Nonprofit Identifies Gold as UFLPA Risk for Hundreds of Companies

A nonprofit organization that fights illicit networks that threaten global peace and security, C4ADS, is recommending that the Department of Homeland Security’s interagency Forced Labor Enforcement Task Force should place Xinjiang Nonferrous Metal Industry Group and its subsidiaries on the UFLPA entity list, as the group laid out evidence that the mines use labor transfers of Turkic minorities in Xinjiang province.

It also says that CBP should "investigate gold and other mineral supply chains linked to XUAR and detain goods found to contain minerals from the region."

In a 24-page report called Fractured Veins, released Oct. 11, the organization described how it traced mining licenses, Chinese ownership records, corporate and media reports on labor transfers and conflict mineral filings with the SEC to make connections between gold mined in Xinjiang and multinational buyers.

"While this report focuses on gold, it is but one of the many globally traded minerals produced by the XUAR mining sector that is entangled with the Chinese government’s violent campaign of repression against Turkic peoples," the report said, noting the larget integrated lithium mine and smelter is in Xinjiang, and there are new mines and processors opening in the province. "The rise of lithium production in XUAR is particularly troubling considering the increasing global demand for electric vehicles and other emergent technologies using lithium batteries," C4ADS wrote. "XUAR produces a considerable amount of the PRC’s coal, natural gas, gold, copper, iron, and steel alloying elements, which play a key role in automotive and new energy supply chains. Despite the significance of XUAR to the Chinese mineral sector and the associated exposure to forced labor and human rights violations, insufficient attention has been paid to this nexus."

"Gold is only one of the many minerals being extracted from the Uyghur region. Global supply chains and investment are tied to a wide range of minerals being mined in XUAR, including copper, steel inputs, and silica. This, in turn, implicates almost every modern industry worldwide in human rights abuses against the Uyghurs and Turkic peoples. The urgency of this problem will only increase as mining in the region continues to expand," the report said.

The companies identified in the report that filed the SEC conflict mineral filings don't say definitively in those filings that they bought from Lingbao Gold, Shandong Gold Group, Zhaojin Mining Industry Company and Zijin Mining Group, instead writing that their due diligence included inquiries to contract manufacturers, who then identified smelters and refiners "that may be in our supply chain."

The nonprofit wrote: "The extent to which any given company is selling XUAR gold into the supply chains of these global companies is unclear due to the multiple levels of suppliers between refineries and end users."

Also, some of the Chinese companies operate mines both in Xinjiang and in other areas of China. For instance, the report said that Shandong Gold’s Xinjiang mine produced almost 9% of its gold in 2022.

Even with these caveats, Fractured Veins calls out many brands in the report: Mattel, Macy’s, Nordstrom, Starbucks, Home Depot, Apple, NVIDIA, Tesla, Ford, Medtronic, Dolby, Nokia, Best Buy, Kohl’s, Express, American Eagle, Sony, Amazon, T-Mobile, General Motors, Hasbro and Columbia Sportswear. Those are a small selection of the more than 1,000 links the authors found in SEC filings to the Chinese gold companies that have operations in Xinjiang. While each Chinese company is associated with hundreds of conflict mineral disclosure forms, some companies may have links to more than one of the Chinese gold companies Fractured Veins identified as tainted by forced labor.

The report extensively footnotes both the importers linked to these Chinese gold producers and the reports of labor transfers at those firms. Labor transfers of Uyghurs, Kazhaks or other religious minorities in China are considered evidence of forced labor, though, of course, under the Uyghur Forced Labor Prevention Act, no transfers need to be shown; operating in Xinjiang creates a presumption of forced labor.

"Local media reports, along with Western Region Gold’s annual reports, describe the company’s participation in labor transfer programs, a major risk indicator for forced labor. In early 2020, Western Region Gold’s Hatu and Hami gold mines reportedly received labor transfers from southern XUAR, and 25 workers were reportedly sent to Ili Gold Mining Co., Ltd ... ," the report says. The report says that XInjiang Nonferrous Group describes how it trains Uyghur workers transferred to its facilities in patriotism and gratitude to the Chinese Communist party.

"Xinjiang Nonferrous Group and its subsidiaries, including Western Region Gold, have been reported to participate in the 'fanghuiju' program, in which employees are sent to villages to monitor Uyghurs in their homes, administer ideological training, and help identify 'surplus labor for transfer'," the report said.

"Official media reports indicate that Zijin’s mines have been the site of labor transfers, with one report stating it had 'solved the employment' of up to 800 workers and that Zhaojin Mining has participated in labor transfers of Kazakh workers from poor households. Both companies are paired with local villages where they carry out assimilative programs; Zhaojin boasts its 'strong political and ideological work' conducted," the report said.

Some of the links for those sites have dates of 2014 or 2016; the Chinese links that talk of labor transfer activity are no longer active.

Mining accounted for 43% of the regional domestic product in Xinjiang in 2020, the report said.

In addition to its advice to CBP and the forced labor task force, the authors said policymakers in the EU should add Xinjiang to the EU’s Conflict-Affected and High-Risk Areas list, as that would make corporations consider the province a high-risk region for gold sourcing.