Latin America: Global Initiative against Transnational Organized Crime launches report on illegally mined gold, criminal activities, and companies' supply chains

The Global Initiative Against Transnational Organized Crime issued a report on the transition criminal gangs in Latin America went through from dealing with drug trafficking to profiting from illegally mined gold. The report looks at trends in Bolivia, Brazil, Colombia, Ecuador, Guyana, Mexico, Nicaragua, Peru and Venezuela, and at the supply chains of particular companies supplying the US market. Business & Human Rights Resource Centre invited Republic Metals to respond to these allegations; the response is provided below. We also provide a statement by Metalor.

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Company response
2 May 2016

Response by Republic Metals

Author: Republic Metals

...The accusations and implications in the Report about RMC are factually inaccurate…The report relies on a small number of secondhand sources to make broad accusations and implications about RMC, disparaging a company that has done as much as any refinery operation in the world to eliminate the influence of illegal gold in the industry.  Neither the author of the report nor anyone from the Global Initiative contacted RMC before publishing the Report.  RMC could have corrected the inaccurate information in the Report had anyone contacted RMC to learn the truth.  We appreciate you allowing us to correct the defamatory accusations made in the Report about RMC.  Those accusations should not have been published in the first place and should never be published again...

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24 April 2016

“Organized Crime and Illegally Mined Gold in Latin America”

Author: The Global Initiative Against Transnational Organized Crime

...[Two] trends intersected: soaring gold prices greatly increased the profitability of gold mining, whilst the US led “War on Drugs”, notably in Colombia and Mexico...sharply reduced the profitability of drug trafficking from Latin America to the USA. As a result, there were considerable incentives for the criminal groups that control the drug trade to move into gold mining, and the fragmented nature of artisanal gold mining in Latin America greatly facilitated their entry…The change of strategy by the drug trafficking groups proved so successful that in Peru and Colombia – the largest cocaine producers in the world – the value of illegal gold exports now exceeds the value of cocaine exports…The Global Initiative Against Transnational Organized Crime carried out desk and field research in Latin America...Desk research focused on Bolivia, Brazil, Colombia, Ecuador, Guyana, Mexico, Nicaragua, Peru and Venezuela…The U.S. Mint is the main buyer of gold in the USA…buying from six principal suppliers, of which the largest, Coins ‘N Things of Massachusetts, provided 40%...Florida is also a major hub, due to the refining activities of Republic Metals Corporation (RMC) and Kaloti Metals & Logistics…For illegal gold to be exported from Lain America, it needs certificates of origin and purchase receipts, which are generally supplied to the bigger traders by chains of acopiadores (consolidators), who purchase directly from the small mines or from informal gold buyers who operate in cities and in hardware stores that advance supplies to miners in exchange for repayment in gold… The destination countries and companies were the international refining corporations Metalor Technologies and MKS Finance from Switzerland and Northern Texas Refinery (NTR Metals) and Republic Metals Corporation (RMC) from the USA. Italpreziosi from Italy and the Dubai based Kaloti group were also suspected of buying hundreds of tons of presumed illegally sourced gold…Despite the suspicious load, SUNAT officials could not intervene because goods under transhipment are not subject to physical examination...Italpreziosi from Italy and the Dubai based Kaloti group were also suspected of buying hundreds of tons of presumed illegally sourced gold.105.  The judicial authorities of Peru have accused these six companies, of which four are part of the London Bullion Market Association, of 25 criminal acts arising from the seizure of one ton of gold in Callao between 2013 and 2014 and the money laundering of the proceeds of illegal mining”. (…)  [Refers to Expominera SAS, Joyería MVK, Universal Metal Trading, AS Perú SAS, E&M Company, Minera Tambogata, Sociedad Minera La Rinconada, Minerales del Sur, Ananea Mining Co, Titan General Contractors, Mineraven, Axbridge Corp., Activos Minerales, Ecuacorriente (part of Corriente Resources]

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15 April 2016

“Illegal gold mining drives human rights abuses in Latin America, claims study”

Author: The Guardian

Illegally mined gold has overtaken cocaine to become Peru and Colombia’s most lucrative illicit export, according to a new report that warns the shift from drug cultivation to criminal mining in many Latin American countries is fuelling “staggering” human rights abuses and wrecking the environment…The study – from the Global Initiative Against Transnational Organised Crime – says the increasing involvement of organised criminal groups in illegal gold mining is funding terrorism, facilitating money laundering and corruption, displacing local populations and driving people trafficking, child labour and sexual exploitation…It says the trend is down to high gold prices over recent years and the success of US-led efforts to crack down on drug trafficking from Latin America…Corporations, Global Initiative says, must adhere to the UN guiding principles on business and human rights and do a better job of mapping out supply chains and ensuring that gold is sourced responsibly and ethically...

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11 December 2015

“Colombia: Metalor Sources Gold Exclusively From Legal Mining”

Author: Metalor

The Colombian magazine “Semana” has published on December 7th a new article on illegal mining in Colombia. This time the publication is focused on the Choco region, one of the richest alluvial gold areas in the country. The article mentions that companies such as Metalor are buying from the area “without asking so many questions”. In that regard we want to stress the following points: It is not true at all that Metalor is sourcing metal neither from the Choco nor from any other Colombian region “without asking so many questions”…On the contrary Metalor has in place a strong due diligence process that requires that all its trading customers be registered with the RUCOM (Official Colombian Registry of Mineral Trading Players – Registro Unico de Comercializadores de Mineral), and the clear identification of the source of the mineral. In absence of these Metalor does refrain from accepting any mineral

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9 December 2015

"Peru: Metalor Supports the Formalization Process In The Gold Mining Sector"

Author: Metalor

Illegal mining with its related symptoms of ecological, social and economic impacts amongst others continues to be a challenge in many areas of South America…Governments in Peru, Colombia, Ecuador, Bolivia or Chile have started some years ago to take measures, implement formalization process’s and crack down on illegal mining in order to tackle this historical problem. Despite these ongoing efforts, results are still modest…Peru however took the decision in 2014 to push the process further. In order to encourage the formalization process of concerned artisanal and small scale gold miners, the government of Peru, through the government controlled company, Activos Mineros SAC, launched Public Tenders to selected trading companies (“comercializadoras”) in the different mining regions of the country. The selected trading companies would in turn commit to offer favorable and fair terms to the artisanal and small scale miners already in the process of formalization. By offering limited discounts versus the international gold price, such local mining communities would be able to receive competitive returns in comparison to the ones offered by illegal traders, while continuing to push forward their formalization and improvement processes...

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