Legitimate mining companies are part of a syndicate that purchases minerals mined by illegal miners, known as Zama zamas, underground and uses them in the formal economy.
A study conducted by Bench Marks Foundation, a religious non-profit organisation that monitors companies in South Africa and in the region, found that licensed mining companies purchase gold from illegal miners.
The report added that illegal miners also sold gold to scrap metal dealers, syndicates, security companies and police officers.
The syndicate is also believed to fund political campaigns in South Africa’s neighbouring countries.
Last week, private mine rescuers brought up the Stilfontein miners, 216 were alive and 78 dead during an operation that began on January 13 at the Buffelsfontein Gold Mine in Stilfontein, in the North West province.
Police began their operations at the mine in August last year and cut off food and water supplies for months in an attempt to force the miners to the surface so they could be arrested as part of a crackdown on illegal mining.
Busi Thabane, Bench Marks’ general manager, said illegal mining is a huge market that is uncontrolled and unregulated.
Thabane said there are more than 6000 abandoned mines in South Africa.
“Each one of these could potentially be unveiled by informal miners, many of whom were retrenched by formal mines and have been criminally deprived of pensions, unemployment benefits and disability benefits,” she said.
Illegal mining has made a considerable dent in the economy. According to the Government Communication and Information System (GCIS), the cost of illegal mining is estimated to be over R70 billion annually in gold alone and resulting in huge losses of revenue for both the government and the mining sector.
According to the Bench Marks report, some junior miners employed gold dealers or to buy illegally mined gold from syndicates and some jewellers were then the ultimate beneficiaries of this gold.
A junior miner or a jeweller, would pay a negotiator a certain amount of money to buy gold from the illegal miners. The primary buyer could also be licensed dealers and the gold is then injected back into the formal economy, the report revealed, adding that gold is also being sold to formal refineries including those that export to international markets. The study indicated that police could be involved in this chain.
Police spokesperson Athlenda Mathe said those with evidence regarding police involvement in fuelling the illegal mining industry should report the matter to the SAPS.
The foundation’s researcher, David van Wyk, said there was evidence that certain syndicates also work with politicians.
Van Wyk said the link to politicians and political party campaigns emerged after police identified the suspects who were involved in the mass shooting at a Soweto tavern in which 16 people were killed in July 2022.
According to media reports, this was a turf war between the two rival groupings, Terene a Khosi Mokata and Terene ea Chakela who were allegedly involved in illegal mining.
The media reported that the leaders of the two groups were captured on video handing out cash to supporters of Lesotho’s ruling party, the All Basotho Convention (ABC), at a rally ahead of the general elections in the Kingdom three weeks before the killings.
“This is a syndicate and these are people driving fancy cars and living in mansions. They are people who control the trade. This syndicate also funds South African politicians,” said Van Wyk.
He said that the minerals being unearthed by the Zama zamas were also being sold to companies that had retrenched workers and closed their operations. Van Wyk said illegal miners were not unionised and it is cheaper to mine with Zama zamas than with unionised workers.
“So they will never go on strike and these companies do not have to pay pension, workmen’s compensation or contribute to the UIF (Unemployment Insurance Fund). The workers are very cheap. Again, these mines do not have to spend on electricity, water and infrastructure. They get the gold cheaper than they could get it in the formal mine,” said van Wyk.
He said this strategy has been used in other African countries such as the Democratic Republic of Congo and now is being adopted in South Africa.
Asked to comment on the allegations, Buffelsfontein gold mine's previous owners, Simmer and Jack (PTY) LTD, said the company was sold to Village Main Reef in 2011. Village Main Reef, a South African operator of mining activities such as gold, platinum and uranium production, did not respond to a request for comment.
The Private Security Industry Regulatory Authority (Psira) did not respond to a request for comment on allegations that security companies are involved in the illegal mining chain.
Tiny Dlamini, an environmental activist, said illegal mining activity involved those in positions of power, from local government officials to politicians in other countries.
“The operation itself involves a lot of corruption. A lot is happening, including human trafficking and that is why it would be impossible for this operation to be regulated. Geologists, scientists and others must come to the party in order for this to be regulated,” she said.
Cape Times