THE ROLE OF THE RUSTENBURG DIAMOND AND GOLD BRANCH

The Rustenburg Diamond and Gold Branch, which is situated at Phokeng approximately 20 kilometres from Rustenburg, is responsible for policing the major part of South Africa’s PGM-producing areas. The large PGM producers, namely Amplats, Implats and Lonmin, as well as a few small companies, operate about 30 shafts and six plants in this area. The jurisdiction of the Rustenburg Branch covers an area of approximately 20 000 square kilometres. It stretches as far as the Botswana border and includes three border posts. In addition, and as a result of the fact that the nearest Diamond and Gold Branch to the north of Rustenburg is situated at Pietersburg, members of the Rustenburg Branch are frequently required to work in a 10 000 square kilometre area in the Northern Province. Their reaction time to attend to incidents of theft in large parts of the Northern Province, for example in Thabazimbi, is much quicker than that of members of the Pietersburg Diamond and Gold Branch.

The now disbanded Bophuthatswana Diamond and Gold Branch formerly used the facilities that now house the Rustenburg Branch at Phokeng. From a departmental point of view, the use of such existing facilities is probably based on financial reasons. From an effective policing point of view, the optimum location for the Branch would be the town of Rustenburg. It is much closer to the platinum shafts and plants than Phokeng. In addition, it must be borne in mind that the movements of members of the Branch are much easier to monitor at the relatively isolated location of Phokeng than would be the case in Rustenburg. When sophisticated organised criminal groups are involved in the theft of PGMs, it has to be assumed that the movements of investigators will occasionally be monitored in order to find out when they are out of their offices, where they are travelling to and in which car. While this could also happen in Rustenburg, it becomes more difficult to do so in a town where there are significant movements of people and vehicles and where branch members may experience a greater degree of anonymity. What needs to be explored by the platinum-mining sector and the police is whether, through a co-operative effort, a relocation to premises in Rustenburg is possible.

During 1998, the Rustenburg Branch had ten investigators on its staff. By 1999, the staff complement had been reduced to six investigators. They have to do their own administrative work, as no administrative staff is available to attend to it. As a result, the Branch no longer has the capacity to follow up all the information that it receives. Valuable information and crime intelligence are sometimes lost because of the unavailability of investigators to follow up on such leads. Rustenburg Diamond and Gold Branch members are constantly engaged in crisis management and ‘fire-fighting’ exercises rather than with proactive initiatives to address the theft of PGMs. Lack of time and personnel also prevents the proper training of those investigators who lack experience.

Corruption also appears to be a problem in the Rustenburg Branch. According to mine security personnel, dockets can be bought for as little as R1 000.13 It has also happened that sources from within the police have warned syndicates of impending raids, thereby rendering such raids ineffective.

The Rustenburg district is a well-known transit area for the smuggling of gold and diamonds to and from Botswana and Angola. As a result, members of the Rustenburg Branch are engaged from time to time in joint operations that target non-PGM thefts such as gold and diamonds.

Figure 15 sets out some Rustenburg Branch statistics relating to the years 1997, 1998, and 1999. Statistics relating to seizures of unwrought gold and stolen diamonds have been omitted.

The above statistics indicate an increase in seizures of PGMs during 1998, both in volume and value. However, a noticeable decline appears during 1999. Figures 16 and 17 below provide graphic illustrations of these trends.

The decline of seizures during 1999 occurred at a time when the number of dockets opened for prosecution, and the number of files opened for the investigation of suspects, increased significantly. During 1998, the Rustenburg Branch opened 289 dockets and files, while this increased to 348 in 1999. These statistics suggest a significant increase in the investigative workload of the Branch but a declining success rate when measured against the seizures of PGMs. The statistics relating to dockets and files that follow do not relate exclusively to thefts of PGMs, but include cases relating to the theft of unwrought gold and diamonds. However, the overwhelming majority of dockets and files opened relate to PGMs.

Investigators appear to have difficulty in investigating the increasing number of dockets and files to a successful conclusion. There are just not enough heads and hands available to do so. The drop in the number of investigators available to the Rustenburg Branch (from ten in 1998 to six in 1999) is therefore the most likely explanation for this. The negative consequence for the platinum-mining sector is that the perception of a low-risk environment for PGM thieves is strengthened and that more syndicates are therefore likely to be attracted to it. Bearing in mind South Africa’s large reserves and the optimistic forecasts for PGMs on the international market, it must be expected that criminal organisations will increasingly turn their attention to this sector. The inadequate number of staff at the Rustenburg Diamond and Gold Branch should therefore be a matter of serious concern for both the platinum-mining sector and the police.

NATIONAL POLICE STATISTICS

The annual reports of the national head office of the Diamond and Gold Branch in Pretoria provide relevant national statistics. However, these statistics do not specifically relate to platinum or PGM thefts as a distinct category. The reports do provide a category of statistics that relate to ‘all other unwrought metals (excluding gold)’. According to police management, however, this category refers almost entirely to PGMs. Although these statistics can therefore be regarded as a fairly accurate indication of police activities relating to PGM theft, the exact composition of these statistics remains unknown. Figure 19 summarises the relevant statistics for the five years from 1994 to 1998.

Not too much weight should be attached to the figures reflecting the mass of recovered PGM material. Significant inconsistencies exist. For example, during 1997, the police recovered about 76 kilograms of PGM material valued at R1 187 368. A year later, during 1998, only about 65 kilograms were recovered but according to figure 19 it was valued at R3 764 208, more than twice the 1997 amount. The discrepancies are likely to stem from different concentrations of PGMs contained in the material that was recovered. It is also difficult to explain how the value of PGMs recovered by the police between 1995 and 1998 could have increased so significantly (figure 19) when there was a significant decline in the mass of material recovered during the same period (figure 20). The most likely explanation for this is that the PGM material recovered during 1996, 1997 and 1998, although less in mass than before, contained a considerably higher concentration of PGMs than in the previous years.

The increase in the value of PGMs recovered by the police coincides with a similar development at platinum plants. Figure 20 below indicates that, for two years after 1995, platinum mines recovered increasing values of stolen PGM material at plants. Security measures have been significantly beefed up during the past few years, particularly at plants owned by the larger mining groups. While the successes at plants suggest that improved security measures by mining companies proved to be effective, the fact that police confiscations also increased during the same period suggests that sufficient volumes of PGM material were still slipping through the mine security system to enable the police to increase their seizures outside plants.

The number of arrests by the police relating to ‘all other unwrought metals (excluding gold)’ declined slightly between 1994 and 1998. They remained more or less constant while the volumes recovered by the police declined. It therefore appears that, on average, arrested suspects had PGM material in their possession with a lower overall mass, but with a higher concentration of PGMs than before 1995.

Despite the increase in the value of seizures, police and senior mine security officials maintain that the theft of PGM concentrates continues to increase. However, they agree that the improved security measures at some plants have made it more difficult for thieves to remove PGM material from those plants. They believe that this has lead syndicates to focus more intensely on those mines and plants where security remains weak. This applies particularly to smaller mining companies.

It would assist both the industry and the police if national police statistics could reflect PGM statistics in future as a distinct category and if the police and the industry could follow a similar approach when recording the mass of PGM material recovered. A review of the manner in which such national statistics are presented will make it less difficult to identify trends accurately and therefore ease the task of developing more effective steps to combat the theft of PGMs.

PGM MINING GROUPS

Platinum production in South Africa is dominated by two groups of companies: Amplats (holding company Amplats) and Implats (holding company Impala Platinum Holdings Ltd). Amplats and Implats are the world’s largest and second largest producers of platinum, respectively. During 1998, they produced a total of about three million ounces of platinum.14 In preparing this report, both Amplats and Implats readily provided their assistance. A third important producer of platinum, Lonmin Platinum, was equally helpful.

Total PGM production in South Africa for 1998 amounted to 5.9 million ounces, 13 000 ounces more than 1997.15 It was not possible to obtain national production figures for platinum as distinct from PGMs. What is clear is that Amplats, Implats and Lonmin together produce a very high percentage of South Africa’s platinum and PGMs. Lack of more detailed information makes it difficult to attach a percentage to their total platinum or PGM production. The statistics provided in figures 21 and 22 below are based on information obtained from the above three mining groups. Even though they do not cover the entire national production of platinum and PGMs, they are as close a reflection of what is occurring in this sector as is possible.

The three mining companies have adopted different criteria in presenting statistics relating to theft and losses of PGM material. Some refer in their statistics to ‘theft of PGMs’, while others distinguish between product theft ‘at BMR’ (base metal refinery) and the value of parcels stolen or found ‘at PMR’ (precious metal refinery). Such a distinction would be very useful if all the mining groups followed it. The different ways in categorising thefts inevitably lead to different valuations being given to the mass of PGM concentrate recovered. For example, mining company X may value 12 000 grams of PGM material at about R145 000 while company Y values 12 000 grams of PGM material stolen at about R60 000. The different valuations inevitably arise because the PGM material contains different concentrations of PGMs. Such differences will occur between PGM material that is recovered at a base metal refinery and PGM material recovered at a precious metal refinery. For this reason, it would serve little purpose to refer to volumes of PGM material recovered by mines in this report. The values attached by the different mines to the volumes that were stolen, as shown in figure 21, is a more accurate reflection of potential losses that they could have incurred through theft had the theft not been discovered.

As mentioned before, the increase in the value of seizures by mine security during 1995, 1996, and 1997, as illustrated in figure 21, is probably the result of improved security measures at plants. The decrease in seizures during 1998 is difficult to explain. What is noteworthy is that all three mining groups concerned experienced a drop in seizures during 1998.

Police statistics show that, during the same year that the mining groups experienced a drop in seizures, 1998, the police recorded their highest levels of seizures in five years (figure 19). National police statistics for 1999 are not available to establish whether or not this trend continued at national level during 1999. However, the recovery statistics of the Rustenburg Diamond and Gold Branch reflect a decrease in the value of PGMs recovered during that year.

Despite the decrease in the value of seizures by mines during 1998, figure 22 shows that amounts involved continue to pose substantial threats and potential losses for the mining groups concerned.

The above figures relate to PGM material that was unlawfully removed from the normal refining process by persons who intended to use the products for their own financial benefit. The PGM material is therefore correctly referred to as stolen material, although it was largely recovered and returned to the plants.16 This means that the value of PGMs referred to in Figure 22 cannot be regarded as constituting a production loss that the PGM industry has suffered as a result of detected product theft.

The mass and value of the undetected theft of PGMs from mines and plants remain unknown. Unlike in the case of product theft of gold, there are insufficient facts and indicators available even to attempt an estimate of undetected theft of PGMs. Insufficient seizures from large PGM smugglers or syndicates have taken place to justify an estimate of the likely mass and value of stolen PGM material that is being sold on the black market. In one of the few successful investigations of a top platinum-smuggling syndicate, police recovered R2 million worth of stolen PGM material in various concentrations during 1998. The syndicate had acquired a smelter worth about R500 000 that was specifically designed for smelting PGM concentrates. Police are of the view that the PGM concentrates that were seized were earmarked for export. Even though this seizure is regarded as constituting the tip of the iceberg, it provides an insufficient basis on which make a projection of the overall value of stolen PGM material that is being smuggled on the black market in South Africa.

THE ROLE OF SYNDICATES AND INDIVIDUAL CRIMINALS 

The high-risk areas for theft are certainly not the shafts through which ore containing PGMs is brought to the surface. As mentioned before, the PGM containing particles in the ore are so minute and so widely distributed that it is hardly an economic proposition for a thief to steal such ore with the hope of profitably extracting PGMs. One ton of ore would have to be crushed into fine dust to extract approximately four grams of PGMs. Despite these odds, finely crushed ore has been offered for sale on the illicit market, albeit in very small quantities.

The high-risk areas are therefore the plants where the ore passes through the different phases of crushing, extraction and refining. Even low-grade converter matte has a black market value. Police refer to an incident where an undercover agent was offered approximately one ton of low-grade matte for sale. It appeared to originate directly from a plant. An intimate knowledge of the refining process is clearly present in many of the detected cases of theft. The high rewards for stolen PGM concentrates make the investment of time and knowledge by the smuggler worthwhile. In one case that was tried in the Rustenburg court, a 1.5 kilogram packet of PGM concentrate removed by a suspect from a base metal plant was valued at R55 502.17

Some thefts occur at the stage in the process where the base metals are removed from the converter matte. However, the activities of thieves become more intense as the refining process moves closer to its final stages. An example is the case where syndicate members contaminated a batch of platinum sponge on purpose in the final refining stage (99% pure). They anticipated that by contaminating the batch it would be rejected and returned for re-refining to a less secure area where it would be possible for them to remove and hide it unnoticed. They then removed the 41 kilogram batch, split it into different ‘parcels’, and hid it for later removal from the premises. They could do so unnoticed, as the return of this batch to the specific phase of refining was not expected in the ordinary flow of the process.

As is the case in the gold-mining sector, the so-called runners constitute the lowest level in the hierarchy of criminal operators involved in the theft of PGMs. They consist of individuals who could be miners at the mine or employees at the plant or they could be independent operators who are retrenched mine workers who no longer have any links to the mine. Some are linked to syndicates while others try to make an independent existence. They tend to be involved in the high-risk aspects of the theft such as removing the concentrate from the plant and transporting it to their syndicate connection or selling it to low-level dealers in the area. Runners who act independently tend to have a wide network of black market contacts, including illicit smelters. Some runners supply their stolen concentrate to smelters in their area who refine it for a fee. Police are aware of at least seven illegal smelting houses that operate in the Rustenburg area, some of them technically quite advanced. Mine security personnel believe that, in the West Rand area, nine illegal PGM smelters are operating. Smelters are also believed to exist on the East Rand but not much information is available about them.

The emergence of organised criminal groups (syndicates) that specialise in the theft of and illicit dealing in PGMs is a relatively new phenomenon. They appear to have established themselves during the past five to ten years. Their increasing activities in the platinum-mining sector are directly linked to the expanding production and increasing value of PGMs. Some syndicates appear to have diversified from gold to PGMs due to the latter’s increasing value and availability. According to the police, the modus operandi of PGM syndicates remain very similar to those that continue to concentrate on dealing in gold. In fact, most syndicates that focus on PGMs are also involved in the illicit dealing in gold or diamonds. Members of the Rustenburg Branch point out that they know of at least three syndicates in their area that specialise in the theft of and illicit dealing in PGM materials. These syndicates vary in size and follow no particular structure. They frequently co-operate with non-syndicate members on an ad hoc basis. Competition between the syndicates does exist and it is not uncommon for members of three different syndicates to be active in the same plant.

As a result of significant steps taken by platinum mines to improve security at plants, including measures such as high technology surveillance equipment and the use of polygraphs, syndicates have tended to focus increasingly on the weak links in the human chain in order to obtain access, information and PGM material from within plants. Although security personnel have constituted their main targets, there appear to be few persons employed in plants and refineries that are not regarded as potential recruits by syndicates. It is known that significant payments are offered to security staff and other personnel to turn a blind eye to the removal of PGM concentrates from plants. Collusion between mine personnel and syndicate members is rife and is likely to increase as PGMs become more attractive and valuable than gold. A likely consequence of improved security measures at plants and refineries is an increased focus by syndicates on those parts of the mining process where security is not yet as sophisticated. Areas where relatively low concentrate produce is found are therefore likely to become more and more attractive to syndicates in future.

Unwrought PGMs that have been through one of the illicit smelting houses are readily purchased on the illicit market for about R32 to R40 per gram. The buyers, who appear to be the link between runners and more sophisticated syndicates operating from Johannesburg or Durban, constitute the next level in the hierarchy of criminal operators. They appear to be part of middle level syndicates that tend to operate in the vicinity of the mines and plants. They in turn sell the unwrought PGMs to sophisticated buyers who have national and international links. The international market for unwrought PGMs appears to be more attractive than the South African market. Both the police and senior mine security officials are of the view that the ultimate destination is inevitably a buyer abroad rather than someone in South Africa.

The Rustenburg Diamond and Gold Branch has very little information available on these sophisticated national syndicates. They are mostly situated in Johannesburg, Durban or Lenasia and consist of people who keep their hands clean and who operate with a level of sophistication that makes it difficult for a local Diamond and Gold Branch to investigate them successfully. Police tend to arrest runners or middle level operators without succeeding to crack those syndicates at the top of the hierarchy.

The fact that the available information on the nature and activities of syndicates active in the PGM sector is very general and vague should be a cause for concern for the industry. There should be a degree of urgency for both the platinum-mining sector and the state in taking steps to improve the information base on these syndicates. Improved crime intelligence, the sharing of crime information by mines, as well as the strengthening of the relevant Diamond and Gold Branches, would constitute steps that will enable the state and the industry to develop a more accurate assessment of product theft of PGMs.