Investigating DR Congo's Illegal Gold TradePublished by MAC on 2019-01-10
The Ugandan connection
Ugandan citizens are illegally trading "conflict" gold from mines in the Democratic Repulic of Congo, according to a recent investgation by the Lighthouse Reports team.
Africa: Investigating DR Congo's Illegal Gold Trade
8 January 2019
The conflict-ridden African nation is rich in gold -- and gold smugglers, who are often linked to rebel groups. But tracing commercially available gold back to illegal mining operations is easier said than done.
The current mood in the Democratic Republic of Congo (DRC) is tense. A general election finally took place this month after a two-year delay and the country is now holding its collective breath as it awaits the results. Meanwhile, armed groups in the north-east continue to take advantage of a weak government and meddle in the minerals trade.
Since 2017, we have been investigating the impact of illegal gold mining in the region. Our initial research led us to Obima Faustin, a hustler who says he will tell us more about the illegal gold trade. But just organizing a time to interview him proved difficult, as he repeatedly insisted on changing the time and place. Finally, we meet him in the outskirts of Uganda's capital, Kampala.
Faustin -- who is half-Congolese and half-Ugandan -- is dressed in a denim suit. He's obviously not lacking in self-confidence. No one in Kampala knows more about gold than him, Faustin assures us. Back in the DRC, he says, he has "an entire community" mining for him. But Faustin prefers not to call himself a gold trader or smuggler. His role is less concrete: "I point people the way to where gold can be found."
Faustin also knows how to get it onto the market. The demand for gold is higher in Uganda than in the DRC. "No one looks at Kinshasa [the DRC capital] for help in the trade," says Faustin. "The city is far away from where the gold is mined."
Along the northeastern border region, most of the gold mines are small in scale and don't rely on heavy machinery. In the DRC, this so-called artisanal form of mining is allowed if the miners hold a valid license from the Ministry for Mining. These sites guarantee work and provide an income for many Congolese families. According to the Belgian research group, International Peace Information Service (IPIS) -- which has been investigating the mining sector in the north-east since 2008 -- almost 200,000 people work in these artisanal mines and not all have licenses to do so. IPIS visited 2,400 sites and found that armed groups were present at 64 percent of the mines, alongside the miners.
This revelation likely doesn't come as a surprise to anyone who has heard of the term 'conflict minerals.' Just as the DRC is rich in natural resources, it is also 'rich' in armed groups -- from civil defense militias to rebel forces and criminal gangs. The national army -- known as the FARDC -- integrated a number of rebel groups after the last civil war, but remains undisciplined and underpaid. While they are not the primary cause of the ongoing violence, the conflict minerals have sustained the armed groups.
In the DRC's many artisanal mines, gold is both valuable and easy to find. So these armed groups will often try to find a way to get involved in the industry, mostly through forced labor or smuggling. As a result, the DRC does not fully profit from the gold mining industry. IPIS estimates that between 75 and 98 percent of the gold crosses the border into Uganda illegally.
Smuggling the gold is not difficult, according to Faustin. "There are many ways to hide the gold," he says. "In your pocket, or in the lining of your jacket or your cap. A hundred grams of gold is already worth $4,000 (€3,500). But even if you need to transport larger quantities, it can be done. This is Africa. People don't check at the border crossings here."
But what happens once the gold reaches the international market? It's used in a wide array of products, from jewellry to the latest gadgets. Companies are under increasing pressure to report on their supply chains and production conditions. So if this is the case, how does smuggled, conflict gold withstand such scrutiny?
Despite its shady origins, the majority of the gold trade process is far more transparent. This is thanks to the involvement of local dealers like Oryema James, who has a Ugandan government license to buy and sell gold. This means the gold he exports is certified before it changes hands.
If someone offers him gold, James first asks them if they have the papers to export it from the DRC and sell it in Uganda. But he usually already knows the answer. "When they come here, they smuggle it," he says. But this isn't a hard problem to fix. "We buy the gold from them, put the documents in order, pay taxes to the [Ugandan] government and export it to Dubai, China and the United Kingdom. So it becomes a legal export product with Uganda as the country of origin."
This way, the product's actual origin remains blurry. The fact that gold ore is traded in bulk also makes this process easier. Smelters accept gold from a multitude of sources so the final exported product is a mix.
A sought-after product
The Ugandan Minister of State for Minerals, Peter Lokeris, acknowledges that this process might compromise the legal trade. "When smugglers from Congo sell their gold to a legal trader in Uganda, the origin can no longer be placed," he says.
Lokeris says he does not know what percentage of the exported gold is actually sourced in the DRC. He emphasizes that countries must do more to guard their borders to prevent smuggling. But that's easier said than done. "The borders are long in the jungle," he says. "You can cross the border anywhere. Even if there is no road. They are porous."
Gold trader James believes there's another big reason why gold from the DRC will almost always make its way into Uganda. "Nobody dares to go to Congo to buy gold," he says. "Uganda is safe. Nobody knows when the wars [will] stop in Congo. The only way to get it is via Uganda."
In any case, James is confident that his business is safe. The demand for gold is rising, he thinks. Faustin, on the other end of the supply chain, agrees: "Everyone needs gold."
The authors of this report are members of the Lighthouse Reports team which produces journalism across the themes of conflict, corruption and migration.