A worker lifts a gold bullion bar from a conveyor machine at the Rand Refinery plant in Germiston, South Africa, on Aug. 16. 2017.
Waldo Swiegers | Bloomberg | Getty Images
DUBAI, United Arab Emirates — Each year, as much as $35 billion worth of gold produced by artisanal and small-scale mining in Africa — the world’s top gold producing continent — goes undeclared and then smuggled out of its borders.
The vast majority of it goes to the United Arab Emirates, according to research published by the independent Switzerland-based aid and advocacy organization SwissAid.
“More than 435 tonnes of gold was smuggled out of Africa in 2022, representing more than a tonne a day,” the organization’s report, published Thursday, wrote. One tonne refers to a metric ton, which is equivalent to 2,204 pounds.
The smuggled 435 metric tons carry a value of $30.7 billion based on gold prices on May 1, 2024, the report detailed, adding: “The overwhelming majority of this gold was imported into the United Arab Emirates (UAE) before being re-exported to other countries.”
Most industrial gold exported from African countries goes to South Africa, Switzerland and India. Industrial gold, which makes up roughly 11% of all gold produced, is used in the medical, electronics, automotive, aerospace and defense industries.
But the majority of artisanal and small-scale mining, or ASM, gold produced on the continent — to the tune of 80% to 85% — goes to the UAE, SwissAid wrote.
A selection of gold jewellery displayed in the window of a store in the Dubai Gold Souk in Deira, in the United Arab Emirates.
Yui Mok | Pa Images | Getty Images
Across all categories, the top three importing countries for African gold were the UAE, Switzerland and India, with nearly 80% of all of the continent’s gold going to those countries in 2022, and with more than 47% going to the UAE alone.
CNBC has contacted the UAE’s Ministry of Economy for comment.
In the case of undeclared gold — which is gold that is not reported or declared for export — the vast majority of the precious metal is only declared once it is imported by another country outside of Africa. Only then does it gain a legal existence.
Once it enters the international market and is declared as imported in a country like the UAE, it then can be legally exported to other countries, and those countries’ laws are often lax when it comes to discerning the actual origins of the metal, SwissAid reported.
In Switzerland, for instance, the last point of processing is considered the gold’s “place of origin,” meaning that gold re-exported from the UAE will be classified as Emirati even if it’s from elsewhere originally.
“This situation is problematic,” according to Marc Ummel, head of the raw materials unit at SWISSAID and co-author of the study, “because for many years smuggled gold potentially linked to conflicts or human rights violations has been legally landing in Switzerland.”
SwissAid’s study required tracking the movement of a highly-sought after commodity in an industry that is particularly opaque, where the product changes hands and countries many times over the process of extraction, sale, transport, processing, re-processing, refining — before reaching its final selling point.
The research authors quantified “the production and trade of gold, both declared and undeclared, for all 54 countries in Africa over a period of more than ten years,” in order to shed light on what they described as unfair practices and negligence on the part of governments and stakeholders, and to call for action on better regulation of the industry, they said.
“Huge quantities of gold are smuggled out of Africa, controls at customs and on production sites are inadequate, some statistics are opaque and others have even been falsified,” the report said.
“Governments must no longer be able to hide behind the lack and poor quality of data and other information to justify their inaction; they must shoulder their responsibilities, in particular by stepping up controls and working to formalise the sector.”