COLOMBIA will begin buying gold directly from small-scale producers next month in an effort to combat illegal mining and formalise a booming unregulated sector driven by soaring prices, said Bloomberg News in a report on Tuesday.
Government agencies including tax and mining authorities will coordinate the initiative from November following instructions from President Gustavo Petro, Mines and Energy Minister Edwin Palma said in a post on X.
Illegal gold mining and trafficking across South America has surged alongside bullion prices, which have risen approximately 50% this year, largely through central bank acquisitions. In Colombia and Peru – leading producers of coca plants used for cocaine –illicit gold reportedly generates greater revenue for criminal organisations than narcotics trafficking, said Bloomberg News.
Roughly 80% of Colombian gold sales originate from informal or illegal operations, Palma said. The environmental and social consequences for forests, waterways and local communities can be catastrophic, said the newswire.
Whilst Colombia’s central bank purchases physical gold, stringent requirements exclude most informal miners. The new programme would enable other state entities to buy directly, potentially disrupting criminal supply networks.
Gold obtained through the scheme will be held by the SAE (Sociedad de Activos Especiales) which manages assets seized from illegal activities. Officials have not yet clarified how the SAE will handle newly acquired bullion.
Ecuador and Bolivia’s central banks already purchase gold from domestic miners. Peruvian legislators have proposed comparable measures empowering either the central bank or state-owned Banco de la Nación to make such acquisitions.
However, Peruvian central bank governor Julio Velarde has opposed the concept, warning it could facilitate money laundering through illegal gold, he said.
