After attacks on gold mining facilities by heavily armed thugs and armed gangs almost doubled to 19 last year, the Minister of Police Bheki Cele said he was considering plans to set up a task force to tackle the violence. In his budget vote speech, Finance Minister Tito Mboweni asked communities to step in to expose disruptive actions of ‘bandits’ who storm construction sites or mines that harm growth and lead to job losses; so the law could take its course. In the meantime, the attacks continue. The Minerals Council of South Africa has confirmed to Biznews that another two attacks on mining operations have occurred in 2020. Gold mines are seen to be softer targets for crime syndicates that were previously specialised in cash-in transit heists. The price of gold has been soaring as investors flock to the shiny metal as a safe haven for investments during the coronavirus outbreak and oil war between Saudi Arabia and Russia. The gold price hit a seven year high trading above $1,700 at the beginning of the week. The Wall Street Journal details how mines are beefing up security in attempt to thwart the armed gangs and “have expressed frustration at the lack of arrests of syndicate bosses.” – Linda van Tilburg
Commando-style heists put South African gold miners on defensive
By Alexandra Wexler and Aaisha Dadi Patel
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(The Wall Street Journal) – Johannesburg – South Africa’s city of gold is under siege.
Since gold was first discovered in 1886 in the area that became Johannesburg, entrepreneurs from all over the world have flocked there to try their luck digging it out of the earth. The region has yielded nearly half of the world’s bullion that has ever been extracted, from some of its deepest mines.
But over the past year, the industry has increasingly been besieged by Kalashnikov-toting gangs from organised crime syndicates trying to rob gold mines and processing plants.
In December, a security contractor was killed in an armed attack on a Harmony Gold Mining plant in the early hours of the morning. Two months earlier, an armed gang stole an estimated 37 pounds of gold in a heist at a DRDGold processing plant. The robbers hijacked a shuttle carrying employees and eventually shot their way past about 40 police officers – after fatally wounding the firm’s chief security officer – before vanishing into the night.
“There’s been an unprecedented deterioration in security,” said Roger Baxter, chief executive of the Minerals Council South Africa, an industry group. “It has reached a crisis situation.”
The rise of commando-style raids on gold companies is the latest challenge to South Africa’s $24bn mining sector, which is also struggling with a weak investment climate, crippling power shortages and illegal mining – the last of which industry researchers say costs the mining sector an estimated R14bn (around $860m) a year.
South Africa’s top mining companies say the attacks reflect a malaise in the broader economy, which is in recession, has an unemployment rate of nearly 30% and has only one remaining investment-grade credit rating. The debt of state-owned power utility Eskom – about R450bn – represents almost 9% of South Africa’s gross domestic product.
Gold-related crimes have spiked as prices for the metal have shot higher. Over the past year, the price of gold on the Comex division of the New York Mercantile Exchange has risen 27%. A weak South African rand has amplified the gains even further in the local market.
The mining industry is spending more on security upgrades. Among the measures are more frequent helicopter flights to ensure no gold is stored for long periods in smelters. The number of raids more than doubled last year, according to the Minerals Council, with at least 220 pounds of gold concentrate – worth an estimated $5m – stolen.
The armed gangs, which authorities and mining executives say are connected to organised crime syndicates, are increasingly well-organised and well-funded. They can easily outgun security personnel, whose use of lethal force and automatic weapons are constrained by company policies and local laws. Employees are taken hostage to extort money or information from them.
Because of the under-resourced police force, when armed gangs roll up, they often get unfettered access to plants for at least a short period. Only a handful of arrests related to the robberies have been made, and mining executives say the heads of the criminal syndicates remain largely untouched.
The Minerals Council began meeting with the Department of Mineral Resources and Energy and police in October in an effort to establish a task force to investigate the attacks. Separately, an elite police unit known as the Hawks has begun investigations.
The mining ministry said it supported law-enforcement initiatives to stop the attacks and was sparing no effort to ensure miners can operate.
A Hawks spokesman said that the police work closely with the companies, but that mining companies are responsible for the security of their facilities.
“With the assistance of crime intelligence we stop most of [these] gangs in their tracks,” said spokesman Hangwani Mulaudzi. “Statistics show that we are breaking the backbone of the criminal groups.”
AngloGold Ashanti, the world’s No. 3 gold miner, said in February that it would sell its last remaining South African assets and exit the country where it was founded – as part of Anglo American – by Ernest Oppenheimer in 1917.
“It’s unacceptable that there’s a lack of law enforcement. The police don’t respond, and if they do, they’re completely useless,” said Neal Froneman, chief executive of Sibanye-Stillwater, South Africa’s No. 2 gold miner by volume and a majority owner of DRDGold. “It’s starting to affect investor sentiment.”
Mr. Froneman said Sibanye-Stillwater spends “hundreds of millions” of rand a year upgrading security and on intelligence gathering to detect possible infiltrators.
Late last year, during a night-shift changeover at DRDGold, a band of criminals hijacked an employee shuttle as it left the company’s Ergo plant, about 30 miles east of Johannesburg. About 10 robbers ferried the employees back inside the plant – hostages to be used as a human shield – using their ID cards to gain access to the plant and eventually the smelter, where gold is stored. Another 10 to 15 robbers took up positions outside the buildings, laying down cover fire when a contingent of about 40 police showed up.
The gang eventually broke into two of three store rooms in the smelter and stole gold concentrate, a sandlike mixture containing gold particles. The company’s head of security, Bart Coetzee, was fatally shot by one of the gang-members in the plant perimeter.
“These guys are not highly trained, it’s just that they’re well-equipped and well-coordinated,” said Niel Pretorius, chief executive of DRDGold.
Since the October incursion, DRDGOLD has spent about R12m upgrading its security – mostly on surveillance capabilities, but also on barricades, personnel carriers, perimeter fencing upgrades, better lighting and other nonlethal defensive systems. The company has begun developing a system that uses artificial intelligence to model the movement of people inside and around its plant and can send alerts if an assembly of people nearby is inconsistent with a two- or three-month model.
At DRDGold, both gold and concentrate now get picked up by helicopter the same day that it is smelted. In the past, concentrate remained in the plant for a few days for further treatment.
Over the past two years, organised gangs have robbed or attempted to rob Harmony Gold’s operations three times, prompting the company to spend R50m upgrading security. During the latest attempted robbery in December, the criminals were unable to break into the reinforced smelt house and were eventually scared off by alarms that called in the local police from more than 30 miles away.
Peter Steenkamp, chief executive of Harmony Gold said the company was “jacking up security” and has met with the minister of police to express frustration at the lack of arrests of syndicate bosses.
“We need to be on the front foot,” he said.
