South Africa is having a gold problem, and it’s not a shortage or excess, but rather gangs who carry out ‘gold raids.’ The groups loot mines and smelt houses, and even take hostages, Engineering News & Mining Weekly reported.
Higher Prices Draw More Gangsters
Gold prices are at record highs, making mining operations prime targets for bandits. In 2019, Minerals Council South Africa reported 19 armed raids, up from 10 the previous year.
“These incidents are almost always associated with intimidation and physical abuse of staff and contractors, and have also included hostage taking,” read a report from the Directorate for Priority Crime Investigation. Last year, two fatalities were recorded.
The bandits are typically armed to the teeth with AK-47 and R6 assault rifles, moving in groups of 15 or 20 raiders. In December, a raiding party target Gold Fields Ltd.’s South Deep mine and made off with $500.000 worth of stolen goods.
South Africa’s Government is Failing to Act
The problem is two-fold, caused first in part by the soaring price of gold. Another factor is the lack of a proper government response. Under former President Jacob Zuma corruption, bribery, and crime became commonplace even with the ranks of government officials. Eventually, honest law enforcement authorities gave up, as Bloomberg reported.
“Mining companies are being attacked by thugs and armed gangs and there is a lack of police response,” said Neal Froneman, chief executive officer of Sibanye Gold Ltd, the nation’s largest producer, which was also the target of a failed raid in January. “It eventually has a knock-on impact into society: it’s lawlessness, it’s anarchy,” Froneman added.
South Africa’s Horrific Overall Crime Stats
The anarchy plaguing the South African gold industry is reflective of society overall. The state’s murder rate is at a 10-year high and crime is up across the board, therefore it is easy to imagine robbers taking advantage of a lucrative honeypot like gold miners.
“The fundamental problem is police are not getting on top of organized violent crimes,” said Gareth Newham, head of the justice and violence prevention program at the Institute for Security Studies in Pretoria. “We are seeing a deterioration in our policing capacity.”
At an administrative level, police and courts were thinned under Zuma’s administration. As a result, the government simply does not have the manpower or resources to get a handle on its gold problem.
Zuma’s Government Weighs Possible Task Force
Minister of Police Bheki Cele met with industry representatives in October and discussed plans to create a task force to focus on violence targeting the gold industry.
Gold companies have also tried to increase their security details, both in number and in training. Guards for Sibanye now undergo combat training and have armored vehicles. But they are often outmatched by the gangs who wield automatic weapons and don’t hesitate to use them.
“It’s military precision in terms of planning and execution,” said Nash Lutchman, head of security for Sibanye. “No smelting plant is going to have sufficient manpower and fire power to defend an onslaught from 20 or 30 attackers.”
The Gold Raids are Hurting South Africa’s Economy
The crimes aren’t only hurting gold companies, but also the South African economy in general, notably investment opportunities, said Minerals Council CEO Roger Baxter. If the government can’t protect can’t protect the industry, it sends a telling signal to other foreign businesses that may consider doing business there. Any business should look to be profitable and profit is a beacon to gangsters who are better equipped than the police.
“The lack of resources and capacity within the SA Police Service to prevent these violent assaults, which are largely driven by organized crime, is a major threat to the industry and places the lives of innocent people at risk,” Bader said.
“The impact of illegal mining and product theft on the industry and the country has risen to unprecedented levels and costs the country significantly,” he continued. “The mining industry is under siege and this detracts from production, employment and investment.”
What’s the Next Step to Stop the Lawlessness?
While companies continue to staff more security details on their own, the Mineral Council is also optimistic that the government might finally take action. President Cyril Ramaphosa also addressed the problem more broadly in his State of the Nation Address this year. He plans to create special law enforcement divisions to counter the gold gangs. Although he referred to “construction and other businesses,” it’s a good bet to infer he was speaking to the gold industry.
The problem is not new and the government is not ignoring it, as indicated by Cele’s meeting and Ramaphosa’s address. While it is understandably a top priority for gold companies, it remains to be seen how the government will prioritize it among a global economic crisis and the current coronavirus outbreak.