he said.

INFO

Police and the mining industry refer to a five-tier crime syndicate hierarchy operating in the illegal industry:

• Individual criminal miners;
• Gangs and illegal mining bosses;
• Bulk buyers in the form of licensed or registered entities;
• Front company exporters and:
• International intermediary companies and buyers.

Traditionally, each level interacts only with the levels directly above and below it. The zama zamas (level 1) are generally recruited by level 2s in their home countries and often only learn the job is illegal when they arrive in SA.

– gcinan@citizen.co.za

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