https://www.miningweekly.com

Lawless South Africa has bulk commodity chrome pirates stripping its wealth

22nd June 2022

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

Font size: - +

South Africa is the world’s biggest producer of chrome ore and it is estimated that about 10% of South Africa's yearly production of chrome is lost to illegal mining.

There has been an emergence of a bulk commodity illegal industry in South African chrome mining, said global law enforcement network organisation the Global Initiative Against Transnational Organised Crime (GI-TOC) in its latest Risk Bulletin report.

According to the report, soldiers, police and security guards in April descended on a mine in North West to disrupt a large illegal mining operation. The miners had been excavating chrome ore, which is an essential mineral for manufacturing stainless steel.

Taking advantage of loopholes in South African law, they had posed as legitimate companies, operating with heavy machinery in broad daylight.

Investigators estimated that the syndicate was making off with R1-million of ore a day. Police confiscated 20 machines, including trucks, excavators and diesel tanks, as well as more than 2 000 t of chrome.

"This was not an isolated case, but part of an insidious and hugely lucrative illicit economy that has flourished in South Africa in recent years. By some estimates, South Africa now loses around 10% of its production each year to illegal mining, amounting to 600 000 t of stolen material. This chrome is exported in bulk, primarily to China, without generating tax revenue in South Africa.

"Its extraction has devastated rural landscapes, in some cases practically swallowing entire villages, and is increasingly associated with reports of violent control. New GI-TOC research of South Africa’s booming illicit chrome mining sector and criminal markets will form part of an overall risk assessment of organised crime in South Africa, which will be published in the coming months," the GI-TOC researchers said.

For the most part, this trade has gone unpoliced, although the raid in April showed that the authorities may be adopting a firmer stance against illegal chrome mining. Much of the damage, however, has already been done, the researchers noted.

"The State relinquished control of the industry. Now it’s the law of the jungle," one analyst explained to the GI-TOC.

Global demand for stainless steel doubled over the past decade, driven primarily by urbanisation in China, and the market for chrome ore has boomed. To feed this growing industry, South Africa initially provided China with ferrochrome smelted locally.

However, in the first decade of the 2000s, many smelters shut down and some were paid by the national power utility not to operate in an attempt to free up electricity for other users.

"At a moment of surging demand for ferrochrome, the world’s major producer was in serious trouble," the GI-TOC emphasised.

China started producing its own ferrochrome and, by 2016, its output had overtaken South Africa’s, which meant its import needs had shifted towards chrome ore, which some producers in South Africa began exporting directly.

During this period, China also switched to using lower-grade chrome ore to manufacture ferrochrome and stainless steel. South Africa has ample surface deposits of this material, naturally and as a byproduct of platinum mining, which produces so-called fine chrome during the refining process.

"For decades, platinum producers had dumped fine chrome at the surface, but it had become feasible to re-mine those areas. Legitimate companies began mining surface chrome in its various forms, as did illegal mining syndicates. People with nefarious goals took the gap, setting the foundations for a new illicit trade," an expert on chrome production explained to GI-TOC.

ILLEGAL BULK
South African investigators first became aware of illegal chrome mining in 2016. In a Parliamentary briefing in 2017, police officials said unemployed youths and elderly women had begun mining in harsh conditions, equipped with inadequate tools.

Reports soon followed of powerful equipment, such as front-end loaders and cargo trucks, being used to illegally mine and transport vast amounts of chrome ore. Industry analyst and mining analysis and services company AmaranthCX director Paul Miller recalls "double-decker trucks stealing chrome" and "entire valleys were taken over by pirate miners".

These miners were able to operate, in part, by exploiting weaknesses in South African mining policy, which had created new provisions for small-scale and artisanal miners in an attempt to address long-standing problems of racial exclusion in the industry.

These permits were intended for mines smaller than 5 ha and less burdensome to apply for, requiring, for example, no environmental or social plans. However, in practice, they provided a veneer of legitimacy for illegal chrome miners. The flouting of permit conditions, by mining beyond the boundaries of a concession or digging too close to homes, came with few consequences. Disputes were treated as civil, rather than criminal, matters, the GI-TOC report said.

Further, sensing an economic opportunity, some traditional leaders began granting permission for chrome mining on communal lands.

However, the mines had grown too big to control.

Additionally, heavily armed guards have appeared at some sites. According to some in the industry, Chinese chrome buyers have been providing miners with weapons to defend their turf, although it is unclear how common this practice has become.

Further, there have been signs of more serious criminality encroaching on the trade, including hostile invasions of legal chrome mines, or mine hijacking as the Minerals Council South Africa described it, and reports of chrome ore being stolen at gunpoint.

Meanwhile, for miners, the work in these illegal mines is perilous. One miner died in 2017 during a rockfall, with another death in similar conditions barely a month later.

In 2018, a woman in her fifties died when, according to a police spokesperson, "a huge rock and rubble collapsed and buried her alive." Another miner died in an explosion in the same year. Further deaths were reported in 2019 and 2020.

To facilitate the flow of illegally mined chrome, an entire new infrastructure has developed, connecting mines in Limpopo and North West with deep-water ports in South Africa and Mozambique.

First, the ore is processed at aggregators known as spiral plants. A recent mapping exercise identified at least 20 of these facilities in areas with no legal mining operations, which suggests that they are processing stolen ore.

From the spiral plants, upgraded chrome is trucked to Mozambique or inland to Johannesburg, where it is warehoused, containerised and delivered to Durban or Richard’s Bay for export. Along the way, this chrome vanishes into the legal supply chain, leaving no trace of its illegitimate provenance, the organisation said in the report.

"There are no restrictions in South Africa on the transport, sale or processing of chrome ore, leaving little recourse for the authorities beyond controlling the mines. In 2017, police recorded 42 arrests and confiscated 22 trucks and 14 excavators, and more seizures have been reported since then.

"However, even stricter enforcement will do nothing to reverse the damage wrought by illegal chrome mining, visible in satellite imagery as vast scars on the earth," the GI-TOC said.

If there is an end to this story, it may come with the exhaustion of surface chrome deposits, which have declined rapidly. However, there are concerns that mining syndicates, enriched by chrome, may already be turning their focus to other commodities, such as coal and sand.

"These pirate miners have been capitalised. If they exhaust the resource, they will find others," Miller said.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION