Inside Zim’s illicit gold mine trade

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The artisan miners, their faces specked with mud and mine dust, were suspicious. They wanted to know why we were at their site, which they call Boko Haram, on the eastern side of Mazowe Dam in Zimbabwe. Tensions rose, and someone shouted: “They are taking pictures. What do they want to do with those pictures?”

They could not be persuaded to talk. The incident captures the fear, suspicion and secrecy that characterises Zimbabwe’s artisan gold trade.

Set between the Ironmask Hills, Mazowe is a modest, nondescript town 38km north of Harare. Gold has been dug from the surrounding areas for more than a century, with activity rising and falling along with the gold price. 

In the 2018 goldrush, more than 100 000 artisan miners from all over the country scraped the earth for any sign of the precious metal.

It is hard work. Felix Mauto, 25, is from Madziva, a town northeast of Mazowe. “We heard about the gold rush and came here with my brother and two friends. We have been working in the tunnels at Jumbo Mine shafts at night. In order to get into the shafts, we pay the police a fee of $20, and another $20 when we get out of the mine collieries. 

“Sometimes our ancestor smiles at us and we get the ore that gives good money. It is hard work in the shafts, a lot of things happen there, but what else can we do? We need money; there are no jobs back home.”

On a good day, Mauto said he could make up to $120. But the big money goes elsewhere.

Prisca Muchokore, manager of DT Mining Syndicates, places small balls of mined gold onto a scale to weigh and calculate payment for the artisanal miners at a small-scale gold mine in Umguza, Zimbabwe, on Saturday, Nov. 10, 2018. On January 1, the London Bullion Market Association will introduce a new version of guidelines for the Responsible Gold Guidance program that embrace whats called environmental, social and governance standards. (Cynthia R Matonhodze/Bloomberg via Getty Images)

All the way to the top

Details about how the gold trade in Zimbabwe works, and who profits, are scarce. Every now and then legal proceedings shed some light on a murky world that implicates some of the country’s most senior officials.

In 2003, for example, Emmerson Mnangagwa — at the time the speaker in Parliament and now the country’s president — was accused of receiving Zim$8-million from an illegal gold miner. 

The allegations emerged during the prosecution in the high court of Mark Matthew Burden, who was accused of trading in gold without a licence. 

Burden, who owned several legal mines, was in court for illegally milling gold ore from small-scale miners and gold panners in the Kwekwe district, thus fuelling and profiting from the illegal gold trade.

A detective with the Zimbabwe Republic Police said that not much has changed over the years. He was stationed at the Mines and Mineral Marketing headquarters in the Msasa Industrial Area and Harare International Airport. He asked for his name to be withheld.

“The illicit dealings have been happening over the years,” he said. “The actors are ‘big people’ who are ‘untouchable’.” He claims that gold-smuggling cartels involve politicians at the highest levels in the government. 

“At airports, you can receive a phone call from these big people ordering you not to search their bags when they come through. Fail to conform, you are either transferred or slated for being involved in trying to smuggle out contra,” he said.

According to political analyst Moeletsi Mbeki, these illicit, high-level networks have become central to Zimbabwe’s economy. In his book, Architects of Poverty: Why African Capitalism Needs Changing, Mbeki describes a “minerals-energy complex” run by oligarchs who have major influence over key aspects of economic and political policy.

This argument was echoed by none other than Zimbabwe’s prosecutor-general, Kumbirai Hodzi. Much to the displeasure of the ruling party — which denied his claims in no uncertain terms — he said earlier this year that the state had been captured by organised crime networks, including gold smugglers. 

“Corrupt cartels, responsible for most serious organised crime, are very active in the smuggling of precious metal like gold. They make sure they are not discovered and frustrate the prosecution and the work of law agents,” he said in an interview.

Against this backdrop, it is no wonder the small-scale miners in Boko Haram — the least powerful actors in the supply chain of illicit gold — were nervous to talk to journalists.

Illegal traders and tricks

Once the gold ore has been illegally extracted from the earth and processed in mills, it must be sold and moved out the country. In return, precious foreign exchange flows in.

In 2018, gold and cash worth $5-million was seized at Harare’s Robert Mugabe International Airport. It was allegedly being carried by a Kenyan pastor and trader, Kamlesh Pattni (also known as Brother Paul), and four others associated with the Dubai-based gold trader Suzan General Trading. Pattni was arrested, according to police spokesperson Charity Charamba, but was released shortly afterwards without being charged. Pattni denies he was arrested or that he is involved in gold trading in Zimbabwe.

But Fredrick Kunaka, an official of Fidelity Printers and Refiners — a subsidiary of the Reserve Bank of Zimbabwe — said Suzan had a licence to buy gold from the FPR. “Suzan was running a small band of dealers bringing in US$16-million to US$20-million monthly to buy gold from artisan miners,” Kunaka told a local newspaper.

An artisanal miner displays a small piece of gold collected at a small-scale gold mine in Umguza, Zimbabwe, on Saturday, Nov. 10, 2018. On January 1, the London Bullion Market Association will introduce a new version of guidelines for the Responsible Gold Guidance program that embrace whats called environmental, social and governance standards. (Cynthia R Matonhodze/Bloomberg via Getty Images)

In theory, Zimbabwe has strict regulations governing the buying and selling of gold, but these regulations are often flouted by the government and businesses. Documents show that a common trick is for investors to fail to properly register their businesses with the Zimbabwe Companies Registry. In the absence of accurate information such as correct phone numbers and addresses it is difficult to hold anyone accountable.

One example: major discrepancies were found in the registration of Sparkplug Investments, which is reportedly owned by an Indian company called Universal Exim. In an interview with The Chronicle, Indian businessman Dipak Hindocha claimed to be a director of the company. But the companies’ register shows only that a shelf company, Sparkplug Mining Private Limited (No 14456/2018), is registered but Hindocha is not listed as a director.

During a visit to the address given for the company in New Delhi, neighbours said it had moved. They gave the company’s phone number but on learning that there were journalists at the other end, they hung up the phone.

India is a primary destination for much of Zimbabwe’s illicit gold. Impact, a nonprofit organisation that investigates natural resources mismanagement in various parts of the world, has called India a haven for smuggled gold. 

One of Impact’s key findings was that “due diligence on gold imports carried out by Indian customs officials and industry actors is negligible or nonexistent. This makes it extremely easy for illicit gold — whether doré (gilt) or refined bullion — to enter India from different parts of the world. In this case, due diligence often extends no further than taking import and export documentation at face value.” 

Quest for foreign currency

In 2017 and 2018, gold production from artisan and small-scale miners in Zimbabwe eclipsed that from large-scale miners. That trend continues: the latest gold delivery data from the FPR shows that, in 2019, artisan and small-scale miners accounts for 63% of the total 27 650.26kg of gold bought by the state entity.

This is good news for the illicit networks that benefit from small-scale mining activity, but bad news for the country, said Tendai Biti, the chairperson of Parliament’s public accounts committee and a former finance minister. 

“The regime turns a blind eye to the illegality in the quest for foreign currency. Artisan miners are producing more gold than companies. They receive greater incentive from the government. Many of the big miners are now going through them.” 

Biti added: “There is so much corruption everywhere. As a Parliament, we are overwhelmed.”

This article was written with the support of the Money Trail Project (www.money-trail.org)


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