Small Wars Journal

Illegal Foreign Mining and US Military Strategic Interests

Fri, 10/05/2018 - 1:08am

Illegal Foreign Mining and US Strategic Interests

Geoffrey Demarest


This is a commentary on the strategic implications for the United States of foreign illegal mining. The article also touches on challenges and possibilities the phenomenon poses for police and military operations. Briefly, foreign illegal mining strengthens strategic adversaries of the United States. Countering illegal mining in order to decrease its contribution to the power of US adversaries might therefore make practical competitive sense. However, friendly government efforts to address illegal mining by applying force directly at mining source locations appears counterproductive because of the geographic proximity of legal and illegal activities. Coercive intervention at mine sites can affect innocent lives and activities to what is perhaps a diplomatically unaffordable degree. Interdiction at other discernable geographies away from mining sites (smuggling routes, conversion and transfer points), however, might effectively and affordably diminish the illicit mining trade and consequently weaken financial flows to strategic adversaries. As a corollary effect, the disruption of select mineral supply chain activities in northern South America and the Caribbean could help the US government rebalance long-term, strategically advantageous influence over a significant portion of the hydrocarbon supply producible in the region. Similar relationships between mineral movement and hydrocarbon supply may pertain elsewhere in the world.

Transporters and Transgressors

Supply chains of almost all material resources are beset at some point and time by illegal activity. Even drinking water suffers the occasional purity or source fraud, and anything taxed will be the object of tax evasions. As for the more effort-intensive extractive industries like mineral mining, debate of their social value invites consideration of public desirables such as species protection, forestland pristinity or community social concerns like child endangerment. Shameful environmental or social unpleasantness might result at the place of extraction, cultivation or processing (mining scars, accidents, water contamination, defoliation, bordellos, shantytowns, etc.) Follow-on (what some economists call “downstream”) activities then become the focus of poignant political debate precisely because a clear market value of some tangible items competes against the other more abstractly valued goods.[i] Underpinning all this is a fundamental economic fact regarding most natural resources, whether mined or harvested, legal or illegal. They become valuable as resources, realizing their profitability, only with movement (or anticipation of movement), and it is this imperative of movement that creates what we can call the geography of impunity -- the places that criminals seek, prepare and create in order to get away with what it is they are getting away with.[ii]

Legal activities associated with the exploitation of common minerals and hydrocarbons often share a portion of their physical geographic footprint with criminal activities. We can efficiently discuss this physical contiguity by dividing the illicit activities into four spatial categories. They are: 1), source location of the thing to be transported; 2), smuggling routes or corridors; 3), the areas in which an illicitly derived or smuggled thing is ‘fenced’ or converted, and; 4), the homes and safe havens of the intellectual authors, managers, leaders, financiers, etc. Together they form the geography of impunity. The middle places (2 and 3, the contraband route and converting locations) are more the focus of this article given that criminals seek, prepare and use those spaces to ‘get away with’ some tangible thing. Typically, there occurs a spatial correlation between such geography and the corruption of legal activities in the contiguous areas, including governance. The crime we call money laundering, meanwhile, can cause particular confusion in analyses of illegal mining because some minerals are sold for hard currency, but also are hard currency. Gold, for instance, is an industrial or utilitarian input, has intrinsic artistic value, and is itself a currency. The verb convert, as used above in this paragraph, can apply to gold in two directions -- the gold exchange can in some cases be seen as simultaneously a sale and a purchase by both parties. Traders holding gold can exchange gold for an illegal substance, maybe cocaine. The wholesale receiver of the cocaine will still have to deliver the drug to retail. The receivers of the gold achieve what is tantamount to immediate laundering. Traders will of course want to hide such an exchange, but even if the holders of gold were only to exchange it for another legal commodity (oil, say, or land or a paper or electronic currency) they might determine to hide the mineral’s extraction source location, that is, to maintain the geographic anonymity of the mines. They might want to do so (hide the geographic origin of a mineral) because some government is attempting to impose sanctions to deter the negative consequences of illegal mining at the extraction sites.[iii]

Owners and Thieves

Origin and processing locations often correlate to preferential ownership sensibilities and assertions, especially among persons who consider themselves original or ‘native’ to a resource’s origins, or even to a place that encompasses that place. Again, most natural resource substances are economically valuable only to the extent they are or can affordably be moved. Resultantly, the route map of a thing’s movement from its origin to its use implies potential claims of preferential ownership all along the way. In other words, whoever claims to own a place situated along the way to a thing’s perfection as a ‘resource’ is positioned and often disposed to call the thing ‘theirs’ and demand as much of a toll for its movement as they predict the market for the thing will bear. Other men will challenge those ownership claims, and they could hail from anywhere along the route of trade or beyond. They could also be strategic actors. After all, piracy along the Barbary Coast is a legendary impetus for American strategic military development and expression; the US Navy exists in great measure because, A - transportation turns a potential resource into a digested resource and B - some annoying highway robber always seems to want a slice of the profits. Regardless, the movement of a resource thing to its points of use remains imperative to its existence as an economic resource. How much violent stress that movement can take will have a close positive relationship to the differential in its market value at the places of its origin and the places of its exchange or use. The greater that price differential, the greater potential violent stress.

Organizers and Extortionists

Typically, miners take unpermitted, artisanal, or informally extracted ore to a basic processing point near the mine where it can be crushed, sifted and perhaps undergo initial chemical treatment depending on the extraction methods and geologic nature of the ore. The ore might be assayed close to the mine site, or perhaps transported some distance to a less exposed site. Only a short time after an informal mine is producing, miners and processors will likely find themselves the objects of ‘organizing’. That organizing might be presented to the miner in the form of an offer of protection against claim jumpers. Miners might come to pay a fee, dues, vaccination charge, or tax, but whatever the euphemism, the payment might also be sweetened with a financial loan to mechanize and increase production. The protection, of course, means protection from the organizers themselves, and the loans are typically calculated to be unpayable. Once such debt traps are set, organizers can more efficiently enforce the political and organizational loyalties of the miners. The miners’ land claims may even enjoy some degree of perfection in governmental property records, records that can typically end up consigned under color of law to front organizations of the organizers’ gangs.

After sifted or partially processed ore is carried to a gang-controlled assayer who weighs it and pays the miners, other gang employees or contractors move the gold over a controlled route to a point of further refinement.[iv] It would then be moved again (if gold, perhaps as bullion) by other employees of the gang, to a secure building in a coastal embarkation town, such as Cumaná. In other parts of Latin America in centuries past this building might have been called the tesoro, casa de moneda, or aduana, (royal treasury, mint or customs building). Today, the same functions occur, but with less transparency. In that building consignments will be made, gold divided, and destinations determined, perhaps first being shipped to Trinidad & Tobago, then maybe to another Caribbean country. It may be exchanged for another substance, held as reserves, or shipped for sale abroad. In the latter case, by the time it gets to, say, Miami, it will have arrived from a firm with a color of accounting legitimacy.[v] The gold bullion or perhaps coin will have been sold legally in Miami for dollars, which can be routed back to Venezuela or to places from which Euros or other currencies were originally sent. Some of this can be done electronically, but at some point, physical bills may have to be made to disappear into the market (casinos, restaurants, land offices, etc.) or into national banking systems (Chinese, Russian, Iranian?). Many among the Bolivarian nomenclatura loyalists and gang/regime hierarchy have their own overseas bank accounts.[vi] This can make it more convenient and efficient for nucleus leadership to reward senior party members and apparatchiks for their loyalty, and correspondingly harder for law enforcement agencies to uncover and prove ill-gotten gains.

For all the potentially low dealing mentioned above, and irrespective of any mining illegality, gold is itself in few places illegal. It is the defiance of standards in its extraction, purifying and assaying that is illegal. These illegalities are rarely within the purview of military forces, and often not within the scope of aggressive police action. They are more often subject to inspection regimes, fines, and civil lawsuits. Cocaine, conversely, is itself almost everywhere illegal to grow, move, store, sell or possess, including for recreational use.[vii] In Northern South America, the supply chains of gold and cocaine, one legal and durable and the other an illegal consumable, are interwoven.[viii] We discover part of that interweave in the opportunity gold offers as a money laundering and fencing mechanism for cocaine traffickers.

Money Launderers

Given a socio-political environment in which authorities are already corrupted or directly participant in criminal activity, a cocaine for gold exchange might work as follows: In a casa de moneda in Venezuela, clerks might exchange gold from informal artisanal or completely illegal mines in Venezuela, Colombia or farther, pay some of the miners, processors, smugglers and accountants in cryptocurrency, and arrange accounting for the payment of higher level bribes in physical dollars, euros etc. The origins of the paper bills may be drug sales or other, licit money exchanges, but the bills themselves need not arrive at that same building (though they might). Some of the accountancy can be done in cryptocurrency. The value of domestically produced oil could also be accounted for in the cryptocurrency, credited for instance to a Russian or Chinese lines. These being exceptional times, the Venezuelan government oil company (PDVSA) might have to buy oil on the international market in order to ‘sell’ to the Cubans at a subsidized rate.[ix] The Cubans might pay for it in kind, perhaps in the form of doctors, social workers, personal security personnel or intelligence and military advisors. The value of the services can be credited in the cryptocurrency books. Meanwhile, the Bolivarians, owing considerable billions of dollars’ worth of something to Chinese and Russian interests, can work off those debts, as reflected in the cryptobooks, by shipping oil (or the cocaine dollars or Euros used to buy gold and other minerals) to Russia or China. They could also ship a portion of the minerals. The cryptocurrency provides a common base of exchange and transparency of accounts within the circle of launderers. The cryptocurrency is ‘backed’ by gold, other minerals or oil for those major players within the system. It can also be backed by other hard currencies obtained in the drug trade or in some cases, directly by drugs. Interest owed to a participant for past loans can be paid and debts satisfied flexibly within the closed system. Tracing by outside investigators of specific cash or gold amounts to specific transactions would be difficult.

Combiners of the Forms of Struggle

Words such as ‘under-regulated’, ‘informal’ and ‘artisanal’ represent concepts that can confound efforts to assert the rule of law as to mining.[x] In 2016, a Colombian High Court ruled that county-level communities, through means of a popular vote, could prohibit certain natural resource exploration and extraction. Cajamarca, Tolima was one of the first communities to take such a step.[xi] Cajamarca was home of a large gold mining operation run by the AngloGold Ashanti Corporation, which is headquartered in South Africa.[xii] The Cajamarcunos voted almost 98% to less than 2% to shut down the operations.[xiii] AngloGold Ashanti’s operations indeed ended, which emboldened activists to attempt the same in other counties. Recently, for instance, in El Peñón County in Santander Department, the local government held a popular consult which voted to disallow a full range of exploration and extraction operations. The intention, ostensibly at least, was to favor an economy of agriculture and tourism. El Peñón (which translates to ‘crag’) is a beautiful mountainous place, so the preference for a pastoral, touristic future is hardly an unreasonable fantasy. Critics argued, so far unsuccessfully, that locally determined total prohibitions of resource extraction activities are unconstitutional, given that underground resources are said to be the patrimony of the country as a whole.[xiv] The attractiveness to local populations of prohibitions on mining was also advanced as a consequence of presidential decision-making. Formerly, royalties from hydrocarbon and hard mineral extraction were returned from the central government to extraction counties at a highly favorable percentage, sixty or so counties reportedly getting back ninety-five percent of the royalties.[xv] On taking office in 2010, President Santos began to reform the legal and administrative regime such that royalties would be spread to most of the country’s 1,100 counties. Extractive counties, in other words, lost a financial preference that had made unwanted environmental consequences of extractive industries more sufferable. Critics also argued that some of the consults were promoted on the basis of false arguments and often under the influence of coercive bidding from armed guerrillas.[xvi] The 98% vote in Cajamarca is itself suspect as a bit too perfect. Correspondingly, El Peñón may present a case-study for our consideration of a security challenge created by a mixture of related, not so innocent phenomena. Some towns, perhaps including the seat of El Peñón county, are near or even hosts to smuggling routes. Such geographic intimacy with smuggling exposes a community to violent gangs, including powerful guerrilla hybrids such as the ELN, FARC, or one of the lesser-known criminal smuggling organizations.[xvii] These gangs tend strongly to be in a kind of mutually beneficial association with the region’s Bolivarian hierarchy, that is to say, with the transnational political-governmental movement of the Marxist-styled left.[xviii] In El Peñón as in Cajamarca, the local consults and attendant marches may have been promoted by pro-Bolivarians.

Often, after a community nixes legal extractive industry in their territory, the gangs go on to encourage artisanal or informal mining operations, organizing the miners. The gangs control the claims, assaying and movement of the product. Informal or artisanal mining can result in loss of government income, violation of safety and labor law preferences, and environmental deprivation that can be worse than with large commercially legalized operations. Among other ills is the overall fiscal and strategic strengthening of the criminal hierarchy. The principal hierarchy benefitted by illegal and informal mining activities in Northern South America is that of the Bolivarians most closely associated with the PSUV and the PCC.[xix]

The strategic identities of the actors may have considerable impact on outcomes for local communities. We can profitably speculate how the balance of equities might have been different had the major international mining firm invested at Cajamarca been Chinese instead of South African. The difference probably would have manifested in the greater number of ways in which the Chinese could have influenced Colombian governments at all levels; or perhaps the Chinese might have exerted a different influence over the Bolivarian apparatuses, including the non-governmental interest groups actively engaged on the ground. In any case, were the Cajamarcunos, indifferent to the nationality of the mining company, to have denied a Chinese formal mining operation, the Chinese would still stand to be enriched from the illicit artisanal or informal mining. The Bolivarians are in many billions of dollars in debt to the Chinese, and so the profitability of the Bolivarian mineral enterprise, legal or not, might promise some return on investment for the Chinese.


Law enforcement, human rights and environmental protection organizations lament improprieties in natural resource extraction, particularly illegal mining. What they often find is mixtures of criminal with legal activities.  Defense and security observers should note that the mining in Latin America also often entails the orchestration of the means of struggle, that is to say, activities willfully coordinated by organizations that, along with their criminality, are ideologically and geopolitically motivated. Such orchestration trends to the strategic disadvantage of the United States and to the advantage of United States’ adversaries.

For a mined substance, it is only through transport that its inchoate condition of ‘valuable resource’ is fulfilled. Illegal mining activity includes the source, movement route and fencing or conversion locations. These categories encompass most of the geography of impunity. As an operational planning question for those who might be tasked to disrupt an illegal mining enterprise, the mine location themselves may be least attractive as decisive geographic targets. While the homes or safe houses of the criminal bosses might seem optimal, they may be hardest to precisely fix and access, have little spatial relationship to the mining activities, and be legalistically well armored. In between the mine site and the boss’ homes, however, are the smuggling routes and fencing or converting locations. These features generally have spatial signatures that are difficult for criminal entrepreneurs to keep hidden, and are often physically accessible due to their transportation nature.

In northern South America, the Bolivarians, that is, leaders of the PCC, PSUV, ELN, FARC and lesser associates and operatives, impel and control a significant portion of the illegal mining gambit. All of these organizations are expressly anti-American. They are also connected through debt and common geopolitical perspective to Russian, Chinese, Iranian and other interests generally considered adversarial by the United States government. The Bolivarians willfully mix the product of their illegal mineral flows with other finance streams including from cocaine and oil. Greater United States influence over illicit mineral movement in South America would likely entail coincidental benefit for the United States in terms of influence over South American hydrocarbon supply activities. Similar relationships between mineral movement and hydrocarbon supply may pertain elsewhere in the world.

The observations, opinions and assertions expressed in this article are those of the author Geoffrey Demarest, edited, and do not represent the official policy or position of the Foreign Military Studies Office, the Department of the Army, Department of Defense, the U.S. Government or any other part of the U.S. Government.

End Notes

[i]  Gold is but one such thing; there are many others.  Ignacio Gómez, “Colombia’s black-market coltan tied to drug traffickers, paramilitaries,” International Consortium of Investigative Journalists, 4 March 2012,

[ii] In some cases, infrastructure or people can be moved to the potential resource.  Gravity, for instance, is a resource for a ski area or for a hydroelectric plant.  These are not integral to the present analysis because geographic anonymity is rarely a goal or possibility, and the lines of communication are rarely contiguous with smuggling routes.

[iii] While ‘blood diamonds’ are famous in Africa, emeralds are the gem stone of criminal lore in Colombia.  See, for instance, Justice Editors, “¿Mafias en las esmeraldas? (Mafias in Emeralds?),” El Espectador, 20 January 2010, “Emerald men in Boyaca accuse ‘narcos’ of moving in on the business to launder money …The marriage between the narcotrafficker and the black market for emeralds was one of the great detonators of violence in the decade of the 80s. …Also known as ‘El Mexicano’, [José Gonzalo] Rodríguez Gacha rose in the emerald business in the decade of the 70s and 80s at the right hand of Gilberto Molina, the first Emerald Czar in Colombia, who he would assassinate in 1989.”  Ibid. (translated by Demarest)

[iv]‘Yes, I’m coming from the mine,’ the man says, the weight of the basket preventing him from looking up at strangers he’s encountered on the trail, inside Puinawai National Park. …The miner has little time to talk; the drop-off point for his ore is still miles away, outside the park.” Ignacio Gómez, “Colombia’s black-market coltan…” Ibid.

[v] On this point see generally, Jim Wyss and Kyra Gurney, “Dirty gold is the new cocaine in Colombia — and it’s just as bloody,” Miami Herald.

[vi] Leaders of the Marxism-inspired Partido Comunista de Cuba (Communist Party of Cuba, or PCC) and the Partido Socialista Unido de Venezuela (United Socialist Party of Venezuela, or PSUV) formally style themselves as “Bolivarian.” Exorbitant spending by the Bolivarian elite outside of Venezuela is widely reported and not admired by many other exiled Venezuelans. As examples, see, Editors and Joaquín Gil and José María Irujo, “La regalada vida de los boliburgueses chavistas en España: 10 millones en lujo (The unearned life of the chavist boliburgueses in Spain: 10 million in luxury),” Periodista Digital and El País, 15 December 2017,; Ana Alonso, “Chavistas venezolanos y condenadamente ricos, boliburgueses S. A. (Chavist Venezuelans and ” El Independiente, 6 August2017,; Venezuela Noticia, “Boliburgueses Venezolanos esconden sus fortunas en Miami (Venezuelan Boliburgueses hide their fortunes in Miami),” Youtube, 25 May 2017,; Editors, “Los Boliburgueses de Venezuela,” Mesa Redonda Contracomunista, 6 May 2013,

[vii] A common argument in defense of South American coca cultivation regards indigenous peoples, workers and campesinos who chew the coca leaf for endurance at high altitude and in relation to certain social gatherings, rites of passage, etc. There are, however, numerous species of the coca plant, several suitable for leaf chewing and others for extensive cultivation for the processing of cocaine for export. See generally, Jorge Hurtado G. and Silva B. Sdenka. The Coca Museum: English Language Guide. La Paz: Museo de la Coca, 1997.

[viii] Brenda Fiegel, “Private Jets as a Viable Option for Trans-Atlantic Cocaine Shipments,” OE Watch, May 2018, p35,

[ix] See, Marianna Párraga and Jeanne Liendo, “Venezuela compra petróleo extranjero para subsidiar a Cuba (Venezuela buys foreign oil to subsidize Cuba),” Revista Inteligencia Petrolera (also citing Reuters), 16 May 2018,

[x] Philippe Dozolme, “What Is Illegal Mining and How Significant Is It?” The Balance, 5 June 2017,

[xi] There is also a northern Peruvian department of Cajamarca which also suffers illegal mining and many of the same attendant political and security challenges.  See Editors, “Minería ilegal: Aramayo suspende trámite de polémico proyecto (Illegal Mining: Aramayo suspends the [legislative] process of the controversial bill),” El Comercio, 8 May 2017.

[xii] Editors, “En este municipio de Santander no se podrán realizar obras de minería”, 5 April 2018,

[xiii] Fabio Arenas Jaimes, “Contundente rechazo a minería en Cajamarca (Overwhelming rejection of mining in Cajamarca)” El Tiempo, 27 March 2017,; Editors, “Mina La Colosa” in “Cajamarca (Tolima),” Wikipedia, la encyclopedia libre, accessed 25 April 2018,

[xiv] Milton Fernando Montoya, “La minería ilegal, la principal amenaza que enfrenta el estado (Illegal mining, the principal threat confronting the state),” Semana, 9 February 2017,

[xv] See Juanita León, “Las cinco piezas que Santos mueve con la Ley de Regalías (The five pieces Santos is moving with the Royalties Law),” La Silla Vacilla, 1 September 2010,

[xvi] Editors, “Ataque de las Farc en La Línea deja tres policías heridos (Attack by the FARC in La Línea leaves three policemen wounded),” El Paí and COLPRENSA,  2 June 2011,; Tolima Editor, “Farc bloquean vías y atacan torre eléctrica en Cajamarca [Tolima] (FARC block roadways and attack electric tower in Cajamarca [Tolima],” El Tiempo, 11 November 2014,; Alaluzpubica, “Farc estarían detrás de amenazas y ataques contra AngloGold in Cajamarca (The FARC is behind the threats and attacks against AngloGold in Cajamarca),, 27 November 2014,

[xvii] ELN is the abbreviation of Ejército de Liberación Nacional (National Liberation Army) and FARC of the Fuerzas Armadas Revolucionarias de Colombia alternatively Fuerzas Armadas Revolucionarias de Colombia -Ejército del Pueblo (Revolutionary Armed Forces of Colombia, the People’s Army), both of which are on the U.S. State Department list of terrorist organizations. FARC recently gained a second derivation as a legal Colombian political party, the Fuerza Alternativa Revolucionaria del Común (Common Alternative Revolutionary Force).

[xviii] See, for instance, Sabrina Martín, “Culpan al ELN por masacre de 20 mineros en Venezuela (ELN blamed for the massacre of 20 miners in Venezuela),” Panam Post, 10 May 2018,; Kassandra Montenegro, “El Contrabando hacia Colombia que desangra a Venezuela (the contraband to Colombia that is bleeding Venezuela),”, 8 April 2018,; “¡EL GRAN NEGOCIO DE LA GNB! Así es el contrabando de alimentos, efectivo y oro hacia Colombia (The Big Business of the GNB! Thus is the smuggling of foodstuffs, cash and gold toward Colombia),” Dolartoday 3 April 2018, “Observed in a video ( is how a truck with gas cans passes without problems by the ‘El Rabito’ control point along the Caribe trunk road, from Maricaibo to Colombia. This repeats itself on a daily basis thanks to the corruption of the border military officials, who receive large sums of money for allowing the passage of smugglers.” Ibid.

[xix] Douglas Farah, Transnational Organized Crime, Terrorism, and Criminalized States in Latin America: An Emerging Tier-One National Security Priority, Strategic Studies Institute (Carlisle: U S. Army War College, 2012).

Categories: national security

About the Author(s)

Geoffrey Demarest is a researcher in the US Army's Foreign Military Studies Office at Ft. Leavenworth, Kansas. He holds a JD and a PhD in International Studies from the University of Denver, and a PhD in Geography from the University of Kansas.  He is a graduate of the US Army War College at Carlisle Barracks, Pennsylvania, and of the School of the Americas at Ft. Benning, Georgia. Demarest's latest book is titled Winning Irregular War.