Introduction by Ahmedou Ould Abdallah, president centre4s.org
In the Sahel, increasingly long-lasting violent terrorism as well as chronical military coups d'état are distracting attention from a situation that undoubtedly reinforce both of them. That is Gold formal and informal productions and sales. It must no longer be excluded that Sahel Islamists have approaches closer to their brothers' in Afghanistan, Somalia and elsewhere than thought. Self-financing through the sale of a lucrative local product is a source of independence and influence: opium for Taliban, maritime piracy for Al Shabab and... gold sales for the Sahel groups. The below paper of Centre4s consultant deserves attention and follow up.
Many countries in the Sahel are gold rich. The yellow metal, a globally coveted wealth, is also a factor of internal conflicts within States and of war at international level. The gold sector is source of enormous threats: conflicts between central governments, multinationals and populations living near its exploitation sites; human trafficking, competition between arable land owners and those of gold mining sites, insecurity on and in these mining sites due to deficient State control, fraud in sales, recruitment of young jihadists on the sites, financing of wars and of criminal networks, deficient equipment, etc.
Gold is one of the Sahel main assets. Though below reality, official figures are a concrete proof of this assertion. In 2022, Sudan exported about 42 tons of gold, earning nearly $2.5 billion. Since 2022, gold in Tibesti, Chad, is with a mining potential estimated at more than 50 billion CFA francs (76 million euros) per week.
At the same time, Mali consolidated its status as a major producer of that metal, selling nearly 70 tons, an increase of 8.4%, compared to 2021. These exports generated 2001 billion FCFA - 3, 4 US$ billion; the increase represents 134 billion FCFA. Industrial gold accounts for 25% of the country's tax revenues, to which should be added 5% for gold panning.
As of December 31, 2022, Burkina Faso had thirteen gold mines - four of them are shut down - for a total production of 57,645 tons of gold. In 2021, that metal brought in 2,172 billion FCFA to the government, its first export revenue. The artisanal sector generates an additional annual production of around 10 tons, according to the Ministry of Mines. In addition, the Mining Local Development Fund (FMDL), to which mining companies has contributed since 2019, collected about 100 Billion CFA, as of December 31, 2022.
In Mauritania, gold exports generated 780 million dollars, compared to 564 million dollars for iron ore, which has moved to a second position, in 2020. Niger produced 44 tons of gold in 2021.
Gold: revenues redistribution.
The Sahel States face the problem of income restructuring between private companies and governments. Mining companies, most of them multinationals, are suspected of practicing tax evasion through the transfer of profits and fuels imports. In fact, in a number of countries, there is a gap between, on the one hand, the importance of the mining industry in the national economies, the considerable amounts of investments made, the weight of the sector in exports and, on the other hand, the low revenues collected by the State.
Sahel gold-producing countries are falling into a tax trap. To attract these multinationals and secure foreign investments, States are reducing the tax rate applied to the sector and that feeds unbalanced regional tax competition. They also accelerated the administrative procedures in favor of these firms. Thus, a mining permit can be obtained in one year, compared to at least five years in the United States and Canada. These multinationals use international profit transfers to reduce the tax charges they should pay, in principle, in the country where they operate. Through corruption, among other things, governments circumvent their own Mining Code, by signing tax exemption agreements with operators, officially or on the sly. These negotiations, mine by mine, are a breach into which many actors are rushing. It also happens that the evaluation of the price of the minerals exploited is not in line with that of the world market. As for the mining companies, they deplore the energy deficit and the high cost of electricity in the Sahel where public funding is still lacking in these areas. They also complain about the artisanal mines activities, otherwise known as gold panning, which is a drain on their income and also in state tax revenues.
In Chad, the Tibesti region, located in the north and bordering Libya, is exposed to various armed groups ambitions driven by gold. From 2015 to the present day, deadly conflicts have developed there, to such an extent that authorities believe that the region "constitutes a recruitment reservoir for mercenaries". The 40,000 gold miners active in the mining sites are considered to be international and national migrants. All in all, there are "adventurers, trafiquants in gold, drugs and states bad guys that are "Chadians, Sudanese, Libyans, Nigerians...Chinese."
Young people, recruited in other localities in Chad, are exchanged there for 10 grams of gold per person. These 10 grams are equivalent to 250,000 FCFA, or approximately 464 dollars. Local populations denounce the government clan appetite for gold, and demand its regular exploitation, within a legal framework, in accordance with the mining code. Between 2016 and 2023, bloody clashes took place between the Chadian army and local populations and then with armed groups.
In Mali, young children work on gold panning sites, exposed to gold processing products, such as mercury, is denounced. They are employed for platforms and in tunnels thirty meters underground. Some are in charge for lifting the earth using buckets or transporting it out of the holes to the place of washing and separating from the rocks. Their working tools are rudimentary: picks, buckets, hammers. They do not benefit from any protective or safety equipment. Many have dropped out of school to pursue these activities. Girls and boys are also sexually exploited. These scourges are also suffered by gold panning sites in Burkina Faso and Niger. Furthermore, the Transition regime in Mali launched a recent investigation into its mining sector that revealed a series of irregularities having resulted in a substantial financial shortfall for the State, estimated at between 300 and 600 billion CFA francs. Exposing the numerous flaws in the implementation of the 2019 mining code could allow Mali to recover at least half of this jackpot.
In Burkina Faso, incidents are frequent on gold sites where the populations of the localities hosting these mines believe that the benefits for local communities are very low. They react by ransacking and looting which have sometimes forced mining companies to temporary closing downs. One of them, Centamin PLC, which had already invested around 74 billion FCFA, was even pushed, partly due to these incidents, to abandon the pursuit of its activities, in August 2022, in Batié, South-West. On these occasions, the authorities invite local populations to rather contact the administration to express their concerns. At the beginning of September 2023, more than a thousand gold miners were evicted from a forest in the country North-West. They had cut down trees, dug large open holes, built hundreds of sheds, and thrown tons of plastic waste and polluting products into the environment.
Funding the war in Sudan.
In Sudan, violence broke out on April 15, 2023, between the army of General Abdel Fattah Al-Bourhane, president of the country since the coup d'état on October 25, 2021, and his deputy, General Mohammed Hamdan Dagalo said Hemetti, boss of the Rapid Support Forces (FSR) militiamen. That violence is partly fueled by gold trafficking. In 2017, gold revenues accounted for 40% of Sudan's exports. Hemeti, already an operator in the sector, had created a commercial company, Al-Junaid. He seizes, by force, the country most lucrative gold mines. Therefore he became the largest gold trader in Sudan, controlling, in particular, the borders with Libya and Chad. With that wealth, he finds himself at the crossroads of a vast network of nepotism, secret security agreements and political financing, thus becoming a "Godfather". It is, in part, this immense fortune that allows him to wage this war. It thus relies on a whole chain of officials, within the police, the administration, in education and in the tribes' chiefdoms. He also secured the services of well-paid Chadian mercenaries.
In Mauritania, the State supervises artisanal miners and provides itself with new tax revenues. On the industrial level, it is encouraging certain companies to "Mauritanize" their workforce, and is also pushing to increase its share of the revenue generated by the yellow metal. However, other firms have more leeway to operate without great transparency or environmental concerns. Health fears are highlighted, with the appearance of HIV/AIDS on certain sites.
In Niger, the gold sector is considered a good lever for economic growth, even though it faces governance problems. It is also a source of ecological, health, security and human rights problems. In addition, the influx of population has led to strong pressure on the few wooded resources.
Insecurity is the common lot of gold mining companies in the Sahel. Terrorist attacks, or others, lead some to briefly shutdowns, or even close. In April 2022, the president of the Chamber of Mines of Burkina (CMB), Adama Soro, estimated that the country's mining future could be jeopardized due to insecurity. Some mines in the North, Sahel and East regions can no longer transport their personnel by land. Mines also invest a lot of resources to securing their sites. Several attacks took place during 2022, leading to the closure of four of them. The other impact is that geologists can no longer access these regions for their exploration and research activities.
The dangers of gold panning.
Alongside the development of the gold industry, the practice of gold panning has also experienced strong growth in recent decades. Authorities estimate that more than 1.3 million people - or around 6% of the Burkinabe population - work on some 700 artisanal mining sites operating in the country, most often outside any state control. With little security, these sites are prime targets for armed groups. They also constitute fertile ground for recruiting "young fighters".
The other big challenge is the marketing of the Sahel countries gold. A good portion is sold fraudulently, allowing traffickers to escape administrative tracing constraints and then duties and taxes. As of 2014, Switzerland had imported at least 7 tons of gold from Togo... even though that country does not produce any. Investigations had made it possible to trace that gold back to artisanal mines in Burkina Faso. That traffic between the two neighboring countries continues unabated, with estimated tax losses for Burkina Faso amounting to billions of FCFA.
Multinationals mining gold in the Sahel are essentially Australians, Canadians, Russians and South Africans associated with local citizens and influential international partners.
Besides, a significant part of Sahel gold follows clandestine circuits, via nationals, through among others, Lebanese connections and other actors based in Switzerland, Turkey, Dubai, Singapore and China. It should also be taken account of Russian operators who have invented new methods of transferring their gold from the Sahel to various destinations, in order to escape Western sanctions. Artisanal gold panning is progressing throughout the Sahel, generally outside of state control. That activity generates, according to the OECD, more than two billion US dollars per year.
In the Sahel, both industrial and artisanal gold mining is growing, enriching, in its wake, multinationals, states and local officials, as well as generating perils and fueling challenges.
Limam Nadawa consultant centre4s.org