Russia is the world’s second-largest gold-producing nation and its exports of the metal to the UK market alone were estimated by the British government to be worth £12.6 billion in 2021.
For a long time, analysts have warned that it would be a pragmatic move for Russia to increase its gold reserves. Using the commodity as a transactional currency would be a natural extension of the policy but would represent a shift from sanctions avoidance to sanctions busting.
However, this is not a precedent, especially in countries whose economies are subjected to the pressure of sanctions and where cash flows are limited. Iran, another Russian ally, is an encyclopaedic example of this practice.
The Russian gold trade was significantly damaged after the start of the full-scale invasion of Ukraine in February 2022. Russian Federation bars have since become a taboo product in Western capitals after restrictions were imposed. As a result, the Russian economy was seriously affected as gold sustains, among other processes, the Kremlin’s military efforts.
“In 2017, after thousands were killed and displaced by fighting in Darfur over the precious mineral, two forces gained strategic influence over the country’s gold trade: Russia and the Rapid Support Forces”
Already in the first days of the Crimea annexation in 2014, the Russian Federation sought alternative paths to continue to supply cash flows that would bypass sanctions.
These efforts that include Africa, the Central Africa Republic (CAR), and Sudan, particularly, because of mineral and metal resources, have become even more vibrant over the past year and a half.
In this context, Russia and Iran have built a new transcontinental trade route stretching from the eastern edge of Europe to the Indian Ocean, while gold trade was filled up by smaller companies, often based outside Europe, like VPower Finance Security, which handled more than $300 million of Russian gold shipments through Hong Kong in March through August 2022.
Sudan’s political future was dramatically altered in 2012, when the war in Darfur changed from a primarily ethnic and political conflict to one influenced by the newly discovered presence of gold.
Five years later, in 2017, after thousands were killed and displaced by fighting over the precious mineral, two forces gained strategic influence over the country’s gold trade: Russia and the Rapid Support Forces (RSF), a paramilitary group created by former president Omar al-Bashir from Arab tribal militias.
General Abdel Fattah al-Burhan, the leader of the Sudanese Armed Forces (SAF), and Mohamed Hamdan ‘Hemedti’ Dagalo, head of the RSF whose forces have created an ever-widening humanitarian and geopolitical crisis, took advantage in recent years to amass influence and fortune.
Russia has acted as an ally to both generals, but Moscow’s loyalty appears to lie primarily with Hemedti’s Rapid Support Forces, who have received the bulk of Russia’s training and weapons.
Over the last decade, gold has played a significant role in Sudan’s political economy, primarily to the detriment of everyday Sudanese people.
Through corruption and underhand dealings, the glittery metal has provided brutal men – both local and foreign – with the financial means to start wars.
For Hemedti’s RSF, gold gave the paramilitary group the ability to remain financially self-sufficient, existing outside of the military-financial complex.
For Russia, Sudanese gold provided the country with the ability to circumvent Western sanctions and buffer Russian coffers ahead of the invasion of Ukraine in 2022.
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Hemedti was, and still is, a rich man
In November 2017 the RSF took control of the Jebel Amer mines, some of the most lucrative mines in North Darfur that stretch for over ten kilometres.
Overnight the RSF became the most important player in Sudan’s gold industry, and at its centre stood Mohamed Hamdan ‘Hemedti’ Dagalo, a former leader of a brutal militia force and subsequent head of the RSF.
At the time of the takeover of the Jebel Amer mines, Hemedti already owned several goldmines and operated a Dagalo-family-owned trading company called Al Gunade. (The company is sometimes spelled Algunade or al-Junaid).
He also had strong connections with the United Arab Emirates, the destination for most of Sudan’s gold, after sending RSF fighters to assist the UAE in Yemen.
A 2019 investigation by Global Witness revealed a flow of money between a bank account with First Abu Dhabi Bank under the RSF’s name, and a company called Tradive General Trading LLC. According to Global Witness, Tradive General Trading is controlled by one of Hemedti’s brothers, Algoney Hamdan Dagalo, and is likely a front company allowing for the movement of money to and from the RSF.
“Overnight the RSF became the most important player in Sudan’s gold industry, and at its centre stood Mohamed Hamdan ‘Hemedti’ Dagalo, a former leader of a brutal militia force and head of the RSF”
But the Dagalo family and the RSF appear to make most of their money through the Al Gunade company.
In response to questions from Reuters in 2019, Hemedti’s office denied any connection between the RSF, Hemedti, and Al Gunade, and instead claimed the company was owned by Hemedti’s brother, Abdelrahim Hamdan Dagalo. Abdelrahim Dagalo is the deputy head of the RSF.
Although Hemedti’s representatives deny connections between Al Gunade and the RSF’s bank accounts, documents analysed by Global Witness as well as interviews with local miners and gold traders indicate that the RSF and Al Gunade are deeply intertwined.
Hemedti and his forces have worked hard to take control of the lucrative mining opportunities available in Sudan’s peripheries, often by using deadly force and dangerous extraction methods. The gold, taken from the likes of Darfur and Kordofan, is quickly removed from Sudan and transported, under the radar, to countries Hemedti has ties to.
Gold mining and trading, coupled with mercenary work in foreign countries, allowed the RSF to become financially autonomous. Today, Hemedti controls a large, independently wealthy paramilitary force that has primarily existed outside of the military command structure.
Sudanese gold in Russian hands
Hemedti’s takeover of the Jebel Amer mine took place at the same time Sudan started strengthening ties with Russia, including through the mining sector.
In a meeting between Putin and al-Bashir in Sochi in November 2017, al-Bashir said: “Sudan may become Russia’s key to Africa”. Al-Bashir also asked Putin to “protect” his country from the West, which had imposed sanctions on Sudan for many years.
In 2017 Meroe Gold, a subsidiary of the Wagner-owned M Invest, set up operations in Sudan. Wagner personnel were sent to guard Russian mining interests in the country, and were, reportedly, able to slip in and out of RSF-operated mines. Meroe Gold has since been sanctioned by the US Treasury Department for its alleged connections to Russian oligarch Yevgeny Prigozhin.
When asked by the New York Times about his connections to Meroe Gold, Wagner’s founder Prigozhin responded with: “I have nothing to do with the Meroe Gold company, this company has never belonged to me, I do not know anything about this company”.
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According to the Organized Crime and Corruption Reporting Project (OCCRP), M-invest struck a five-year deal with a security firm linked to Sudan’s military intelligence to bring M-invest employees into the country and provide them with armed security.
Russia provided the RSF with training, and, in the months before al-Bashir was ousted, advised the dictator on how to remain in power. On 5 June 2019, two days after the RSF dispersed a pro-democracy sit-in by killing over 120 people, Meroe Gold imported riot shields and equipment for a company controlled by Hemedti’s family.
In November 2020, Russian President Vladimir Putin issued a decree authorising the Ministry of Defence to sign an agreement with Sudan to establish a permanent Russian military base or so-called “naval supply station”.
If built, the base would have been Russia’s first foreign naval base since the collapse of the Soviet Union and would give Russia a stable footing to counter Western presence and gain access to important resources that would help bolster Russia’s economy. But the agreement was not ratified by Sudan’s interim parliament.
By 2021, Russia was feeling the heat from investigations into the country’s gold interests in Sudan. Moscow attempted to move back into the shadows by transferring Meroe Gold’s assets to a Sudanese-owned company called Al-Solag. An anti-corruption committee, set up to assist Sudan in its transition to democracy, attempted to block the transfer.
But a month after the transfer was blocked, Hemedti and al-Burhan staged a military coup in October 2021, and the anti-corruption committee was dissolved.
The article first appeared in The New rab
