All contraband roads lead to Dubai
The involvement of armed groups and foreigners in the rampant contraband gold trade in the Tigray region is escalating into armed clashes and violence. An investigation conducted by The Reporter has found that dozens of people have been killed in the region since April, including one death last week.
A number of foreigners, particularly Chinese nationals, have been detained by regional security forces for operating without a license. They are among the individuals accused of taking part in a highly organized and illicit gold rush that has involved the round-the-clock excavation of farmland and other unauthorized areas.
Illicit mining is particularly active at the Rahwa gold mine located in Indabaguna Woreda, near the Tekeze River in northwestern Tigray. Former TDF combatants, local youth, refugees, Chinese nationals, and others work at the site. The site itself and the gold mined from there, however, is under the control of senior Tigrayan military officers, according to inside sources.
The officers, whose ranks include generals, use satellite phones to communicate and coordinate activity in the area despite the prevalence of telecom network jams.
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“These people have their own military and they control the mining areas. Rahwa especially seems like some place in the Congo; like the blood diamonds. It’s highly militarized because it has huge gold reserves. A lot of Chinese work there, with the Tigray generals and armed groups under them. They have plenty of equipment,” said an official from the Tigray Mining Bureau, who spoke to The Reporter on condition of anonymity.
Although it may be the largest, Rahwa is by no means the only gold mine in Tigray. Other sites, such as Hintsat, have been the setting for deadly violence over squabbles involving the lucrative business.
The official revealed that 22 people died during a violent clash in Hintsat, also in northwestern Tigray, two months ago.
“In Hintsat, former TDF combatants, IDPs, refugees, and locals work in the gold mine. Some months ago, they discovered large gold reserves using machinery. The locals asked to share the gold with the foreigners. The foreigners, largely Chinese, refused saying ‘we hired you as laborers, you cannot have shares.’ The former TDF combatants working at the mine brought out their weapons from where they hid them and then fought with the security personnel guarding the foreigners. The foreigners are protected by security forces under the generals. It is confirmed that 22 people died,” said the official.
Last week, one person died as a result of fighting at a mining site in Weri, near Weri River, according to The Reporter’s sources.
Fisseha Miresa, head of the Tigray Mining Bureau, admitted that people have died in recent violence at gold mines but refrained from disclosing an exact number of casualties.
“There were clashes over the mining sites. People have died. The fighting took place around Asgede, at a site called Hintsat. Security forces and locals managed to contain the fighting before it spread further. The largest mining clash happened in April. People died, but claims that there were 22 fatalities are false,” Fisseha told The Reporter.
The violence had done little to deter the illicit trade, which sources say is conducted through four primary smuggling routes. The first goes through Adiabo and Badme, over the Mereb River and into Asmara, Eritrea, from where the gold eventually ends up in Dubai, UAE.
Other means of smuggling gold out of the region involve using vehicles marked with the insignias of the UN and other international organizations, as well as private trucks and cars. This is the preferred method on the smuggling route from Shire to Addis Ababa via Mekelle, the regional capital.
There are also smuggling routes to Somaliland via the Afar Regional State, and cross-country into Kenya and Uganda. Much of the smuggled gold ends up in Dubai, according to reliable sources.
Shire has grown into the primary hub for contraband gold trade in Tigray on account of its proximity to many of the largest mining sites. Shire serves as a depot for the gold, and it is from here that contraband cartels smuggle it out of the country.
Prime Minister Abiy Ahmed (PhD) recently stated that Shire and Assosa (Benishangul-Gumuz) have become hubs for the illicit gold trade.
The proprietors of large jewelry shops in Addis Ababa also invest in illicit mining and receive the gold through smugglers, according to documents seen by The Reporter.
“The Shire gold market operates in parallel with the Dubai gold market. Most gold sites in Tigray are located near Shire. The price of gold in Dubai is typically disclosed in the afternoon. Each day, the generals and warlords who run the gold mining sites in Tigray wait until the afternoon, until gold prices in Dubai are announced, to sell the gold to the smugglers. The generals have their own network. Once they learn the daily price in Dubai, they make their transactions and dispatch the gold to smugglers who move it out of Ethiopia. The generals and smugglers have their own margins on the Dubai prices,” said the anonymous official.
Fisseha concedes that much of this is true, but refrains from disclosing further details or naming any names. He says that mining in Tigray is beset by two major problems.
“The first is there are a lot of illegal parties who have taken control of mining sites in Tigray. They hold no licenses whatsoever but control the mines and minerals, especially gold, using armed forces. This is well known. They possess machinery, including excavators, and operate night and day. The Tigray Interim Administration (TIA) has scolded the local administrations in the places where these situations are taking place,” said Fisseha.
He indirectly alluded to the identities of the people running these mines as being part of the TIA, but said the interim government is unable to force them to cease the illicit activity because of their immense influence.
“The illegal mining is being run largely by people from Tigray, and refugees and IDPs who came from various places to take part in the contraband gold trade. All areas known for their gold deposits are occupied by these forces. They have even begun excavating farmland and other unauthorized areas in search of gold, which is illegal. There have been improvements following criticism at the TIA level, but the problems are persisting at large,” said the Bureau chief.
Fisseha observes the second most pressing problem is the widespread contraband network in the region.
“Both legal and illegal miners are feeding the contraband network. The volume of gold that used to be extracted from Tigray prior to the war is still being extracted today. The same volume is going out but it isn’t going to the central bank. There are well established networks that take the gold through neighboring countries as well as into Addis Ababa. They do the job through joint networks,” he said.
Fisseha estimates that more than 20 quintals of gold is being extracted annually from Tigray, but none of it is going to the central bank and the federal government.
“The gold in Tigray is benefiting neither the people of Tigray nor the federal government. It is being used by generals and former TDF groups,” concurs the anonymous official.
The foreign individuals involved in the lucrative trade are also reportedly using dangerous chemicals to process the minerals. The list includes cyanide, mercury, and others. Cyanide is used at all mining sites operated by Chinese nationals, according to sources.
Sources who spoke to The Reporterincluding woreda and zonal officials, Mining Bureau heads, investors, geologists, and regional security officials to gather the data for this article. They say the TIA is putting together a task force in a bid to get the situation under control.
The root causes
The genesis of the gold crisis in Tigray is rooted in the northern Ethiopia war, Ezana Mining Development Plc, and the feud between regional and federal mining authorities.
Most of the mining sites now under the control of the illicit trade were previously part of concessions awarded to large-scale mining companies licensed primarily at the federal level by the Ministry of Mines. However, in the wake of the two-year war, these areas were taken over by the military commanders and armed groups, local youth, and foreigners who work with them.
The TIA has been unable to stem the takeover and people who reside in and around the mines also oppose the presence of any federally-licensed mining entities in the area.
“The TIA has been negotiating with the federal government. The region does not want to supply god to the federal government until the federal government disburses the wartime Tigray budgets. The TIA has no other source to rely on, except the gold. The military generals use the gold money to maintain the TDF. Hence, they do not want to supply the gold to the central bank,” said an inside source.
Fisseha, however, argues the primary cause of Tigray’s booming illicit gold trade is the central bank’s gold purchasing rate.
“We have studied the root cause. The primary reason all miners are supplying gold to the contraband market is because the central’s bank’s purchasing price is much lower than the prices offered in the illicit market,” he said.
Although the rate can fluctuate, the contraband trade offers up to 2,000 birr more for each gram of gold than the central bank. The National Bank of Ethiopia (NBE) and Governor Mamo Mihretu recently announced a 65 percent increase in gold purchase prices, but that has done little to stem the flow of contraband gold.
“We’ve repeatedly asked the NBE to make an adequate revision to the margins. Gold miners are working for profits; they will not supply to the government unless the NBE narrows the price gap between the informal and formal markets,” said Fisseha. “All of Tigray’s gold is going to the contraband trade. Only Ezana is permitted to purchase and collect gold from all over Tigray and supply it to the NBE. But Ezana is also waiting until the NBE improves the margins. The prices are discouraging. We are in talks with the NBE.”
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