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At the request of the South African Chamber of Mines, Eunomix Research has conducted an independent, non-peer reviewed, analysis of the UNCTAD study entitled Trade Misinvoicing in Primary Commodities in Developing Countries: The cases of Chile, Cote d'Ivoire, Nigeria, South Africa and Zambia. The UNCTAD study points towards a systematic practice of mis- and underinvoicing among mining companies in these countries, alleging that the mining industry has been engaging in this practice with the direct objective of avoiding taxes or, at the very least, reducing tax burdens in producing countries. Specifically, the report states that mining and oil companies have misappropriated as much as 67% of the export revenues of the countries studied, most of which would occur out of South Africa.
The counterfactual studies conducted by Eunomix, and focused on South Africa, have easily demonstrated that the UNCTAD study's findings are both theoretically and empirically incorrect:
1 - In the case of gold, the trade data discrepancy figure of USD 78.2 billion (in the July 2016 report) or USD 57 billion (in the December 2016 report) was shown to actually be only USD 9.8 billion, according to other reliable data sources in South Africa.
2 - In the case of silver and platinum, the trade data discrepancy figure of USD 24 billion was shown to be only USD 15 billion, according to other reliable data sources in South Africa.
3 - In the case of iron ore, the trade data discrepancy figure of USD 620 million for iron ore was shown to be lower than the figures compiled by the DMR and DTI.
On this basis, Eunomix rejects the UNCTAD study's conclusion that trade misinvoicing is substantial, and that underinvoicing is preponderant in misinvoicing. It is our view that the UNCTAD study mainly, and perhaps exclusively, documented trade data discrepancies rather than actual trade discrepancies:
1 - The core proposition Trade Discrepancy = Trade Misinvoicing if greater than 10 percent appears false.
2 - In reality, Trade Data Discrepancy imperfectly reflects Actual Trade Discrepancy, which may or may not indicate Trade Misinvoicing.
Our findings call into question the methodology used by institutions like Global Financial Integrity and the African Union/UNECA (in their 2014 Report of the High Level Panel on Illicit Financial Flows from Africa) to document illicit financial flows.Download
In March 2016 Eunomix Research released a study measuring the impact of the platinum mining industry on the socioeconomics of Rustenburg, South Africa. This infographics presents key findings of the study in a concise way.Download
Further research commissioned by the Chamber of Mines of South Africa on trade gaps in South African gold, explaining that trade gaps are due to the Rand Refinery refining gold from other African countries.Download
The Chamber of Mines of South Africa commissioned Eunomix to produce a limited counterfactual to the UNCTAD report on trade misinvoicing in five developing countries, published in July 2016, which - inter alia - accused South African gold producers of smuggling USD 72.8 billion out of the country. Eunomix finds that, based on alternative data sources, the reporting gap on which UNCTAD's accusations are based is four times smaller than alleged by UNCTAD. This puts into question the overall conclusion of the UNCTAD report that South African gold producers are engaged in illegal trading and smuggling.Download
This report studies the impact of platinum mining in the Rustenburg area in South Africa. In particular, it looks at the three main platinum companies' direct and indirect economic role and the impact of their social investments. The study finds that the while the impact of the platinum companies in the area has been extensive, there remains space for more strategic directions in responding to some of the underlying socio-economic structural problems that plague the area.Download
Eunomix's second Africa Mineral and Beneficiation Policy Monitor highlights several African governments' struggle in implementing their beneficiation policies through export barriers due to the current economic climate in the extractives industries, which is rather characterized by job losses and mine closures than by investment in beneficiation capabilities, including in South Africa, Zambia, Zimbabwe, and Uganda.Download
Eunomix has launched a comprehensive research series on beneficiation, which seeks to contribute to policy by filling some of the current critical gaps in the beneficiation debate. The series includes a combination of publications, events and engagements with key parties. The following publications and events are currently in preparation:
Eunomix has been investigating the very public issue of misinvoicing and illicit financial flows in mining since October 2016. This issue, highlighted by reports from the AU/ECA, UNCTAD and other leading organisations, has raised much controversy. Eunomix has been providing independent research on behalf of the Chamber of Mines of South Africa to assess whether claims of systemic misinvoicing from South Africa's mining industry are valid, and how to address them. Our research has so far demonstrated that the theories and approaches used to define and measure misinvoicing are problematic. Our work has received significant public attention, and is ongoing.