INVESTIGATION: Billions at stake as illegal gold mining persists in South Africa
Between 5% and 30% of South Africa’s gold output may be mined and traded illegally, according to estimates from industry and regulatory research.
The range is wide, reflecting the difficulty of quantifying a trade that operates largely outside formal oversight.
Even at the lower end, this represents gold worth billions of rand, bypassing taxes, royalties, and reporting mechanisms.
Illegal mining is concentrated in abandoned or under-regulated shafts, particularly in Gauteng, North West, and Free State provinces.
These operations often rely on artisanal and small-scale miners, some working informally or illegally, while others are employed by organised syndicates.
Gold from these sources frequently enters formal supply chains after being laundered through refineries, making it extremely difficult for authorities to track its origin.
Prices of this precious metal remain elevated, increasing the incentive to extract and move gold outside legal channels.
“Gold rose more than 5% to above $4,900 per ounce on Tuesday, as bargain hunting emerged after two consecutive sessions of heavy selling,” according to Trading Economics.
This did follow a nearly 5% drop the previous day, compounding losses from Friday and marking the metal’s steepest short-term decline in more than a decade.
How the illegal trade works
Once mined, gold from informal or illegal operations rarely enters the market openly. Syndicates often move it through networks that mix illicit and legal gold, effectively laundering the material before it reaches refineries. There, gold can be refined, repackaged, and exported with limited ability for authorities to verify its origin.
International research, including a recent OECD report, highlights how gold concentrates can be moved through supply chains in ways that obscure provenance, allowing illegal gold to enter global markets as if legitimate.
Maritime and overland transport routes, weak trade classification systems, and opaque customs processes all create opportunities for gold to be misreported or hidden entirely from regulatory oversight.
South Africa’s position in the regional gold economy further complicates enforcement. Gold may be sourced locally or smuggled from neighbouring countries, including Zimbabwe, then refined and exported. These flows create a blind spot for regulators and law enforcement, while formal channels remain unable to account for the true scale of production.
Economic impact
The value of illegally mined gold at current prices is staggering. Even a small volume of gold extracted outside the law, when sold at market rates, can result in losses of tens to hundreds of millions of rand in uncollected royalties, taxes, and export duties.
Across the wider African continent, SWISSAID has estimated that billions of dollars of gold leave the continent each year without contributing to national revenues – a problem mirrored on a smaller scale in South Africa.
“Tracking African Gold – Quantifying Production and Trade to Combat Illicit Flows” found that, between 2012 and 2022, the United Arab Emirates imported 2,569 tonnes of undeclared gold exports from African countries, valued at over $115.3 billion – equivalent to R1,845 billion.
For the formal economy, this leakage reduces the ability to fund mining regulation, community development, and environmental rehabilitation, while allowing criminal networks to profit.
It also distorts market dynamics, undermining legitimate producers and encouraging further informal activity.
Human and environmental costs
While the financial scale grabs attention, there are significant human and environmental consequences. Illegal mines are often dangerous, with minimal safety protocols.
The illegal miners (zama zamas), including migrants from neighbouring states, may face hazardous conditions underground, exposure to chemicals, and long hours for low pay.
Environmental damage is common. Abandoned shafts are repurposed with little oversight, leading to soil erosion, water contamination, and landscape degradation.
Without regulatory enforcement, rehabilitation of mining sites is rare, compounding risks for nearby communities.
Gaps in regulation and enforcement
Reports show that regulatory weaknesses are central to the persistence of illegal mining. Licensing, reporting, and oversight mechanisms are fragmented or inconsistently applied, leaving gaps that syndicates exploit.
The tracking of semi-processed gold is insufficient, and customs authorities often lack the resources or data to identify irregular trade flows.
Moreover, enforcement operations are typically reactive rather than preventative. While police and regulatory bodies occasionally raid illegal operations, criminal networks quickly adapt, moving extraction sites or shifting smuggling routes.
This cycle perpetuates both the economic and social risks associated with informal gold mining.
Why it matters
South Africa has a long history in gold production, once a global leader that contributed significantly to national revenue. Today, illegal mining represents a persistent leak in the economy, one made more lucrative by high gold prices and global demand.
As long as 5–30% of output remains outside formal oversight, billions of rand are at stake.
The trade is complex, involving miners, syndicates, refiners, and export channels. Tackling it requires coordinated enforcement, tighter regulatory control, and better monitoring of gold flows, both within South Africa and in the region.
Without such measures, the country risks continued economic loss, environmental harm, and exploitation of vulnerable labour – even as gold prices soar and international demand grows.
IOL Business