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Africa: New gold refineries raise concerns of 'race to the bottom' on conflict minerals, safety and environmental practices

"Race to refine: the bid to clean up Africa's gold rush", 15 January 2020.

...Small-scale mining is booming, and new gold refineries are opening by the dozen, to process metal produced by informal diggers in Africa and beyond. The refineries, which often win high-level political backing, can be positive because they offer miners and states a way to extract value from their own mineral wealth rather than just exporting raw commodities. But if not properly controlled, they risk adding to problems of smuggling and funding conflict...

Some of Africa’s new gold refineries are in South Africa...authorities granted 19 refining licences in the year to March 2019...Elsewhere in sub-Saharan Africa...as many as 26 are now either operating or under construction across 14 countries from Mali to Tanzania...Governments of gold-producing countries in Africa have long complained that the precious metal in their rocks is being illegally produced and smuggled out on a vast scale, sometimes by criminal operations, often at a high human and environmental cost. By refining gold...states hope to capture value that is being lost. Some new refineries have invested in systems to ensure they process gold from legal and environmentally responsible miners...But because informal miners already often operate through smuggling networks to avoid tax and scrutiny, officials and industry sources say some refineries risk inevitably joining these shadowy channels...

The Organisation for Economic Co-operation and Development (OECD) has developed global sourcing standards against which it recommends refineries are audited. Outside South Africa, no African refineries have yet followed that recommendation, said Louis Marechal, an OECD expert on responsible business conduct...Africa’s new refiners operate amid networks of buyers who are willing to pay extra for gold. These include smugglers...One refinery in Mali says it is struggling to compete with smugglers. Kankou Moussa Refinery...says it plans to invest more than 400 million euros ($445 million) to create a network of centres which will buy gold and educate miners on how to work safely. But smugglers and money-launderers pay up to three percent above market price for gold, said Dario Littera, its president...With high profits from smuggling and weak oversight pushing vast quantities of gold into the informal economy, there is little incentive for the new refineries to play by the rules, said the OECD’s Marechal...