Bloomberg News

Deadly Illegal Mining Booms Below South African City of Gold

April 24, 2014

A Man Carries a Sack of Waste Material at Blyvooruitzicht

A man thought to be a "zama-zama" carries a sack of waste material as he scavenges for gold dust among mining debris at the closed Blyvooruitzicht gold mine near Carletonville. Photographer: Dean Hutton/Bloomberg

Smoke rises from a derelict mine shaft 25 miles east of Johannesburg, where illegal miners cook, work and sleep below ground for weeks at a time.

They have broken through a slab of concrete covering the entrance to the shaft, one of 6,000 abandoned mines, many around Johannesburg, known as “eGoli,” or “City of Gold” in Zulu. At least 40 unlawful prospectors have died in South Africa this year as mines collapse, workers succumb to poisonous gases and gangs wage turf wars underground.

“Any mistake and you feel you’re going to be killed,” said Joseph Sithole, 23, an undocumented Mozambican migrant, as he stood among corrugated-iron shacks and rubbish-strewn paths near the mine. He recounted how last year he dashed to one side of a shaft after hearing a crack, narrowly avoiding being buried by falling rocks. He felt his way to the surface through clouds of dust.

Sithole is one of 14,000 people the government estimates are now involved in illegal mining, which comes as a drop in gold prices and aging ore bodies shut South African shafts. The practice has grown to create a complex criminal industry valued at 6 billion rand ($566 million) a year, Mineral Resources Minister Susan Shabangu said in February.

The government now plans to block up entrances to abandoned mines, compel owners to heighten security and increase convictions for illegal mining.

Worth Risks

“It’s getting out of control,” Shabangu said. “We need to act with speed.”

While Sithole, in jeans and slip-on shoes, typically earns less than $5 a day, he said it’s worth the risk, because hitting a rich seam can make him significantly more and allows him to send money home to his mother in Maputo, Mozambique’s capital.

Sithole and prospectors like him are known as zama-zamas, or hustlers, in Zulu. They live and work in subterranean tunnels rife with robbery and prostitution, according to police. Illegal miners from job-scarce nations including Zimbabwe, Mozambique and Lesotho as well as fired workers from South Africa, where almost one in four is unemployed, are drawn to the shafts.

Rockfalls, gang violence and robbery are becoming more common as some of the zama-zamas fight between themselves for a bigger share of the profit. Sithole says that he and his colleagues work “innocently” and carry no weapons, which means they are victims of the violence.

Gang Wars

Sithole was once held at gunpoint by a gang from Lesotho, robbed and forced to mine for two straight days, he said. The Mozambican citizen came to South Africa in 2010 after being recruited by a man from his neighborhood in Maputo, he said.

“It’s much better here because even the little that you get here when you go back home it’s worth much more,” said Sithole, whose father is a welder in Tembisa, a township north of where he lives near Brakpan, and two brothers work nearby fitting tiles.

The 28 percent drop in the gold price last year and the dwindling amount of ore in South Africa that can be mined profitably has increased the number of abandoned shafts around Johannesburg. The city lies in the middle of the Witwatersrand basin, the source of a third of all bullion the world has yet produced.

The government estimates there are 6,000 illegal miners underground and 8,000 on the surface, equivalent to about 10 percent of the number of legal employees in the industry.

Survival Instinct

Shabangu’s ministry didn’t respond to questions first sent on March 13 on the number of illegal miners killed and convicted in 2014 compared with previous years. She won’t be available until after national elections on May 7, spokeswoman Ayanda Shezi said.

For Sithole, it’s about survival.

Using hand tools, a head torch and rope, he and three friends can mine three grams (0.1 ounce) to four grams of gold in a week, earning the group 960 rand to 1,280 rand. That’s about 22 percent less than the prevailing gold price. The metal fell 0.7 percent to $1,274.76 an ounce at 2:23 p.m. in London today.

Their takings equate to about $4.60 daily each, enough to buy a cabbage and an 11-pound bag of corn meal. The sum is 82 percent lower than the average black South African household’s income of $26 a day, according to government statistics.

With shafts extending down from the surface as many as 2.4 miles, South Africa’s gold mines are the world’s deepest, and it takes Sithole as long as two hours walking through a labyrinth of tunnels to get to the ore. He spends a week below ground at a time, living in the dark, often flooded shafts.

Good Money

Kenny Mashiane, 34, another illegal miner who works independently of Sithole, said in a productive week in a rich seam of gold ore he can make as much as 3,000 rand.

“It’s risky but you can make good money, if you’re lucky,” said Mashiane, who is South African. “You need to study and know where to go.”

Mashiane, who wore a ragged white shirt held together by strands of material, blue overall pants and a Nike (NKE:US) baseball cap, said he used to mine platinum for Lonmin Plc (LMI), the world’s third-biggest producer of the metal, before losing his job in 2004 in Rustenburg, 106 miles northwest of Johannesburg.

Goliath Gold Mining (GGM) Ltd. owns prospecting rights to the land where Mashiane and Sithole mine. The company bought them from the liquidators of Pamodzi Gold East Rand Ltd. in 2012, according to spokesman Grant Stuart.

Rising Incidence

Those who have died this year include a group of 20 people, predominantly Zimbabweans, who were poisoned by carbon monoxide in a mine near Roodepoort, west of Johannesburg, according to Paul Ramaloko, a spokesman for Hawks, the South African Police Service’s anti-corruption unit. That mine is not owned by Goliath.

Unlawful mining and associated violence is increasing due to “poverty, unemployment and large numbers of illegal immigrants in South Africa,” the Chamber of Mines, which represents producers including AngloGold Ashanti Ltd. (ANG), said in an e-mailed statement on March 31.

Security guards, policemen and legal mine workers take bribes from zama-zamas, allowing them access to ore-bearing shafts and fueling the illicit industry, according to Nash Lutchman, senior vice president at Sibanye Gold Ltd., the biggest producer of gold from South African mines.

Falling Victim

Legal operators are also falling victim to the zama-zamas, who recruit fired laborers and steal equipment, the chamber said. Sithole and Mashiane said they mine in abandoned shafts with no guards and buy their equipment.

“While we’ve certainly seen reports of illegal mining activities, the careful securing of entrances to our operational sites has thus far worked for us,” said David Noko, AngloGold’s executive vice president for sustainability.

The chamber is establishing a precious-metal fingerprinting system that can trace where gold and platinum comes from and working with government and international bodies such as the United Nations to target criminals who trade illegally mined metal across national borders.

Rockfalls are often caused by the mining of gold-rich rock pillars that were left behind by companies to prevent shafts from collapsing, according to Herbert Sogoni, 61, a retired legal miner from Sithole’s shanty town.

“There are still a lot of bodies captured by the rockfalls that are never brought to the surface,” he said.

‘Not Safe’

Rival gangs are just as dangerous as rockfalls. Murders happen during turf wars between groups fighting for rich mining areas, according to the police’s Ramaloko. Women often work below ground as prostitutes, he said.

As many as 200 people were allegedly trapped underground after a gang of zama-zamas blocked the entrance to a shaft in February near Brakpan, where Sithole lives. ER24 emergency-rescue service helped haul 24 people out while others refused to surface for fear of being arrested. The 200 figure may have been exaggerated by the miners to guarantee rescue, or they fled through tunnels to escape via other shafts, ER24 said.

Violence and intimidation have caused Thompson Ngobeni from Mozambique and Abednico Mkhize from South Africa’s KwaZulu-Natal province to say they won’t go underground again. The pair, both 25, were digging for gold in waste material from a mine dump near Brakpan when interviewed.

“It’s not safe, people are killing each other and robbing each other,” said Ngobeni as he shoveled gray waste rock into a plastic bucket. “They shoot each other sometimes.”

Mining Method

While the gold content of the waste rock is less than a third of what they could mine underground, it’s much safer to work on the surface, Mkhize said.

Once the rock is ground into a fine powder, the men pour it into a sieve and add water, making a paste that they then drip onto a towel placed on a plank of wood. They scrape the slush into a bowl and add mercury.

Gold particles cling to the mercury and the men take the substance and put it in a cloth. They squeeze the cloth to extract the mercury and form a small ball of gold concentrate.

“Back home if you’re stuck, you’re stuck,” Ngobeni said. “At least here you can get something yourself.”

Shabangu, the mining minister, said people forging a living from abandoned mines and waste materials are contributing to a proliferation in crime including burglaries and assaults committed by zama-zamas. “Poverty is no excuse for criminality,” she said on Feb. 21.

Village Crime

This happened at Blyvooruitzicht, a 72-year-old gold operation 50 miles southwest of Johannesburg that closed in July last year. Residents and former workers in the mine’s neighboring village have been robbed, beaten and raped by some of the illegal miners, according to the National Union of Mineworkers.

Many are living without water and electricity after cables, pumps and generators were stolen, said Richard Xati, a spokesman for the NUM in the area.

Convictions for illegal mining are increasing, with 100 people sentenced already this year, according the Hawks’s Ramaloko. While prison terms can range from three years to five years, miners are often caught without ore, which they process underground, so can only be charged with trespassing. The police are now focusing on the dealers who buy the gold, he said.

Sithole, Mashiane and Ngobeni said they have been robbed by policemen who, they say, sell gold concentrate to dealers.

The accusations are “not credible,” Ramaloko said. “These are criminals engaged in serious criminal activity. It’s not surprising they try and deflect the issue.”

Mashiane, the South African who worked for Lonmin, rejects Shabangu’s criticism of illegal miners. His work supports his wife and three children.

“Leave us alone, we are taking the risk,” he said. “If they shut down these mines we’re just going to open them again.”

To contact the reporter on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net Ana Monteiro, Antony Sguazzin, Rodney Jefferson


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