His first involvement with the African gold export business started in the early days of the logging concession in Liberia.
Liberia is not a big gold producer; nevertheless it has a long history of alluvial gold and diamond mining, although iron ore used to be a major product. Artisanal workings account for 98% of gold and diamonds produced.
Within the limits of his concession several thousands of miners used to extract alluvial gold on a daily basis. Alluvial deposits were found in stream or river beds, usually as native metal, and may contain in excess of 90% gold. These deposits were widespread within the concession area. It was estimated that 5,000 people were directly and indirectly involved in artisanal and small scale gold mining activities in that county. They work 5 days a week (being mostly Muslims they do not work Mondays and Fridays). Considering occasional stops and holidays, it is reasonable to consider that a miner worked 250 days/a. An individual miner would make 30 g Au/a or 0.12 g Au/day. At least 50 to 70% of the miners were women, and children might represent 10 to 20% of the work force. All processing steps, such as ore-transporting, crushing and panning, were conducted mainly by women and kids.
The concession area was situated midway between Upper and Lower Lofa counties on the west of Liberia and running along the Guinean border, in an area of intensive alluvial gold mining, known as Gold Camp, where artisanal miners have been working for many decades and many small mining operations have worked for generations. The subsequent discovery of primary deposits up-stream led to the development of two major hard rock artisanal mining camps within and near the logging concession area.
On other hand the policy of his company was that the support from the communities in which we operate was critical to the long term success of their operation. By working in cooperation with our host communities, including the miners, they endeavor to create sustainable, long-term economic and social opportunities. In general terms their relationship with the host communities was excellent.
The company compound and offices were based in Monrovia, but he used to spend half of every week at the bush camp. On other hand in a radius of 500 miles he was probably the only person with the financial capacity to buy large quantities of gold, so miners, shaft owners, intermediaries, paramount-chiefs, chiefs, kids, politicians, hustlers, policemen, military, rebels, Lebanese dealers, smugglers from neighbor Guinea and all kind of bush people used to come to his camp to offer their goods.
The business started being more a game than a proper organized business. They use to melt the gold at the camp’s atelier with a torch and pour it into a cast fabricated by themselves. Then they analyze it by touchstone testing. This technique is not in itself an accurate assaying method for gold and probably, at that time, they didn’t know even how to conduct it properly, so results were always a matter of big discussion with miners at the moment of determining the final price to pay.
Afterwards he used to bring the gold to Monrovia and get the Gov assay, pay the export taxes and get the export paperwork. The funny thing was that the Ministry of Mines did have neither equipment nor technicians to conduct any kind of assay, but nevertheless he should pay for that inexistent official assay.
When he had put together a serious amount of gold he used to fly (with the Coke –Antonov 24– or the JAK-40) to Abidjan to connect with Air France to Europe. At that time he used to bring the gold along with him in cabin and he would always remember the first time he arrived to Abidjan with the very first 55 Kg. The ingots were placed in several timber boxes and he had to buy, at the airport, two wheeled suitcases to move around and to carry the gold to the plane. The best he could find were a very bad quality Made-in-China canvas bags and the wheels spoiled before reaching the plane. To climb the airstairs with the 55 Kg was an impossible task and he didn’t want to leave one bag downstairs unattended, so finally three kind airhostesses came down and all together took the cargo into the cabin. Before reaching the planes door one of the bags gave up and one of the timber boxes fell downstairs and broke in pieces. It was quite embarrassing to take his seat sweating profusely with one cheap and spoiled bag scratching the plane’s carpet, one white timber box under his arm and three precious gold ingots that the hostesses brought in their hands. If he was trying to keep a low profile he just got the opposite: a big cabin show. That’s Africa.
After those early Indiana Jones days plagued of funny –and not so funny– incidents he got better organized. He brought to Liberia complete Fire Assay (accuracy 0.2 parts per thousand) and casting equipment and conditioned a 40” container specifically for the gold analysis, casting and packing (in metallic boxes fitted with high-density foam cut to fit the ingots and separated by cardboard) in the bush camp.
Transport of the gold from the camp to Monrovia was done by helicopter –at that time he was the co-owner of one small air transport company composed by two Mi -8 leased by the other partner in Kazakhstan). And transport from Abidjan to Europe was done as regular cargo fully insured by Lloyds London.
He also used to advance some financing, send some logging equipment as loaders to help in earth-moving –as construction of dams or shaft excavation– and facilitate hand-equipment to the miners in return of gold. He was also owner –for a while– of one mine site with over 100 workers.
He soon discontinued most of these practices because most of miners used to ran away with the advanced money and others sold the hand-equipment provided and never show up again. After several bad experiences he concentrated on just buying gold on the camp base.
In the selling side he got a sole buyer in Andorra. It was a private refinery belonging to a family of local bankers. The main advantage was that Andorra was not imposing VAT – as all EU countries do– to the importation of gold.
As PR he also invited the Minister of Lands, Mines and Energy, late Jenkins Dunbar to Andorra and he had to buy a box of Tabasco to season all his European dishes because the Minister fond them insipid. Also he put him in a quite tense situation in a meeting with the Andorra’s Ministry of Foreign Affairs, Albert Pintat. Mr. Pintat was speaking about how well Andorra is protecting their forest and Dunbar interrupt him saying that “in Andorra they have just trees, not forest. Forest is what Liberia has” Mr. Pintat didn’t seem very happy with the point. Anyhow…
From 1995 to 2000 he exported from Liberia around 500 Kg of gold bars of Au 22 K for a approximated value of USD 4.8 million (average price for that period per ounce Au 24K was USD 325). Considering that Liberia is not a big producer of gold, that the gold transactions were intermittent, that they were in the middle of a civil war, that from 1997 he was fully concentrated in the logging operations, 0.5 Tones of gold was a remarkable figure.
After the confiscation of the concession in Liberia he moved his residence to Abidjan. There he met two young garimpeiros –gold miners– from Sao Paulo. They knew each other from Monrovia and the Brazilians were looking for a financial partner to open an office for gold purchasing in Bamako (Mali).
At that time Mali was Africa’s fourth ranked producer of gold after South Africa, Ghana and Tanzania. Gold production was about 40,000 Kg/a –today is the third and production has increase to 55,000 Kg/a.
Gold is produced at both the artisanal and industrial levels. Most of the artisanal gold is coming from the Kenieba Valley –about 500 Km west from Bamako– where orpailleurs –artisanal gold miners– recovered gold from alluvial deposits. Other production areas are located at the southeast of the country. In Kenieba area about 100,000 of the 200,000 inhabitants are estimated to be directly engaged in the gold mining. At least 50% of all artisanal miners in Mali are women and they are actively involved in all stages of the gold mining process.
During the period 2002-2005 a gram of gold –Au 20.5K– was sold in Bamako at USD 2.75 – 3.00 /gr. Price increased afterwards.
Small scale operations use rudimentary techniques to process precious substances like gold and diamonds, obtained from gold fields or primary deposits located near or above the earth’s surface. Operations are typically organized by village communities.
The management structure runs –in a traditional and simple way – the successive phases of the operation, from the village where a gold field is located to the various actors along the production chain. Among them:
– Damantigui – The chief of the village where a gold field exists.
– Dugutigui – Owner of the land –or who is the heir of the village land.
– Tonboloma – Landowners’ representatives acting as mine police. They are a group of young village people. They are in charge of peacekeeping, observing regulations, arbitration of disputes and collaboration with the public administration. They are chosen for their knowledge of customs and integrity. They represent the moral authority of the Damantigui.
– Tonden – As traditional gold mining operators are called locally may be persons or legal entities, and their activity may be individual or cooperative.
– Orpailleurs – Miners. These are all individuals who participate directly in gold extraction at any stage, who are not owners of pits or motor pumps, and who are not salaried employees
– Weigh Station Operators or Ambulant Trader or Site Gold Buyer – They are a key link in the chain of artisanal production. They enable other actors to quantify their daily output, so as to distribute it as needed. The weighing service they offer is free. They are the money holders, and thus the spot buyers of the output. They purchase on their own account and/or on someone else’s account, but always in their own name, and they are paid a commission by the persons they represent. Very often they advance money to pit owners and mining workers.
– Organizers of Ritual Sacrifices – They ensure gold washers have spiritual protection against bad spirits and evil.
– Blacksmiths and Food-stall Operators – They purchase in the village or elsewhere the goods necessary to their trade, depending on the case. Through the goods and services they sell, they participate in providing maintenance and replacement of manual tools and food for the gold producers.
– Collectors – In Bamako. They finance the Weigh Operators or Spot Buyers and pay them a commission. In some cases they export by themselves.
Traditional production on a site rarely involves more than half of potential reserves. These small scale operations involve the use of rudimentary tools. Gold ore is crushed using large wooden poles and then processed by wind panning or water panning. Losses cumulate progressively and quickly become considerable. In the case of gold, they probably reach 75 per cent of the metal stock for a placer deposit and 90 per cent of a lode. Outputs rarely exceed 2–3m3/person/day and drop to 0.1m3/person/day for heavy jobs like quartz crushing using manual drop forging. Some sites may be returned to later. However, in most cases, the deposit is irremediably damaged in the course of the first phase of work, and so lost.
At the beginning of 2002 he traveled to Bamako for three consecutive months to organize the new business along with the two Brazilians. They rented a villa in a safe neighborhood of Bamako –Badalabougou– and installed the laboratory and the casting equipment.
During the next months the Brazilians visited all the main artisanal mining areas and establish a business relationship with many independent Spot Buyers. He took care of all the Collectors in Bamako and key Gov Officials. Among the Gov officials was the Minister of Finances –Abou-Bakar Traore, Ministre de l’Economie et des Finances– today Minister of Mines, after the creation of this new Ministry as an excision of the previous Ministre de l’Energie et de l’Eau et des Mines.
During the 6 years life of the venture he was in Bamako intermittently. He used to go there to make the payments for the gold and get it into the plane. The combined time he spent in Mali was near two years.
In the same period they were able to export around 1.5 tones of gold. The main destination was a Belgium refinery –Tony Goetz of Antwerp.
This figure wasn’t much higher due the following constrains: It was a side business for him at that time and he was financing the local purchasing from his pocket and a limited capital was available for that operation in that particular period.
They closed the operation at the end of 2008, when the two Brazilians got a mining permit in Surinam and returned to Brazil.
His Malian network of business contacts is –today– intact.
Gold Business – Dugutigui