Gold Rush: Organised Crime in Transition Mineral Supply Chains

The energy transition, increased defence spending and semiconductor production expansion is driving mineral demand. The International Energy Agency estimates that the market value of transition minerals, including cobalt, copper, graphite, lithium, nickel and rare earths, will reach almost $800 billion by 2040, nearly double that of 2023.

Geopolitical tensions, trade uncertainties and the geographic concentration of key mineral supply chains in China create a pressing need for states to establish secure supply chains in transition minerals, dubbed ‘the oil, steel and electricity of the 21st century’. The UK seeks to make supply chains more resilient to market shocks by strengthening ties with mineral-rich regions such as Latin America and supporting companies to diversify overseas investments.

However, price volatility, concerns around environmental, social and governance (ESG) integrity of mineral supply chains and the competitiveness of Chinese industry pose significant challenges. Certain risks have received limited attention to date, such as the prevalence of organised crime and corruption in Latin America and the ability of organised crime groups (OCGs) and other non-state armed groups (NSAGs) to swiftly adapt to changing market conditions. The expansion of organised crime into illicit gold extraction offers a cautionary tale for government and industry actors with a stake in the clean energy transition.

Going for Gold

Gold has become an integral part of OCG and NSAG business models in mineral-rich parts of Latin America. Since 2015, gold prices have more than doubled, creating strong incentives for drug trafficking organisations to diversify into gold mining to expand their profit margins. In some contexts, illegal gold exports have reportedly exceeded cocaine in profitability. Lack of traceability has also proven convenient for money laundering. Distinct typologies have emerged whereby armed actors launder drug proceeds by re-investing the cash into mining inputs such as fuel and machinery and laundering illegally sourced gold into legitimate supply chains.

OCG and NSAG diversification into gold has been facilitated by groups’ territorial control over areas where artisanal and small-scale miners (ASMs) were already prevalent. Many ASMs operate in prohibited areas without legal mining titles, and are therefore classified as ‘illegal’ miners. These miners tend to face barriers to formalisation and lack viable alternative livelihood options, leaving them few options but to operate illegally. Armed groups exploit governance vacuums by taxing ASMs – often through coercion – consolidating control over illegal gold production, in exchange providing protection from law enforcement.

This model has become common in the Amazon where OCGs and NSAGs have consolidated control in parts of Brazil, Colombia, Peru and Venezuela. In Brazil, the OCG Primeiro Comando da Capital (PCC) has provided garimpeiros (wildcat miners) operating illegally in the Yanomami Indigenous Territory (YIT) with firearms and heavy machinery, leading to clashes with security forces and attacks on Indigenous communities. Los Lobos, an Ecuadorian OCG, has attempted to replicate this model during its territorial expansion but has met resistance from local miners, resulting in deadly clashes and displacement.

Criminal infiltration into illegal gold mining stokes conflict between ASMs and multinational mining companies. Since 2021, miners allegedly associated with the Colombian OCG Ejército Gaitanista de Colombia (EGC) have taken control of about 70% of the tunnels of Colombia’s largest gold mine Buriticá – owned by a subsidiary of the Chinese Zijin Mining Group – using firearms and improvised explosive devices (IEDs), leading the company to call for a military intervention. By providing arms and stoking antagonism, the involvement of OCGs in such disputes escalates potential for violence. On 2 May, for example, increasingly organised gold mining gangs in Peru’s La Libertad department attacked mining installations owned by the Poderosa mining company and kidnapped and killed 13 of its workers.

Aside from fuelling conflict and financing armed groups, increasingly organised illegal gold mining causes considerable harm to the environment and public health. The use of heavy machinery and toxic chemicals such as mercury pollutes rivers, disrupting aquatic ecosystems and contaminating water and food sources used by local communities. Furthermore, land conversion for mining drives deforestation, leading to biodiversity loss and accelerating climate change by disrupting the Amazon’s critical role as a carbon sink.

A Smooth Transition

While gold remains the primary mining interest for many Latin American OCGs and NSAGs, evidence suggests they are increasingly diversifying into other minerals, responding quickly to new opportunities.

In April 2025, Colombian authorities seized 49 tonnes of coltan and tin extracted illegally from the departments of Guainía and Vichada and allegedly destined for China, through Colombia’s port of Cartagena. The illegal extraction of coltan – used in most electronics and cars – has become commonplace in the National Reserve of Puinawai in Guainía, driving deforestation. NSAGs active in the area – including the Ejército de Liberación Nacional (ELN) and Frente Acacio Medina of the dissident Fuerzas Armadas Revolucionarias de Colombia (FARC) – have diversified from gold, replicating the modus operandi of extorting ASMs and laundering illicit coltan into legitimate global supply chains.

In Brazil’s YIT, OCGs have incorporated minerals such as copper, manganese and cassiterite (a tin ore) into their portfolios since 2021. Cassiterite – cheaper but more abundant than gold, used in coatings for solar panels and lithium-ion batteries and solder for electronics – is reportedly being used to finance inputs for gold production. In 2023, the Brazilian authorities stated that cassiterite illegally extracted from the reserve had been sold to a major tin producer that had failed to verify the mineral’s origin and exported the processed final product to multinational clients. Cassiterite and other minerals are subject to fewer regulatory controls than gold in Brazil, creating opportunities for fraud and supply chain contamination.

As OCGs expand into transition minerals, tensions between ASMs and mining companies are likely to increase. In Peru, Las Bambas copper mine – owned by Chinese state-owned company MMG Ltd – has filed over 100 legal complaints against ASMs for allegedly mining within its concession and stealing copper. Although OCGs are not currently driving this activity, such disputes illustrate how their expansion into copper could fuel violent conflict between legitimate investors and ASMs, in the same way as the case of the EGC in Colombia.

Mitigating Supply Chain Risks

The expansion of organised crime into transition mineral extraction in Latin America indicates a growing risk to mining industry, challenging supply chain integrity and investment stability. The UK government, an important finance and trading hub for mining, has expressed intent to lead efforts in improving ESG standards for mineral supply chains, but has failed to meaningfully leverage its position.

Gold should serve as a cautionary precedent for weak ESG standards. OCG and NSAG expansion into gold has increased the resilience of these groups and driven violent conflict and environmental degradation in local communities. Foreign companies certified by the London Bullion Market as high-quality dealers have been implicated in illegal sourcing, indicating the prevailing challenges and limitations regarding efforts to encourage responsible sourcing. Transition minerals risk following the same trajectory, given that some minerals – as demonstrated by cassiterite – face even fewer due diligence checks, and experience the same traceability issues.

To mitigate this risk, policy and industry stakeholders must prepare by evaluating which minerals are most exposed to organised crime risk and associated harms, implementing rigorous responsible sourcing practices and anticipating risk of social conflict where concessions overlap with ASM communities and OCG or NSAG presence. Further research and greater interdisciplinary collaboration between policymakers, industry stakeholders, and civil society, is required to fill important knowledge gaps and identify ways to safeguard strategic supply chains.

© RUSI, 2025.

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