Metals and Minerals Smuggling


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  1. Black Market: Minerals Smuggling $2.3 Billion

Information and statistics about metals and minerals smuggling. Data about gold smuggling, diamond smuggling and other precious metals are collected from intelligence reports, security agencies and other public information sources.

The Financial Services Commission in South Korea reported that 110 tons of gold is traded in the country each year. Out of the total gold trade, about 70 tons of gold bullion is traded on the black market.

The value of the black market gold in South Korea is estimated to be about $3 Billion (3.3 Trillion South Korean Won). The Government of South Korea loses an estimated $280 Million in tax revenue from the gold smuggling.

In 2013, criminal justice programs across the country seized 360 kilograms of gold as it was being smuggled into the country. The number of busts conducted by Customs officers doubled in 2013 when compared to 2012.

The Korea Precious Metals Distributors’ Associated states that buying smuggling gold on the black market can be up to 7 percent cheaper than buying gold through proper channels.

Financial and tax experts in South Korea state that many people buy gold bars in order to hide income.

Source:  Heesu Lee, “Korea Exchange Seeks a Cut of $3 Billion Illegal Gold Trade,” Blooomberg Businessweek, March 24, 2014.

According to criminal justice officials, as of March 2014 an estimated 700 kilograms of gold is being smuggled into India every day.

Between March 2013 and March 2014, the rate of gold smuggling to India has increased by nearly 300 percent, according to the Gems and Jewellery Export Promotion Council. Officials state that the smuggling rate is the highest it has been in over two decades.

The high smuggling activities were caused by a rise in the duty of imported gold jewelery. Between March and December 2013, security services seized $41.18 Million (2,500 Million Indian Rupees) worth of gold at airports and entry ports across India. In the previous fiscal year, just 500 Million Rupees worth of gold was seized.

Source:  Shantanu Guha Ray, “Why gold smuggling is on the rise in India,” BBC News, March 13, 2014.

Security services in Mexico state that the organized crime group Knights Templar have made millions of dollars in the state of Michoacan by extorting local mines.

The group, which primarily makes its money from drug trafficking, forces local mine operators to pay between $4 to $7 per tonne of minerals that is extracted in the area. In 2013, the shipment of iron ore totaled 4 million tonnes, compared to the 1.5 million tonnes extracted in 2012.

Intelligence officials also report that the Knights Templar is trading iron ore with China in return for chemical precursors that are used to make synthetic drugs such as methamphetamine.

(How much does crystal meth cost?)

Source:  ” Why Mexican drug-traffickers started smuggling iron ore to China,” Economist, March 9 2014.

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In 2013, an estimated $6 Billion worth of coal was stolen from mines in Indonesia, according to industry sources.

In one mine operated by PT Bumi Resources, up to two million metric tons of coal is stolen by illegal miners and operators. At the prices of March 2014, the value of coal stolen from this mine would be about $150 Million per month.

The amount of coal being stolen  every three days in the province of South Kalimantan is enough to fill a vessel almost the size of the Chrysler Building in New York City.

Source:  Jesse Risborough, “Indonesia’s $6 Billion of Coal Mine Thefts Said to Widen,” Bloomberg, March 5, 2014.

Over 50,000 hectares of rainforests in Peru was estimated to have been destroyed in 2013 due to illegal mining activities. In 2012, 18,000 hectares of rainforest was destroyed due to illegal mining.

Illegal mining has become a profitable activity on the black market for criminals in Peru. The value of the illegal gold mining in 2013 was 15 percent higher than the profits drug traffickers received from trafficking cocaine.

Source:  Cecilia Jamasmie, “Illegal mining is Latin America’s new cocaine,” Mining.com, December 23, 2013.

The World Gold Council estimates that between 150 to 200 tonnes of gold was smuggled into India in 2013. Officially, there was also 900 tonnes of gold that was imported to the country during the year. ‘

Intelligence officials in India state that most of the gold originates in Dubai, with Singapore also becoming a key player. The gold is smuggled to Sri Lanka, where it is then transported into the country.

Customs officials have begun paying informants a higher reward for help in stooping gold smuggling than they pay illegal drug informants. An informant who provides information about gold smuggling can receive a reward up to $807 (50,000 Indian Rupees) for each kilogram of bullion seized. By comparison, a cocaine informant can receive up to $645 (40,000 Rupees) while a heroin informant receives up to $322 (20,000 Rupees) as a reward.

The actually smuggler who carries the gold into India is paid $161 (10,000 Rupees) per trip.

(More underground income and profits.)

Source:  A. Anathalakshmi and Siddesh Mayenkar, “Bullion smuggling outstrips narcotics to feed gold habit,” Reuters, December 4, 2013.

Up to 20 million people in the Democratic Republic of the Congo depend on the illegal mining minerals as their sole source of income, according to intelligence agencies.

80 percent of the minerals in the DR Congo are smuggled out of the country into Uganda, Kenya, Rwanda, Burundi and Tanzania.  Diamonds, gold an tantalum are smuggled out and eventually ends up on the international market.

Security experts state that the black market income from these minerals are used to purchase firearms and weapons.

Source:  Mark Klusener, “Illicit mineral smuggling costs DRC millions of dollars,” eNCA, October 25, 2013.

In a 2013 report conducted by the United Nations, the value of diamonds being illegally smuggled out of Ivory Coast was reported to be between $12 Million to $23 Million a year.

Back in 2006, a report examining the Kimberly Process also reported that $23 Million in diamonds was being smuggled out of the Ivory Coast.

Source:  Michelle Nichols, “Embargo fails to stop Ivory Coast illicit diamond trade: U.N. experts,” Reuters, October 24, 2013.

Rebels with the March 23 Movement (M23) in the Democratic Republic of Congo smuggled 12 tons of gold worth $500 Million a year, according to US based NGO Enough Project.

The gold is smuggled from illegal mines into neighboring Uganda and Burundi, where it is then sold to brokers in the United Arab Emirates. The gold is then shipped to global gold centers such as Switzerland and India.

Source:  “M23 Rebels in DRC Using Illegal Gold to Finance Rebellion,” Voice of America, October 10, 2013.

In 2011, around $3 Billion in gold that was illegally mined in Peru was exported out of the country.

International monitors estimate that over 20 percent of gold mining activities in the country is done illegally. In the region of Madre de Dios, up to 97 percent of the mining is done by unauthorized miners. Many of the illegal mines employ children, as tens of thousands of children are believed to be working in the mines.

Source:  Roberto A. Ferdman, “Peru exports more illegal gold than cocaine, and it’s the world’s biggest exporter of cocaine,” Quartz, September 30, 2013.