Ivanhoe’s Kipushi zinc mine in the DRC officially reopens
The restart marked exactly a century since the mine first went into production.
A new report by accounting firm Crowe and the University of Portsmouth’s Centre for Cybercrime and Economic Crime reveals that fraud eats up 6.4% of expenditure in mining.
The study draws on 25 years of research and paints a stark picture of fraud’s reach. Globally, corruption costs the economy $2.6 trillion, roughly 5% of GDP.
For mining operations, particularly in procurement, fraud can escalate costs by as much as 8%. Some examples uncovered in natural resources include suppliers delivering fewer or lower-quality goods than agreed; counterfeit equipment parts and non-existent employees on payroll.
The report also highlights the challenges of corruption, citing cases where the payment of bribes is necessary to acquire government permits. Recently, Glencore was fined £276 million ($352 million) after admitting to bribing government officials for access to oil in Africa.
The report also includes specific case studies.
In one instance, forensic analysis at an Australian gold mining company operating in West Africa revealed the Head of Operations was involved in a corruption scheme. Contractors bribed the executive while delivering substandard work and falsifying government licenses. The result: over $1 million in losses.
In another case, a major copper miner, spending $800 million annually on procurement, discovered 300 ghost employees on its payroll and was losing 7.8% of procurement funds to fraud. After intervention, the company managed to reduce these losses by 51%, saving $20 million per year.
Crowe’s research shows that implementing better fraud prevention practices can cut losses by up to 40% within 12 months.
The report emphasizes that tackling fraud not only saves money but also protects companies from regulatory and reputational harm.
The full report is here.
