Ecuador’s dirty gold is transported to the US on commercial flights


By Fabiola Torres López / OJO PÚBLICO

While the Ecuadorian government militarizes illegal gold-mining camps to evict the small-scale miners from territories granted in concession, Guayaquil Airport is a sieve for shipments of gold of suspicious origin. After traveling to Ecuador and getting access to previously unknown records of gold exports, OjoPúblico discovered that 140 companies sent 74 tons of gold on commercial flights. The metal’s main destinations between 2011 and 2014 were US companies NTR Metals and Republic Metals Corporation. 70% of the mineral was of illicit origin or was never declared and there are indications that there have been attempts to launder some of Peru’s dirty gold through Ecuador.

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In Nambija, the golden mountain that today resembles a giant crater in the midst of the Ecuadorian Amazon, the life of its inhabitants is laden with paradoxes: finding gold here and having it in your hands means being poor. Living off mining often involves dying because of it due to the dangerous and illegal way in which the metal is extracted from the galleries. “Small-scale miners just get enough to eat. Who knows where the riches go?” says Amable Agreda, one of the survivors of the landslide that in 1993 buried 500 people in this deposit located in the province of Zamora Chinchipe, on the border with Peru.

After leaving his youth in the tunnels of Nambija, Agreda, a 60 year-old Ecuadorian, claims that nothing will take him away from there. He knows nothing about environmental emergency declarations or mining reforms. For him only one thing is certain: producing one or two grams of gold for which a middleman will pay between 25 and 50 dollars is the only way he can cover family expenses.

In Ecuador, where mining did not develop on a large scale as it did in Peru, gold production is in the hands of some 40 thousand artisanal and small-scale miners such as Amable Agreda, who for decades exploited deposits without rules or State control. But their situation changed in 2009 with the mining reform initiated by President Rafael Correa, which meant that only those miners who were registered and adjusted to the new conditions for the extraction of natural resources could work in this field. Since then, the armed forces have been destroying both the equipment and the inputs of illegal mining camps. This, however, does not prevent new ones from opening or gold of suspicious origin from leaving the country without being declared to the authorities or even less, paying royalties to the State.

After going round the centers of illegal gold production in Ecuador and reviewing the so far unknown production and export records of the metal between 2010 and 2014, OjoPúblico discovered that 140 exporters sent 74 tons of gold on commercial flights departing from Guayaquil. Their main destinations were four US companies: NTR Metals (19 tons), Republic Metals Corporation (13 tons), GoldFellow (8 tons) and MVP Imports (7 tons). 70% of this shipment, i.e. more than 50 tons of the metal, had an illegal origin because it was never declared to the Central Bank of Ecuador or the Mining Regulation and Control Agency (Arcom).

Ecuador’s Prosecutor General, however, is not investigating any companies on charges of tax fraud or money laundering from illegal mining. Its official reports of the last two years only register 23 lawsuits filed against miners for environmental offenses. It wasn’t until August 2014, that the government included the financing of illegal mining as an offense under Ecuadorian law and banned the free import and trade of mercury, whose provision is now overseen by a State company called Public Importing Company (EPI). The use of explosives is now under the control of the armed forces.

In Ecuador 229 gold mining areas have been authorized in nine provinces, but their total production does not exceed seven tons annually, according to the Mining Regulation and Control Agency (Arcom). Most of the metal is extracted by cooperatives of artisanal and small-scale miners who operate in informal conditions and are settled in five provinces: El Oro on the coast; Azuay and Zamora Chinchipe in the south (on the border with Peru); and Imbabura and Esmeraldas in the north (on the border with Colombia), where both tunnel mining and open pit mining operate.

Most of the companies responsible for collecting and exporting the gold, however, are located in Guayaquil, several kilometers from the centers of extraction. The metal is transported on commercial flights from the airport of this city and has as its main destinations US corporations. The Bonanza Group has its offices in the city. It is owned by Ecuadorian Jorge Rengel Piedra, a geologist who on account of the more than 24 tons of metal sent by his companies Expobonanza, Expausa and Compañía Minera Mollopongo, was one of the largest suppliers of NTR Metals and Republic Metals Corporation between 2011 and 2014.

Customs records reveal that Ecuador has a very high rate of under-recording gold leaving the country without certification of origin. In these records Rengel’s companies head a list of 140 exporters that fragmented the shipments of 74 tons of gold to international markets between 2010 and 2014. Over that same period, Ecuador’s Central Bank recorded only 22 tons as the country’s entire gold output.

Jorge Rengel appears as manager and shareholder of 13 companies engaged in the mining and export of minerals in Ecuador, five of which have already been dissolved, as recorded by the Superintendency of Companies, Securities and Insurance in Quito. He also owns two companies in the fishing and shrimp industries at home and two mining companies in Colombia: Torrebruma and Realmonte, with headquarters in Medellin. OjoPúblico phoned his offices in Guayaquil to request an interview about his gold exports and, although his assistant made a note of our request, we were not able to get in touch with him before press time.

In the list of 140 Ecuadorian gold exporters, the companies Elipe, Expimsum and Ecuador Goldxport also stand out due to their large shipments. The three companies were curiously dissolved in October last year after sending their cargoes of the metal.

We found out that Elipe, a subsidiary of the Canadian mining company Dynasty Metals since 1999, mined gold concessions in Portovelo and Zamora Chinchipe without complying with local regulations. According to customs records, Elipe exported six tons of the metal to the Dynasty Metals and Jhonson Mathey Ltd. corporations of Canada over the last five years. Its main shareholder was the company Sun Empire Investment Limited, based in the British Virgin Islands.

For Ecuador Goldxport, owned by the brothers Juan de Jesús, Cindy and Juan Carlos Cando Carrillo, five tons of gold are recorded as sent to NTR Metals in 2012. This family company was dissolved two years later, but Juan de Jesús, the eldest of the Cando Carrillo brothers, remains linked to the mining industry as a shareholder of Minera DMG, Compañía Supermag, Corporación Minera Rey de Oro and Aurífera Cerro Dorado.

Expimsum, constituted by Venezuelan citizen Reny Angulo Gallardo and the Ecuadorian Alex Noriega Narváez, was also dissolved after shipping nine tons of gold to NTR Metals in 2013. The list of companies also includes, although not part of the mining sector, a real estate agency called Capertone, created by siblings Xavier and Kristel Estrada Chiriboga in 2012 to send about six tons of metal to the Bravo Group LLC of Miami the following year. A similar thing occurs with businessman Eduardo Andrade Idrovo, owner of a dumper truck company, and Genaro Mera Cardoso, an electrical appliance dealer and supplier of the State, who recorded gold shipments to the United States, although it was not possible to identify their customers.

“Ecuador is experiencing an awakening in gold export”, said the Ecuadorian minister coordinator of economic policy, Patricio Rivera, at a conference with the foreign press in Carondelet Palace in June last year. The customs records analyzed by OjoPúblico prove he is right: over the last three years the volume of gold exported from Guayaquil nearly tripled and China appeared as the third destination of the metal after the United States and Switzerland.

According to these records, the unusual increase in gold shipments abroad began in 2012: 10 tons of the metal were exported that year, double the historical annual average; in 2013, about 15 tons were exported and the amount exceeded 30 tons in 2014. There is one detail, however, that Minister Rivera did not mention at the press conference: Ecuador’s Central Bank recorded as national gold production less than half of all exports in the same period, which shows that most of the metal that leaves the country is either not declared or has illegal origins.

The records to which we had access also showed that companies Amerland, Orotecno, Agriplaza and Guillermo Vásquez Jewelry Shop are among the main exporters of gold to China. Between 2013 and 2014, these four companies shipped about two tons of gold on commercial flights from Guayaquil bound for the Asian corporations Brinks Hong Kong, Kings Mark Designer, Hong Kong Huasheng Mineral Group Limited, World Master Investment and Fai Po Gem and Jew Corporation.

The growing demand for Ecuadorian gold by China was also reflected in the statistical bulletin of the Institute for the Promotion of Exports and Investments – Proecuador, which revealed that the shipments of this metal to Hong Kong increased from USD 147 thousand to USD 17 million between 2011 and 2013. This is not circumstantial; it is the result of a policy established by both governments to strengthen their trade relations and facilitate Asian investments in the mining sector, claims researcher William Sacher in his study ‘Large-scale mining in Ecuador’.

The negotiations to purchase or establish associations that ‘major’ mining companies of Chinese origin carried out with twenty ‘junior’ Canadian companies, owners of 40% of the gold and copper concessions in Ecuador (in an area larger than 400 thousand hectares), aim at this goal.

At Los Encuentros, a hidden locality in the Cordillera del Cóndor that is part of the province of Zamora Chinchipe, lies Ecuador’s largest gold deposit, discovered in 2007. It is held by the company Fortress Minerals Corp, of the Swedish Lundin Group, which is carrying out exploration work after buying the mining project from the Canadian company Kinross last year. This concession will only be mined starting in 2016, but the volume of gold exported by Ecuador has been steadily rising over the last few years.

Neither the Mining Regulation and Control Agency, nor the Central Bank or the Internal Revenue Service of this country, have given any explanation for the notorious increase in the amount of metal leaving from Guayaquil airport between 2011 and 2014. Ecuador’s Border Police, however, can provide some clues to explain it: attempts are being made to launder illegal Peruvian gold in Ecuador.

A telling incident occurred the night of March 5, 2015 in the Arenillas canton, in the province of El Oro, when the Ecuadorian border police stopped two armored vehicles that came from the border with Peru. Inside were ten private security agents armed with guns and rifles. They were protecting a shipment of 90 gold bars, valued at USD 2.5 million. When asked to identify themselves, the agents presented a waybill for the load, but could not prove the legality of its origin.

The police believed this was evidently a smuggling operation of gold from Peru, whose fate was to be mixed with Ecuadorian metal in order to be ‘legally’ exported from Guayaquil. The gold bars seized that day are now at Ecuador’s Central Bank. The carriers have been arrested.

Illegal gold, however, knows several ways into Ecuador: the Ecuadorian police has also identified the province of Esmeraldas, located on the northern border with Colombia, as another flashpoint where gold smuggling is closely linked to drug trafficking and the Revolutionary Armed Forces of Colombia (FARC). “This is a very complicated area because illegal mining there is a way of laundering the money of organized crime. There is no other explanation for extremely poor communities having dredges to produce gold”, said Jorge Montoya, Arcom coordinator, in an interview with OjoPúblico.

In 2013, Ecuador’s Ministry of the Interior declared a state of emergency for 90 days in the communities of San Lorenzo and Eloy Alfaro, in Esmeraldas, so that the Armed Forces could destroy the backhoe loaders and inputs belonging to mining communities apparently financed by the FARC. Since then more than 70 machines have been seized and 15 locations for the purchase and sale of gold in the area have been closed, but new illegal mining fronts have opened.

Military operations on this border area and other large informal gold mining camps go on all the time in Ecuador, but gold shipments without certification of origin leaving through the country’s main airport lack controls. The metal extracted by miners like Amable Agreda in dangerous conditions in the Nambija mountain has no trouble reaching its big buyers.

Travel for this research was conducted as part of “The Gold Route” a transmedia project of the Peruvian Society for Environmental Law (SPDA) and the International Union for Conservation of Nature (IUCN), in partnership with OjoPúblico.


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