Responsible Investing: U.S. Government Warns Gold Sector of Possible Sanctions Exposure | Kharon The Kharon Brief

Responsible Investing: U.S. Government Warns Gold Sector of Possible Sanctions Exposure

(Source: Created in Midjourney)

By Hannah Mackay and Michelle Phillips

July 26, 2023

Private Russian military company the Wagner Group has established a significant presence in the mining sector in Africa. The Central African Republic (CAR) gold mining company Midas Ressources was the latest to be sanctioned for its connections to Wagner on the continent.

Wagner, and its leader Yevgeniy Prigozhin (known as "Putin's chef"), have come under increased scrutiny in light of their recent rebellion in Russia and the group’s record of profiteering from foreign conflicts as proxies of the Russian government. On July 24, the U.S. government sanctioned three Malian officials for facilitating Wagner’s expansion in Mali, to include Air Force officer Adama Bagayoko for working to facilitate the group’s access to gold mining in the country.

Despite years of western sanctions, Wagner and its leadership continue to operate and benefit from the trade of natural resources and minerals. A June 2023 “Africa Gold Advisory” jointly issued by the U.S. Departments of State, the Treasury, Commerce, Homeland Security, Labor, and the Agency for International Development (USAID) suggest that this recent designation may be the first of many to disrupt the industry’s misuse by illicit actors, to include criminal organizations, terrorist groups and others.

Learn more about the Wagner Group’s commercial reach and sanctions evasion strategies in just 6 minutes.

The Financial Action Task Force (FATF) and the Organization for Economic Co-operation and Development (OECD) have in the past also warned that illicit gold trafficking in Africa, Latin America, and elsewhere could finance armed conflict and be used by criminal networks to launder money into global markets.

Without adequate due diligence and appropriate mitigating measures, participants in all aspects of the gold sector – mining, trading, refining, manufacturing, and retail – may inadvertently be exposed to sanctions evasion, money laundering, conflict and terror financing, human rights and labor abuses and environmental degradation, the U.S. government said in it's recent advisory.

The Midas Touch

Midas Ressources, a gold mining company registered in CAR in late 2019, was one of two mining companies sanctioned by the U.S. government in June 2023 for being affiliated with Wagner and Prigozhin indirectly. The aptly-named gold mining company has connections to Wagner-linked companies in Madagascar.

In March 2020, the newly-established Midas was granted a mining exploitation permit by the CAR government for the Ndassima mine, an area with extensive gold deposits. The existing license was previously held by a Canadian company until it was revoked in favor of Midas.

On its website, Midas markets its mining operations, noting that "there is no problem we cannot solve" and boasting of its employees' "great experience of implementing international mining projects around the world."

Midas’ connection to the Wagner Group and Prigozhin comes through Final Leandric Rabenatoandro, a Malagasy national. Rabenatoandro, who is the reported owner and manager of Midas Ressources, is linked to Kraoma Mining, a joint venture between a Madagascar state-owned enterprise and Ferrum Mining, a Russian company reportedly controlled by Prigozhin. Kraoma Mining is believed to have been established as a quid pro quo arrangement, granting Wagner access to Madagascar's mineral resources in exchange for their interference in the country's 2018 presidential election, according to media reports.

Kharon ClearView and LensView users can explore the full, live chart directly in the Kharon platform. Click here to view.

Share this story