When people think of deforestation in the Amazon, few think of illegal gold mining as a cause. Yet mining accounted for the destruction of 1.2 million hectares of rainforest between 2005 and 2015 — or nine percent of forest loss during that period — and illegal gold mining drove a lot of it.
Some of this gold ends up in our phones and computers. Indeed, the use of precious metals for high-tech products is rising, with big tech companies buying around eight percent of gold refined annually. But most of the gold goes into the notoriously shady jewellery market.
This investigation delves into how actors in Europe’s gold industry are building a complex “gold chain”, using Dubai as a hub for gold laundering, to allow refineries in Switzerland, Belgium and Italy to import gold illegally mined in the Amazon without being linked to rainforest destruction.
This system is mainly based on a lack of transparency by the main gold refineries — which refuse to disclose the country and the gold mine of origin of the metal they refine — and on a lack of external control over their work.
In 2022, Brazil exported nearly $5 billion of gold worldwide. Around 30 percent came from protected indigenous areas.
Belgium and Italy, Europe’s biggest importers, purchased around 10 percent of Brazil’s gold output.
In addition to buying gold straight from Brazil, these countries also get their gold via Dubai in the United Arab Emirates, which has no gold mines but is increasingly importing Brazilian gold. In 2021, Dubai imported $452 million worth of the metal, up from just $49 million in 2017.
All the while, European regulations aimed at stemming the flow of so-called conflict minerals are proving ineffectual at preventing gold imports from high-risk areas, the investigation found.
The journalists revealed that Italy has carried out no government checks on gold refineries to date, despite regulations being in force since January 2021.
The Gold Chain team also investigated the role that key refineries play in the murky international gold market and the impact of gold mining on Brazilian indigenous populations.
What is more, the investigation raises serious questions about gold certification schemes.
The most important scheme is offered by the London Bullion Market Association (LMBA). Being part of LMBA’s Good Delivery List allows refineries to sell their gold in the London market, dominated by big banks like HSBC, the International Bank of Commerce and the Industrial and Commercial Bank of China.
But certification is based on due diligence carried out by the refineries themselves, plus a yearly evaluation by auditing firms.
Lawyers at Leigh Day — a London law firm that has been helping the families of two Tanzanian miners killed in 2019 in a gold mine that supplied an LBMA-certified refinery — highlight how LBMA governance structure allows for conflicts of interest, since “many of the board members come from a bank, a refinery or a mine”.
While LBMA has been quick to apply sanctions against Russian refineries after the invasion of Ukraine, when it comes to human rights and environmental abuses, “they seem to respond very differently”, a solicitor at the law firm said.