Gold Page 2
Brad was not known as Bad Brad then, nor did he earn the name in the way you might think, by shooting people. He got it by taking part in the 2001 South African version of the reality TV show Big Brother, a show that puts good-looking young people together in a confined space until they discover, as they do, that they are all awful. “I lasted six weeks,” said Brad. “I swore very bad, I tried to break out, I smashed the cameras. I had a bit of fun. When I was finished I left, and that was that.”
That was that except now he was famous. The newspapers had started calling him Bad Brad, and the name stuck. The notoriety did not hurt his business, nor sever his connections to the elite. When the new owners of the Aurora gold mine found their property crawling with illegal miners, they hired him to head security.
Brad’s new employers were importantly connected. Jacob Zuma had been president of South Africa for a year. Brad had been bodyguard to one of his nephews in the taxi wars, and now, at the gold mine, he worked for another Zuma nephew, and for a grandson of Nelson Mandela. The second Zuma nephew, Khulubuse Zuma, and the Mandela grandson, Zondwa Mandela, were among the owners of Aurora Empowerment Systems, the company that had bought the Aurora mine from its previous owners, a firm in liquidation. In South Africa the term “empowerment” refers to the transfer of shareholder equity, often in mining companies, to black people, as part of a scheme to remedy the injustices of apartheid.
THE TOWN OF SPRINGS LIES on the Witwatersrand, the richest goldfield in history, a 300-mile crescent that arcs around Johannesburg in a wide belt of gold deposits. Forty percent of all the gold ever mined in the world has come from that single geological formation. Much of the Witwatersrand, except for deep mines like Mponeng, has been mined out. The Aurora mine was a case in point. The property covered 81,000 acres in three mine licenses. In its heyday, 150 shafts had opened into hundreds of miles of tunnels that tapped the fabulous “black reef,” the carbonaceous, coal-like ore of the deposit. By the time Aurora Empowerment bought the site, only eight shafts of the original 150 remained. A mill processed what production there was and a shabby office building housed the administration. Yet underground, the Aurora mine was a different story. The tunnel infrastructure of the mine remained intact. Invisible from the surface, a city of shafts and tunnels honeycombed the reef. What’s more, the ground was loaded with gold. Everywhere in that sprawling catacomb, nooks and crannies contained gold-bearing material. In mining, “ore” means rock that can be mined profitably. In the course of mining, the past owners had left behind rock not rich enough to be considered ore. But now, with the gold price smashing records, it was, and the new owners of Aurora wanted it. They asked Bad Brad to escort a team underground to assess the damage caused by thieves and illegal miners.
The team met at a shaft in Springs at 9:30 A.M. on August 9, 2010, a Monday. It was a public holiday. There were five of them, including Wood; Herbie Trouw, a tall, thin, chain-smoking mine manager, who carried in his head a map of the underground warren they were about to enter; Willie Coetzer, a “captain,” or foreman—a chunky, bluff, gray-haired master miner; and two security guards. Coetzer had a .38 Special handgun, “just for my own protection.” Wood had his Glock and a Dashprod .223, a compact semiautomatic rifle made by a Johannesburg gunsmith and designed for “close contact.” The only other weapon was a JPX pepper gun carried by one of the guards.
There was no working cage. The party made a slow descent by steel ladder fixed to the side of the shaft. They climbed down 300 feet to the first mine level. Trouw and Coetzer were the only ones familiar with the inside of a mine. “The others were security, and [it was] their first day ever to go underground,” said Trouw, “so they were a bit nervous.”
A couple of miles to the northeast, illegal miners were also going down. They used their own, hand-dug shaft. Both shafts led into the same maze. Two opposing forces were gathering in the mine. Although separated by miles of twisting tunnels, they shared an interest that would draw them together: some of the richest ore in the world.
One way to keep tunnels from collapsing is to leave in place stabilizing areas of unmined rock known as pillars. At Aurora, the pillars were ten feet thick and six feet high. Each pillar contained fifty tons of ore. Three of the pillars were very rich, grading about 6.5 ounces of gold per ton. In August of 2010 the gold price averaged $1,230 an ounce. Those three pillars alone contained more than $1.2 million worth of gold.
Mining the pillars would not necessarily cause the tunnel to collapse. It would create a danger that desperate men would accept. If they did not die, they would be rich.
“That zone was a high-grade channel that we mined a couple of years back,” Trouw told me, “a bit like an old riverbed where the gold was deposited many years back. It was approximately thirty yards wide and maybe 200 yards long by six feet high. A good estimate would be that we left about 100 kilograms of gold behind in this area in the pillars and blasted material that was not cleaned properly, plus we left a lot behind due to faulting in the rock structures.”
More than 3,000 ounces of gold, then, worth about $5 million, lay in that one gallery of the dilapidated mine. After inspecting electrical substations near the shaft, where thieves had stripped out all the copper wiring, the party struck off in the direction of the richest ore.
It lay in tunneling beneath an abandoned pit. As was usual with a deposit near the surface, it had first been mined by open pit. When the original miners had reached the deepest practical level for a pit, and were still getting ore, the mining had moved underground. When illegal miners came to exploit the deposit, they picked the floor of the pit as the nearest point to the tunnels below, and sank their shaft. In South Africa the Zulu slang for an illegal miner is zama-zama, which means “try your luck.” But luck was not the main ingredient in the illegals’ success. Many were experienced miners who had lost their jobs, or men led by such veterans. They knew where the rich ore was, or soon found out. Since it was the richest ore that the new owners of Aurora wanted to assess, the two groups underground that day were fated to meet.
Wood’s party had come underground at 9:30. They spent about an hour in the tunnels near the shaft. At 10:30 they started for the area where the zama-zamas were working. They walked for two and a half hours and covered as many miles. It was slow, hot work. The floor of the passage was uneven; the tunnels ramped up and down; the natural heat of the rock made the air stifling.
Because they knew they could meet illegal miners, who might be armed, Trouw and Coetzer wore jeans and T-shirts rather than the usual miners’ overalls, which are sewn with reflective tape that would offer a good target for someone with a flashlight and a gun. Bad Brad and the security guards wore plain blue overalls. At about 1:00 P.M. the two groups met.
“We came to a place where the tunnel went up a hill,” Wood told me, “and I walked to the top and when I got there I saw that the whole place ahead of me was full of lights. I turned to get a better footing and the ground gave way, and I slid down towards them making a lot of noise, and as I fell I saw the flash of a gun and then heard it, and I thought—stuff it!—and I shot back.”
In the exchange of fire, Wood said, he screamed at his party to get out. They fled back along the tunnel. Behind them, at least four intruders lay dead and two were wounded. One account said that thirteen miners might have died in the gunfire. Wood and the others were each charged with four counts of murder and five of attempted murder. In a two-week trial, the prosecution tried to prove that the Aurora team had entered the mine intending to evict the zama-zamas, and that Wood had gone into the confrontation guns blazing. This theory failed to convince the judge. He accepted that Wood was the only one in his party to fire, that he had fired between seven and thirty rounds, and that he had fired in self-defense. No one knows how many illegal miners were underground that day, but when police raided the Aurora mine four months later they arrested more than 200. At an earlier raid at a gold mine in Free State province, illegal miners attacked the police with stones
. That day the police killed one and arrested 426.
On the day Bad Brad and I drove out to the Aurora mine, two dejected guards watched the gate. Ten feet from their post, the chain link fence lay on the ground where someone had driven through it. The brick buildings were a shambles of broken windows and missing doors and holes through the walls. A bedraggled population haunted the rows of roofless miners’ hostels. The roofs had been stolen. Men trenched for gold in plain sight. They collected the dirt in wheelbarrows and took it to a central location to pan it in a sluice, recovering whatever residue of gold there was. A battered yellow Dodge packed with young men tore past as we drove out. Wood said they were runners, picking up the gold concentrate. A few miles away, we climbed a bank and looked down into the pit. In broad daylight, a gang was stealing ore.
The pit was the gateway to the zone of high-grade ore beneath, and a collection point for the people stealing it. Beneath the pit floor were the Aurora tunnels. We watched as miners crawled from a hole. Bags of ore lay in a row, and porters staggered up a track to a row of vans.
IN SOUTH AFRICA THE THEFT of ore from gold mines is a legendary enterprise. Thieves steal about a billion dollars a year worth of ore, or maybe twice as much. The distance between these estimates shows how little grasp authorities have of the problem. Gold mine theft is a staple topic in South Africa, and many people think the police connive at it. A few days after my visit to Springs, I boarded the high-speed intercity Gautrain at the Rosebank station in Johannesburg, and went swooshing off to Pretoria, the administrative capital of South Africa, to meet a policeman who’d agreed to talk about gold mine crime and its connection to the powerful.
At suburban Hatfield, a police van picked me up for the ten-minute drive to a sprawling, fenced campus of single-story brick buildings—the headquarters of the Hawks, the elite unit of the South African police. We drove past the guardhouse and through the complex and pulled up at a little bungalow that stood apart. It had a two-car garage and a pair of identical white Volkswagen GTIs gleaming in the driveway. With its flagstone path and crew-cut hedge it might have been a starter house in Palo Alto. We went inside and sat down in a little boardroom. The winter sun poured through slatted blinds.
Colonel McIntosh Polela, the official spokesman for the Hawks, was a trim, stylish figure. He wore a gray-striped shirt with the two top buttons open. His trousers had a knife-edge crease and his shoes glowed with a high polish. His head was shaved. A TV reporter before he joined the Hawks as their public face, he maintained a grave demeanor. He opened a thick hardcover diary whose pages were crowded to the edges in a dense, neat handwriting. Reading from these notes, he reviewed the epidemic of violence and larceny that is illegal mining in South Africa.
Driven by the high gold price and the desperation of the poor, illegal miners had overrun abandoned gold mines and vacant parts of working mines, and produced a flow of illicit gold. For South Africa the problem was not only theft, but social disruption. Many of the illegal miners, Polela said, were also illegal immigrants. They came from Zimbabwe, Lesotho, Mozambique, Malawi, and Namibia. Their presence stirred up anger in the South African poor, themselves in a condition of permanent want. Vigilantes took bloody measures against the migrants.
Polela said that another problem facing police was that they could not pursue illegal miners underground. Not only did they have no training to work in mines, but police insurers would not cover them if they did. “In the shooting at Aurora,” Polela said, “if it had been policemen who’d been shot, they’d not have been covered.” Because police could not pursue criminals underground except at a risk borne entirely by the officers themselves, illegal miners had been able to create no-go areas both below and above ground, enforced by violence. Nor was it a question of forty or fifty miners, as at Aurora. At Welkom, in Free State province, more than 1,500 illegal gold miners were working on the surface and 270 underground. “In a functioning mine,” Polela said, “they create their own pockets, sometimes with the help of legal miners.”
They had been doing so for decades, robbing the mines from within. A 2001 monograph produced for the mining industry by South Africa’s Institute for Security Studies, said that well-provisioned groups of up to twenty-five miners at a time infiltrated mines by bribing the security. The groups did their own blasting underground with stolen explosives. They built small refineries, establishing themselves in vacant tunnels. They had detailed maps of the mines, and could navigate the underground maze with confidence.
Illegal miners sometimes threatened and even attacked mine inspectors who discovered them. In the echoey tunnels, thieves could easily hear the approach of mine security teams, and be ready to ambush them. This made the security teams nervous about going down. They could not know how many illegals they would meet. Gold diggers often entered the underground from one mine and moved through tunnels that connected to a second or third mine. The gold-bearing material that they mined was stored in disused shafts and then retrieved over a period of time, the paper said, “often in collusion with runners who are employed in the mine. It is then transported to one of the more than 170 smelting houses [operated inside the miners’ hostels] and elsewhere in the Free State goldfields.”
The writer concluded that syndicates of thieves, miners, and smugglers were stealing thirty-five tons of gold a year. At a mean price of $350 an ounce for the years he studied, 1994–1998, $400 million worth of stolen gold was flowing out of the country every year.
Legal miners made good money by colluding with the thieves. According to one newspaper report, a smuggled 48-cent loaf of bread could fetch $12 underground. And there were others earning money from the zama-zamas too. “They [the miners] have contacts with the police,” Colonel Polela told me. “We have to admit that people who should be fighting the illegal mining are in fact participating in it.”
With this assertion, Polela voiced a common belief of South Africans—that corruption infects the government. The police were helping to rob the mines, and behind the police, the forces that controlled them. Polela saw a nexus of the rich and powerful, of politicians and of criminals, jointly preying on the mines. The stolen gold passed through the hands of organized crime syndicates in South Africa to clients in the Persian Gulf, India, and Russia, where the gold was laundered through sham companies and sold into the legitimate bullion trade. According to Polela the theft from mines was threatening the stability of South Africa by crushing investor confidence. Mining security costs had “skyrocketed,” he said, creating a situation so harmful to the interests of gold mining companies that South Africa was looking to the United Nations for help in fighting the international trade in stolen gold.
But which South Africa sought this help? Not the robbers. Polela was not the only expert to suspect the involvement of those he called “big players in South African society.” Peter Gastrow, who wrote the 2001 study for the industry, reached the same conclusion: that an untouchable elite was behind the theft of gold.
When I met him in New York City in 2012, Gastrow, a South African lawyer, was a senior fellow at the International Peace Institute, and its program director. His focus was transnational crime. He had been Cape Town director of the Institute for Security Studies, a government prosecutor in South Africa, and an expert in organized crime. “My impression,” he told me, “is that [the pursuit of gold thieves in South Africa] has become far more politically restricted. Imagine you are an ordinary cop. These are powerful people involved. It’s an intimidating environment, not just because of the scoundrels, but in addition there are these very powerful people.”
Gastrow said he thought he had detected only “the tip of the iceberg” in his investigations. “I had the impression that I was scratching the surface. Mining houses felt the same way. I left my job there feeling that [theft from mines] was going to be a huge industry in the future. Powerful people were involved. I spoke to mining houses, and they were seriously worried.”
They had good reason to be. At the Barberton
mine in Mpumalanga province, for example, there were once as many people stealing gold inside the mine as there were legal miners working for the owner. To break this stranglehold, Pan African Resources, the owner, increased its security budget 237 percent in one year, to half a million dollars a month. A helicopter flew continuous patrol. In 2010 the police arrested the heads of six of the seven syndicates believed to have been robbing Barberton, and the company declared victory over the thieves. It was a doubtful claim. Even policemen specializing in gold theft, Gastrow had reported, could not agree on the number of syndicates plundering the mines.
One could reach one of two conclusions about at least some of the police: either that they knew exactly how much gold was being stolen because they were helping steal it, or that they didn’t know how much gold was being stolen even though they were helping steal it. I tick the second postulate. The truth is, nobody knows, except that it’s a lot.
Willie Jacobz, a senior vice-president at Gold Fields, one of South Africa’s biggest miners, told me that the industry was losing around 10 percent of its ore to thieves. Let’s put this another way. At just one of its mines, South Deep, Gold Fields produced 273,000 ounces in 2011. At a conservative mean price of $1,600, that would be $436,800,000 worth of gold. By Jacobz’s estimate, then, thieves were taking more than $43 million of his company’s money out from under their noses. This said a lot about how crazy the gold price was. How many companies can see their profits rise 27 percent in a single quarter, as Gold Fields did in the fourth quarter of 2011, while having 10 percent scooped straight out of revenue? But hang on—it gets even more fantastic. A mining company director with intimate knowledge of the South African gold scene told me off the record that the theft was likely higher—in fact, twice as high. A security consultant hired by his board had reported that they were losing as much as 20 percent from one of their most advanced gold mines. By this math, more than $80 million worth of ore could be hijacked out of a mine like South Deep in a year.