(Ecofin Agency) - Gold mining is a key part of the Russian mercenary group’s business model. Even after coming under Kremlin control, it continues to offer security, training, and combat services to governments in exchange for access to gold, often at the expense of artisanal miners.

The Russian paramilitary group Wagner has made more than $2.5 billion through illegal gold mining, primarily in African nations, since the onset of the war in Ukraine, according to a report released on November 18 by the World Gold Council (WGC).

Titled “Silence is Golden: A Report on the Exploitation of Artisanal Gold Miners to Fund War, Terrorism and Organised Crime,” the report reveals that Wagner's profits come largely from gold mines and refineries it controls in conflict-torn nations like the Central African Republic, Mali, Libya, and Syria. Regimes in these countries have paid Wagner hefty fees for security services, as the private military group—now officially integrated into the Russian army—maintains its operations.

The report highlights that gold looted by Wagner is smuggled directly into Russia, often via the Russian military base in Latakia, Syria, or through major international gold trade hubs such as Hong Kong, India, Switzerland, Turkey, and the United Arab Emirates. The proceeds from these illicit transactions are used primarily to fund Russia's war machine.

Despite the death of its founder Yevgeny Prigozhin and its formal integration into the Russian military, Wagner continues to expand its control over gold resources. In February 2024, it took over an artisanal gold mine in Intahaka, Mali.

Exploitation of Artisanal Gold Mining for Conflict and Crime

The report, authored by former UK Deputy Prime Minister Dominic Raab, underscores how Wagner's massive profits from illegal gold trade illustrate the dark side of artisanal and small-scale gold mining (ASGM). While bad actors exploit this sector to fund conflicts, launder money, and enrich criminal enterprises, the entire ASGM sector is not inherently harmful. Millions of families, often in the poorest and most marginalized communities, rely on it for their livelihood.

Artisanal gold mining, concentrated mainly in Africa, Asia, and Latin America, contributes about 20% of the world's annual gold supply and employs 80% of the global gold mining workforce. The ASGM sector has grown significantly, with production rising from 304 tons in 2002 to 669 tons in 2018. In 2022, it was estimated to directly support 15 to 20 million people and indirectly sustain an additional 270 million.

An estimated 80% of artisanal gold mining operates in the informal economy, exposing miners to criminal gangs, armed groups, terrorist organizations, and corrupt officials. In regions like the Sahel, groups affiliated with ISIS and Al-Qaeda extort ASGM operations as part of their strategic expansion. In Colombia, criminal groups like Clan del Golfo, as well as paramilitaries and guerrilla groups such as the ELN and FARC dissidents, finance their activities through illegal gold mining.

Governments often lose significant tax revenues due to smuggling and exploitation. For instance, Sudan reportedly lost CFA2 billion in a single year due to the plundering of artisanal gold miners.

Artisanal miners face severe health risks from using mercury and, in some cases, cyanide to extract gold. Exposure to mercury can cause kidney damage, hearing loss, and neurological harm, while cyanide affects respiratory and cardiovascular health. Unsafe working conditions, such as lack of basic safety measures, result in frequent accidents, including landslides and collapses, as well as long-term illnesses like respiratory diseases.

Weak rule of law in some regions exacerbates child labor and other human rights abuses in the ASGM sector. A 2015 Human Rights Watch report documented widespread child labor in Ghana's artisanal gold mines. In the Democratic Republic of Congo, militia groups and bandits force miners to relocate, leaving them in precarious living conditions.

The Need for Coordinated Action

Despite the existence of international frameworks like the UN Guiding Principles on Business and Human Rights, the EU’s conflict minerals regulation, and the US Dodd-Frank Act, there is a glaring lack of transparency and enforcement. Governments and organizations fail to apply legal standards and prosecute perpetrators adequately.

To combat these issues, the report calls for coordinated efforts between governments, international organizations, and the gold industry. This includes dismantling criminal networks (e.g., seizing assets from illegal gold trade and imposing visa bans on officials collaborating with Wagner), increasing judicial cooperation, and enhancing surveillance of refineries and trade hubs.

Also, integrating ASGM into legal supply chains is essential. This involves formalizing artisanal mining activities, developing early warning systems for vulnerable mining communities, expanding gold-buying programs by central banks, and educating consumers about ethical sourcing, etc.