The battle with illegal miners intensifies

Allan Seccombe | Fri, 20 Nov 2009 12:11
[miningmx.com] -- ON SOME GOLD MINES in South Africa security teams are moving around deep underground hunting groups of men stealing gold and becoming engaged in gun battles as they try to arrest them.

The mines are throwing money and technology at curtailing the first level of illegal mining syndicates. SA’s government estimates the value of the gold theft business at R5,6bn.

Chillingly, the illegal miners – or criminal miners, as some in the industry insist on calling them – aren’t cowed or intimidated by such security and police teams.

In a handwritten note in Sotho – addressed to the manager of a shaft at Harmony Gold’s Masimong mine and the managers of Protea security services – the illegal miners said: “Together with your people we will kill each other. You must know that as from today if we can see one of Protea’s members or any policeman underground we will fire with bombs and also the cage will be bombed.”

Those aren’t idle threats. There have been running gun battles underground between such miners, security personnel and police. The illegal miners also battle fiercely between themselves for turf.

“The gold-smuggling syndicates are highly organised, dangerous and well resourced,” says Mines Minister Susan Shabangu, pointing out gangs working illegally underground at Barberton openly carry AK-47 automatic rifles and that clashes with police and security personnel are becoming more frequent.

“Legal mineworkers have been abducted at Barberton and used as human shields in confrontations with police. In Welkom, booby traps have been set for the police and security personnel using explosives,” she says.

Figures from just one company – Harmony – speak volumes about the number of people involved in illegal mining. The number of illegal miners arrested had soared to 844 by July this year from 757 for the whole of 2007 and 475 in 2007.

Together with your people we will kill each other

Mining officials are scathing of the government’s policing efforts to date, especially after a dedicated gold and diamond anti-theft police unit was shut down nine years ago. The penalties meted out by the courts for those caught by mining companies are laughable, a veritable slap on the wrist that provides absolutely no form of deterrence.

“The penalties are an absolute joke. We want far stricter and more severe penalties and sentences for these guys,” says a mining executive, who added industry pressure was being applied on the Department of Mineral Resources to push Security and Justice Departments for tougher sanctions and consistency in sentences between various prosecutorial areas.

“This is more than just an issue of gold theft. It contributes to the general crime scenario in SA and we feel the government just isn’t coming to the party to control it,” another official says.

Shabangu says cabinet had recently charged the Police and Justice ministries to deal more proactively with the problem. The Hawks, SA’s new organised and serious crime-fighting unit, has been tasked with investigating illegal mining in totality. There will also be investigations into whether local police and prosecutors are involved in those criminal syndicates.

VAST UNDERGROUND COMPLEXES

“Without a co-ordinated approach on a local, national and international level we’ll get nowhere,” says Jan Nelson, CEO of Pan African Resources, which has mines in Barberton.

Harmony is one of the two worst affected of SA’s gold miners, having vast complexes of operating and decommissioned shafts and 60km of interlinked tunnels in the Free State province, acquired when it was growing from a single operation to one of the world’s top-five gold producers.

Harmony has shut down a number of unprofitable shafts as the economics for a large gold miner become increasingly tougher. It’s those abandoned workings that are targeted by criminal syndicates, which can selectively target veins of gold ore a large company like Harmony, with large overheads, can no longer economically extract.

Harmony reported the number of deaths of illegal miners had spiked, rising to 109 by June this year from eight last year and 36 the year before. There were 90 deaths in June alone, which were related to inhalation of noxious gases thought to be from a fire underground in abandoned areas.

Illegal miners operate in treacherous conditions in abandoned, crumbling tunnels and don’t have the safety mechanisms companies put in place for their employees. Theft of equipment and explosives by illegal miners is also an issue companies are grappling with to control.

Commodity prices and economic trends within SA play a role in fuelling illegal mining. With the gold price as high as it is – topping US$1 000/oz at the time of writing – the syndicates, who are said to be laundering dirty money, are only too keen to get their hands on the metal.

Tens of thousands of miners across a spectrum of commodities have been laid off since September last year, when resources prices fell sharply. Those former workers are recruited by syndicates to provide training or to work underground themselves.

One of the reasons for the increased level of illegal mining activity is that security at processing plants has become so tight that gold theft syndicates have directed their attention to softer targets. The Institute of Security Studies estimated in a 2007 report that 10% of all gold mined in SA is stolen each year. Last year SA produced 220 551kg, or nearly 7.1m oz, of gold.

a dramatic increase in the number of arrests

There are no updated figures to account for illicit underground activities and there’s no data about how many people are involved in the syndicates. “It’s impossible for us to tell how many people are involved in this, let alone guess how much gold is involved,” says Harmony CEO Graham Briggs.

“We’ve had a dramatic increase in the number of arrests, but it’s difficult to know how much of that’s due to improved security or because of increasing numbers of criminal miners.”

Illegal miners bribe security guards and employees to use mine infrastructure to get underground. They might pay a guard who earns R1 500/month double that to look the other way or offer sex as a bribe. They pay employees to smuggle food, drink and tobacco underground. A loaf of bread can sell for up to R200 underground, while a bottle of spirits can go for R1 500, according to Harmony’s data.

Harmony reports a growing number of its employees have had disciplinary charges brought for supporting illegal miners. By June the number stood at 108, rising from 80 last year and 64 in 2007.

It would appear illegal miners are largely drawn from neighbouring countries, including Mozambique, Botswana and Zimbabwe, with Lesotho nationals featuring heavily in the illicit activities underground in the Free State.

Gold Fields also has illegal miners but because of its far more limited access points and increasingly tougher controls to stop them getting underground than its peers its problem isn’t as pronounced and illegal entrants tend to spend less time underground.

“Since the 90 deaths at Eland we’ve noted a definite increase on our side. There’s a lot of heat on that side and the syndicates are transferring people to West Wits,” says Nash Lutchman, head of Gold Fields Protection Services. “We’ve started a massive campaign within Gold Fields to nip that in the bud.”

Included in that strategy are pamphlets promising employees cash rewards of up to R5 000 for information and assistance leading to the arrest of illegal miners, who are called “zama-zamas” at the operations.

Gold Fields has erected fences and intense security around headgear, where security previously had been fairly lax. It’s started installing expensive biometric devices, which mean only authorised people can access a cage and down the mine.

It calls the whole security system “shaft flasking” – providing just one way in and one way out. “We’re comfortable what we’re doing is containing the problem,” Lutchman says.

It was the steady stream of 90 bodies from the abandoned Eland shaft in June this year that prompted Harmony to break an industry silence on illegal or criminal mining, which entails gangs of men living underground for months at a time, in some cases for up to a year.

TIGHT LIPPED

SA’s gold mining industry has historically been fairly tight lipped about gold theft from its operations, but a spate of high profile incidents has changed that for a number of companies. Some are reluctant to talk about the matter for fear it spooks investors already jittery about SA’s investment climate, particularly in light of tight electricity supplies, fearing it will heighten the perception of risk.

In what could become an issue of semantics, Harmony and Pan African generally prefer the term “criminal miners” – which is far more emotive and for them cuts to the essence of what’s happening at their operations.

Pan African has reported 35 deaths this year, including 21 fire-related deaths of illegal miners in March – prompting it to pour money into security and technology to curb the problem, which Nelson says could affect the long-term viability of its business.

Pan African spends around $14/oz on security, half being directly related to curtailing illegal mining, says Nelson. For the year to end-July 2009, Pan African made 698 arrests, of which 340 were successfully prosecuted. There are 355 cases still pending.

“We charge them with as much as we can – trespassing, illegal firearms, owning gold – to make sure we can send them to jail for as long as possible,” Nelson says, adding the company estimates it loses about 3kg/month of gold to illegal mining in old workings.

However, it was the death of more than 90 people at Harmony that really thrust the issue into the spotlight. It was that incident – plus a change in SA’s mines minister to Shabangu – that brought new vigour from the government in tackling the problem. Harmony and the Chamber of Mines have made presentations to a parliamentary committee, which subsequently visited mines to get a sense of the problem.

send them to jail for as long as possible

Shabangu is probably best remembered for the comment of “shoot the bastards” she made to police about criminals during her tenure as deputy Safety & Security Minister. There’s some hope in the mining sector that she brings this tough, no-nonsense anti-crime stance to dealing with illegal miners.

Harmony is adamant it will take no responsibility for the deaths of illegal miners, arguing it’s done all that’s reasonably practicable to prevent illegal entrance to its mines and disused working areas.

However, that’s not how the illegal miners see it. They leave notes in working areas, telling the company where it can find dead, ill or injured people; or they leave bodies where they can be found and extracted.

Asked if AngloGold Ashanti had a problem with illegal miners in SA, CEO Mark Cutifani says: “No – nothing substantial. We’ve got to remain vigilant and ensure all areas of all possible access are being secured. We don’t have the diversity of openings that Harmony has to deal with. It’s a much tougher problem for Harmony and Gold Fields, but we’re in a better position and we need to keep an eye on things.”

AngloGold does have illegal miners elsewhere in Africa at its Obuasi, Geita and Siguiri mines, where people enter its operations from outside local communities, which creates stresses within those communities.

Says Cutifani: “I don’t believe any site can be secured absolutely. You have to have a good relationship with the community. In the end the local community is your first line of defence. They’ll be the first to identify and manage the people who shouldn’t be there.”