5.8 C
Saturday, December 23, 2023

Gold mined by Uyghurs forced to work for Chinese firms ends up in Western investments and products, report shows

December 24, 2022, was a normal day for the 40 men digging gold from the ground in northwestern China’s Yining County, roughly 2,000 miles west of Beijing, near the border with Kazakhstan.

China has been the world’s largest gold producer since 2007, and Yining, known as Ghulja by the majority of its Uyghur population, China’s mostly Muslim Turkic minority, sits in the Xinjiang Uyghur Autonomous Region, an area the size of Alaska.

The gold produced in Xinjiang is bought around the world as a value investment and is used in jewelry and component parts in computers and mobile phones that were being wrapped as Christmas gifts that day, half a world away.

Suddenly, above the din of the heavy mining equipment, the 40 miners — cogs in a huge, wealth-producing machine — heard a deafening roar when the mine collapsed and buried them under tons of rubble. Although 22 miners were rescued, 18, including a few teenagers, could not be found. Most, if not all, of the miners were Uyghurs.

A probe into the disaster ↗ at the Western Region Gold Mine at Qarayaghach showed that two weeks after the accident, local officials had not found the 18 missing miners. They were presumed dead and appeared only as unnamed statistics in the incident report, which blamed the accident on “discharge of mining waste, or slag, into an open pit in violation of the mine’s design.”

Four of China’s 10 largest gold companies are in Xinjiang, where, since 2016, the Chinese Communist Party leadership has carried out a campaign to crack down on what it says are terrorists and to alleviate poverty through providing work, ordering the detention, imprisonment, and assignment to labor of more than 1 million Uyghurs and other Turkic people.

Xinjiang is home to 50 active gold mines, 303 gold mining licenses, and 253 prospecting rights. The four biggest miners are Shandong Gold Group, the second-largest gold company in China; Lingbao Gold Group Company; Zhaojin Mining Industry Company; and Zijin Mining Group. These companies are both state-owned and publicly traded. Their shares and their products can appear in the portfolios of global investors.

A report on October 11, 2023, by the Center for Advanced Defense Studies (C4ADS), a Washington, D.C., think tank, revealed the extent to which gold produced in China is mined by Uyghurs working in conditions akin to slavery.

The report, “Fractured Veins: The World’s Reliance on Minerals From the Uyghur Region ↗,” unlocked “what used to be a black box,” surrounding the workings of China’s largest gold companies, Laura Murphy, a professor of human rights and contemporary slavery at Sheffield Hallam University in England, told The China Project.

Xinjiang is rich in raw materials such as cotton ↗ used in textiles made into clothing ↗ sold in the West, and rare minerals used in the solar ↗ power and auto industries ↗.

The C4ADS probe into forced Uyghur labor in China’s gold mines was published in the same week as a report by The New Yorker on Uyghurs forcibly recruited into China’s seafood industry ↗.

“Against a backdrop of suppressed information and restricted access, the alarming indications of Uyghur forced labor in East Turkistan’s mining and refining industries are a stark reminder that no sector is immune to the stain of coerced labor,” Rushan Abbas, the executive director of the Campaign for Uyghurs, a nonprofit advocacy group based in Washington, D.C., told The China Project. “I am heartened to see more coverage of this aspect of Uyghur forced labor.”

In its report on Chinese gold mining, C4ADS found that global supply chains that use Chinese gold, and investments funds linked to gold mined in China, are at “high risk” of being tarnished by human rights violations against Uyghurs. By failing to declare Xinjiang a “conflict zone,” lawmakers around the world are aiding and abetting forced labor, the report said.

“Companies are loath to publicize supply chain information or to invest in developing the capacity to do so when there is no legal incentive,” Mishel Kondi, a C4ADS analyst, told The China Project. “It’s really important to call on governments to make relevant changes.”

Looking at Chinese mining license data from the Ministry of Land and Natural Resources, the C4ADS report authors discovered 1,467 active mines and 1,683 prospecting sites in Xinjiang mining 113 different minerals. Using publicly available mining licenses and corporate data, the C4ADS report is the first to focus on gold mining in Xinjiang and its role in enslaving Uyghurs, and the first to connect mines across Xinjiang to their ultimate owners.

Major investment portfolios, including some listed on the Shanghai, Shenzhen, and Hong Kong stock exchanges, were found by C4ADS to be dealing in gold mined in China.

“One of the key findings of our report is that regulating bodies fail to consider the Uyghur region, where forced labor is rampant as a conflict zone. Because gold is considered a ‘conflict mineral,’ if anything, the standards should be higher,” Kondi said.

Among the industry bodies turning a blind eye to forced labor in gold mining in China by giving mining companies a clean bill of health are the London Bullion Market Association (LBMA), the world’s leading standard-setting body for wholesale precious metals, the Responsible Minerals Initiative (RMI), and the World Gold Council, the C4ADS report said.

These bodies answer to standards set by the Organization for Economic Co-operation and Development, whose 38 government members meet in Paris to set rules to stimulate world economic development. The OECD does not classify Xinjiang as a conflict zone, Kondi said, and neither does the U.S. Securities and Exchange Commission, an oversight that allows companies whose shares are listed on American markets to evade required declarations that they are not aiding and abetting forced labor.

The C4ADS report cites 420 Western companies linked to gold mined in Xinjiang, including big-name brands such as Dell, Google, Kodak, Nokia, Johnson & Johnson, and Sony. Some of them are direct recipients of gold itself, but many others are linked through investments, the report said.

“While goods produced in the Uyghur region are prohibited from entering U.S. markets, investment in companies registered in or manufacturing in the Uyghur region is not,” the C4ADS report said.

“Many Chinese mining companies with mines in [Xinjiang] are publicly traded, meaning that international investors may be unwittingly putting their money into companies complicit in the repression and exploitation of the Uyghur region through investment products like index funds,” the report said.

Investment fund portfolios include links to companies tainted by forced Uyghur labor, including some with headquarters in Xinjiang. Despite efforts by Chinese companies to wash their corporate image, the C4ADS report showed “these companies still fall far short of global standards on transparency and workers’ rights.”

Western Region Gold, whose Yili mine collapsed in December 2022, was included in index funds offered between July 2022 and July 2023 by Blackstone, Dimensional Fund Advisors, State Street Global Advisors, and Vanguard.

Chinese state-owned Xinjiang Nonferrous Metal Industry Group controls a sprawling network of mines, including many of the major gold mines in the region via its subsidiary, Western Region Gold.

Western Region Gold was penalized multiple times for infringements between 2016 and 2018, seven of which resulted in miners’ deaths. In 2021, there were three fines for worker safety issues.

The December 2022 fatal mine collapse at the Western Region Gold Mine in Yining “illustrates the toxic convergence of human rights abuses, environmental crime, and lax safety standards,” the C4ADS report said.

Mineral extraction in Xinjiang is fraught with safety hazards, negligence, and lack of accountability, the C4ADS report said, adding that a rising number of large mining companies with many subsidiaries scattered around the region increases the chances of human rights issues.

According to Fairtrade International, a nonprofit based in Bonn, Germany, which promotes ethical working conditions for farmers and laborers worldwide, unregulated gold mines ↗ are “hazardous places” that can contaminate local water supplies and where “miners working in structurally insecure pits, without protective gear and using harmful chemicals such as mercury to recover gold,” can suffer severe health problems.

A clean certification from the LBMA, RMI, or the World Gold Council, all of which have passed the Chinese “offending” companies with flying colors, is no guarantee a company is innocent of forced labor.

“There are practically no safeguards to prevent forced-labor-tainted gold from getting to consumers,” said Murphy at Sheffield Hallam, where the Forced Labor Lab posts regular updates on China’s supply chain violations ↗. “To the contrary, many of them seem to hide more than they reveal.”

The LBMA did not respond to a request for comment for this article.

Other well-known global finance firms such as Fidelity, WisdomTree, USAA, and JPMorgan Chase continue to offer investment funds that include Chinese companies that have mines in Xinjiang and are clear risk indicators for forced labor or forced assimilation, the C4ADS report said.

“International companies should take care not to trade [Xinjiang] gold if participating in the Shanghai Gold Exchange,” the report said.

The C4ADS report details cooperation between the mining companies and the Chinese government in facilitating the transfer of laborers mandated by the CCP as it tried to assimilate Uyghur culture in Xinjiang.

Scholars have observed that China’s state-imposed forced labor has taken two forms since authorities began releasing Uyghurs and Turkic peoples from the so-called reeducation camps begun in 2016. After release, many Uyghurs were sent into forced work placements within the camps, elsewhere in Xinjiang, or further afield in China’s interior.

In a simultaneous but separate practice, Chinese government authorities promoting “poverty alleviation” classified 10% of the Uyghur region’s population as “surplus rural workers,” relocating them to labor-intensive industries such as picking and processing cotton and tomatoes and manufacturing solar panels.

An official white paper ↗ published in 2020 justified the state’s “proactive labor and employment practices” to “continuously improve the peoples’ material and cultural lives” and “guarantee and develop their human rights in every field.”

Of the average 2.76 million people tapped each year for “relocation of surplus rural labor,” more than 60% were in southern Xinjiang, the white paper showed.

Deployment of forced labor in the gold and mineral mining sector was not fully understood until the C4ADS report.

“Because job placements cannot be freely refused and independent auditing is impossible, participation in these labor transfers amounts to evidence that Uyghur and other Turkic peoples are being forced to perform inherently dangerous work in a sector with a long track record of major accidents and poor enforcement of environmental and safety regulations,” the C4ADS report said.

The C4ADS report criticized the corporate world for not taking the opportunity to influence bodies responsible for setting world standards. By turning a blind eye, they “lend credibility” to the companies’ global activities, it says.

“Companies, accreditors, and regulators alike have fostered a permissive environment for companies participating in or facilitating forced labor and human rights violations by failing to recognize the Uyghur region as meeting the definition of a high-risk area due to its severe and widespread human rights abuses.”

C4ADS called on the world to act against Uyghur repression in the face of “extreme human rights violations against Turkic peoples in [Xinjiang].” The report’s authors called for a ban on investments in companies aligned with XUAR abuses and for U.S. President Joseph Biden to expand the “entity list” of industries in violation of the Uyghur Forced Labor Prevention Act to include gold, construction, manufacturing, agriculture, and textiles.

C4ADS called on the European Union to add Xinjiang to its list of Conflict-Affected and High Risk Areas and to ensure that mineral supply chains were added to forthcoming legislation against forced labor.

Chloe Cranston, the head of Thematic Advocacy at donor-funded Anti-Slavery International, told The China Project that there should be “globally coordinated steps to put pressure on the Chinese government to end Uyghur forced labor.”

“With two new industries exposed in one week alone, it is clear that current action to end Uyghur forced labor is insufficient,” Cranston said. “We need import controls on products made with forced labor, the use of sanctions regimes, and meaningful action at the UN Human Rights Council, where we are calling for a commission of inquiry with the authority to investigate allegations of crimes against humanity.”

Kondi said the C4ADS report focusing on case studies at four of China’s largest gold mining companies “only scratches the surface of global mineral supply chains linked to Uyghur forced labor.”

Kendyl Salcito, the executive director of the nonprofit human rights research organization NomoGaia, which develops, pilots, and publishes human rights due diligence processes, said there were other industries that needed researching for their labor practices, including export products such as coal, fentanyl, fertilizers, and oil and gas products.

After the release of its report, C4ADS made its database available for other researchers, governments, world bodies, and advocates to use as a springboard for more research. C4ADS analysts said they had contacted all the major players concerned and were awaiting responses.

BFIA Admin
BFIA Admin
The big boss.

Related Articles


Please enter your comment!
Please enter your name here

Latest Articles