Illegal mining is on the rise in South Africa and presents challenges that need to be addressed from a range of perspectives. It takes place at abandoned mines and at operating mines with illegal miners often operating under dangerous conditions.

The growth in illegal mining, could be attributed to the combination of a difficult socio-economic climate and limited resources at the disposal of law enforcement agencies such as police, immigration, border controls and prosecuting authorities. Many thousands of people are currently estimated to be involved in illegal mining, both directly and indirectly. Miners enter mostly abandoned shafts, travelling as far as 4km underground where they may live for several days at a time, risking their lives and the lives of others.

CRITICAL TEAMS AND MEMBERS

Ursula Brown: Head: Legal

CONTEXT

The Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) specifically prohibits mining without the required statutory authorisation (Section 5(4)). This means that illegal mining is a criminal activity, which also involves at least trespassing and theft. In South Africa, it is illegal to be in possession of unwrought precious metal ore, platinum group metals (PGMs), gold-bearing material and rough diamonds without the required statutory authorisation.

Illegal mining and organised crime are inter-related. Very often, illegal mining is spearheaded by globally connected criminal syndicates. Zama zamas, as illegal miners are known in South Africa, are often heavily armed, have explosives and, when trespassing on operating mines, set ambushes and booby traps for employees, security personnel and rival groups of illegal miners. Following the severe drought in 2016, the excessive use of water by zama zamas to process the gold-bearing material became apparent, which directly impacts on local communities.

Illegal mining has a range of negative social and financial impacts on the state, employees, companies, the mining sector and the country because of loss of revenue, taxes, employment opportunities, capital expenditure, exports, foreign exchange earnings and procurement, among others. It also presents a serious risk to the sustainability of the industry and its ability to contribute to a meaningful future for all South Africans.

NEGATIVE SOCIAL AND FINANCIAL IMPACTS

  • Illegal miners present a major risk to themselves, and to the health and safety of the employees of legal mining operations, often threatening them and their families to assist in the crime. Many illegal miners have lost their lives in accidents, often fatally injured in falls of ground or killed in factional rivalry.
  • Illegal miners may also illegally acquire explosives, diesel, copper cables and other equipment from mines, and make illegal electricity connections from the mine’s electrical infrastructure. Any interruption of the mine’s electricity supply could create significant risks to the mine’s ventilation system underground and to the ability to hoist persons out from underground, particularly in cases of emergency.
  • Illegal miners tend to use extremely environmentally unfriendly refining methods and materials, which also put their health at grave risk.
  • Illegal mining destroys the social fabric of mining communities through, among others, bribery of workers to gain access to mines, and to secure food and other supplies; and threats of violence against workers and management. It often gives rise to prostitution, child labour and substance abuse. This has created a lucrative secondary informal syndicate market supplying commodities, including food, liquor and prostitutes, among others.
  • Mining companies have to spend a significant amount of additional time and money on security.
  • Illegal mining activities threaten the viability of the mining companies’ mine closure efforts. On the East Rand for example, a mining company has had to seal numerous shaft entrances as much as up to four or five times at huge expense as the zama zamas would just reopen the cement slab.
  • Companies carry a significant cost for repair and ongoing maintenance, and there is risk to local communities (especially children) and livestock, where perimeter fences are broken by illegal miners to gain access to old mine shafts and tailings dumps.
  • There is a cost to the state and mining companies to commission Mines Rescue Services (MRS) for emergencies and sealing of voids created by illegal miners. The rescue efforts pose a moral dilemma for MRS, as they are a purely voluntary service and their volunteers have to risk their lives to save people who are undertaking illegal activities. The MRS teams are a small group of people who are highly skilled and there is not a large pool of them available in the country.

KEY ACTIVITIES

No single stakeholder can address the challenge of illegal mining and collaboration is key. The industry, individually and through the Minerals Council, remains committed to working with other stakeholders in addressing this serious challenge.

The Minerals Council has recognised that the only way to deal with the problem is to focus on both the supply and demand side of illegal mining.

Various forums have been established to address the different challenges, and these should be used and strengthened where needed rather than duplicating efforts. State involvement is not always optimal because of the shortage of human and financial resources, overlapping jurisdictions, and slow decision and implementation processes.

SECOND-HAND PRECIOUS METALS

An announcement was made by former Finance Minister Pravin Gordhan that second-hand goods made from precious metals are to be excluded from notional input tax under value-added tax (VAT) legislation as a measure to avoid fraudulent claims in this regard.

A notional input tax is allowed when a VAT vendor acquires second-hand goods from a non-VAT vendor, allowing for the unlocking of part of the VAT on goods previously paid by final consumers as those goods re-enter the formal supply chain. Sales of certain gold coins are zero-rated for VAT. While the resale of gold jewellery by non-VAT vendors to VAT vendors should allow for the deduction of notional input VAT, in practice such jewellery is smelted along with gold coins and illegally acquired raw gold. This has created an enabling environment for fraudulent input tax deductions.

THE NATIONAL CO-ORDINATING STRATEGIC MANAGEMENT TEAM AND THE STANDING COMMITTEE ON SECURITY

The Minerals Council has a long-established Standing Committee on Security (SCOS) through which its members deal with all issues relating to security at mines and product theft from mines. The SCOS led to the establishment of the multi-stakeholder National Precious Metals Forum (NPMF) over a decade ago. The NPMF consisted of representatives of mining companies, the Minerals Council, the South African Police Service (SAPS) (various branches and its forensic science laboratory), the South African Diamond and Precious Metals Regulator, Rand Refinery and the National Prosecuting Authority. In 2014, the NPMF was replaced by the National Co-ordinating Strategic Management Team (NCSMT), which is chaired by the National Intelligence Co-ordinating Committee (NICOC).

Provincial multi-agency forums exist in five of the nine provinces and these feed into a national multidisciplinary co-ordinating body, which deals with illegal mining. The illegal mining market is a well managed 5-tier syndicate system.

1ST TIER:

The underground workers, mostly illegal immigrants, do the physical mining. Many have worked in the mines previously. They use chemical substances to primitively refine the product.

2ND TIER:

The buyers on the surface around the mines also organise the first tier illegal miners and support them with food, protection and equipment.

3RD TIER:

The regional bulk buyers, who are usually entities with, in most cases, permits issued in terms of the Precious Metals Act of 2005 to trade in precious metals.

4TH TIER:

Distributors, nationally and sometimes internationally, work through front companies or legitimate exporters.

5TH TIER:

The top international receivers and distributors usually work through international refineries and intermediary companies.

These forums implement provincially based disruptive operations and measures to identify and apprehend illegal miners. Some of these measures include, but are not limited to:

  • Sensitising prosecutors on the nature, extent and effect of the problem so that appropriate charges are brought and sentences imposed
  • Often the illegal miners were merely charged with trespassing and a fine of R200 was imposed. Lately, various charges are brought under the Criminal Procedure Act of 1997, MPRDA, Explosives Regulations and Hazardous Substances Act of 1973, among others, and more severe penalties have been imposed in many cases.
  • Providing awareness and training to SAPS and other authorities in identifying the different forms of precious metals, especially PGMs
  • There has also been regional and international engagement to create global awareness.

  • SCOS has replaced the NPMF, which became defunct in 2014 and was replaced by the NCSMT, which is chaired by NICOC, and initiatives include:

  • Establishing a precious metals fingerprinting database at the SAPS forensic laboratories
  • Formal agreements between the Minerals Council, mining companies and the SAPS
  • Determining where gold and platinum originates
  • Creating a special investigative task force
  • Investigating syndicate activity at national and international level
  • OTHER NATIONAL AND INTERNATIONAL INITIATIVES

    Illegal mining was identified as a national threat and a special multi-agency team (NCSMT) was convened in order to co-ordinate government’s efforts against illegal mining in South Africa and beyond its borders.

    South Africa and the Russian Federation have since engaged in talks with the United Nations Interregional Crime and Justice Research Institute (UNICRI) and the United Nations Office on Drugs and Crime (UNODC) to develop a global strategy to assist in dealing with the phenomenon. This initiative will bring together all the different national, regional and international public and private actors, and design a common strategy to disrupt the value chain of these criminals on all tiers.

    In April 2013, South Africa tabled a resolution dealing with the combating of transnational organised crime and possible links to the illegal mining of precious metals. In July 2013, at the 22nd session of the UNODC Commission on Crime Prevention and Criminal Justice in Vienna – which was co-sponsored by Russia, Zimbabwe, Namibia, Ghana, Belarus and Colombia – the resolution was adopted by the Economic and Social Council (ECOSOC), which is concerned with the growing involvement of organised criminal groups, as well as the substantial increase in the volume/rate of transnational occurrences and range of offences related to the illegal mining of precious metals in some parts of the world. The resolution further stressed the need to develop comprehensive, multi-faceted and coherent strategies and measures, including reactive and proactive measures, to counter illegal mining.

    UNICRI will be assisting the South African government in a global initiative to deal with the findings of the ECOSOC resolution.

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