THE RISING RISK OF GOLD SUPPLY CHAINS IN SOUTH AMERICA

Mining Technology on 24th September carried an interview with Jesse Spiro, global head of threat finance and emerging risks for Thomson Reuters Financial & Risk.  It is said that in South America in particular, a lack of monitoring or prosecuting illegal mining, together with endemic corruption, has resulted in gold being perceived as a low-risk-high-reward way to make money, and that while many believe the major drug trafficking organisations in Colombia make all their money from the production of cocaine and trafficking, illegal gold mining and the extortion that is baked into the system and targeting legitimate miners, both large and small, is extremely profitable, in some cases even more so than coca production.  The article refers to a recent report which claims that FARC, a Colombian guerrilla group, obtains an estimated 20% of its funding through illegal gold mining, whereas in Peru, annual illegal gold exports are double that of cocaine, amounting to around $3 billion.  The problem is also said to be prevalent in Bolivia, Brazil, Ecuador and Venezuela.  One particular problem is said to be so-called ‘gold laundering’ –  as with money laundering, illegal miners and organised criminals try to hide the illicit origins of their gold by mixing it with legitimately mined gold, to then introduce it into the legal international gold market.  It is also said that the reputational risk for companies that become embroiled in illegal gold mining could be higher and ‘should be higher’.

https://www.mining-technology.com/features/the-rising-risk-of-gold-supply-chains-in-south-america/

The report itself: ILLEGAL MINING IN SOUTH AMERICA AND FINANCIAL RISK – TAKING THE SHINE OFF GOLD, is available at –

https://risk.thomsonreuters.com/content/dam/openweb/documents/pdf/risk/white-paper/illegal-mining-in-south-america-and-financial-risk-taking-the-shine-off-gold.pdf

gold

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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