Chinese strike about $500m worth of Gold in Ghana with secret method

Scores of villagers from a small town in China’s southern Guangxi province have struck gold worth more than 1 billion yuan in Ghana - but they're keeping their method a secret, reported the 21st Century Business Herald.

An estimated 50,000 gold diggers, known as “the Shanglin gang", work in Ghana’s gold mines, Africa's largest producer of the metal after South Africa. Many have been lured to the foreign land after hearing friends and relatives' outrageous stories of their success.

They are Shanglin villagers who have started from scratch, ambitious high school dropouts and hard working laborers eager to trade their sweat for cash. They have made a fortune in the West African country in the past eight years by investing and working in small and medium-sized gold mines, said the report.

One such miner reportedly brought a gold bar to a relative as a “gift” upon returning to his hometown. Another person ordered a Ferrari over the phone from Hong Kong airport while he was transferring to a flight home.

While to many these revelations sounds like wild rumours, an insider working at a local bank produced solid proof of their riches. In May and June 2011 alone, he said, more than 1 billion yuan (HK$1.2 billion) was wired into Shanglin by villagers working abroad, dwarfing the township’s 2012 revenue of little more than 300 million yuan.

When the Shanglin villagers arrived in Ghana in 2005, larger sites for hard-rock gold mining had already been snapped up by international corporations. Smaller sites, using the placer mining technique usually near rivers, were traditionally run by quasi-professional independent operations.

Placer mining, in which gold is extracted from other materials using water, had been so challenging that many of the Shanglin gang's Chinese predecessors had failed.

Workers from northern Heilongjiang and southern Hunan provinces who ahead of the Shanglin villagers failed to turn a profit due to outdated techniques that led to low efficiency, said the report.

Although placer deposits are harder to work with, they still contribute to 30 to 40 per cent of the total gold produced in Ghana.

The Shanglin gang, however, had a “killer” technique involving remodelled sand pumps, secret technology they have since kept to themselves. This has revolutionised placer mining in Ghana and made the business hugely profitable. An average shop makes 100,000 yuan in gross profit daily, says the report citing a worker. Many operations thus easily make tens of millions yuan a year.

Working with local village heads and labourers, the gang quickly expanded their business. They have built more than 1,000 operations by investing more than 3 billion yuan, according to an estimate by a Shanglin investor. In fact, almost all of the smaller mines in Ghana are now controlled by the Shanglin gang.

An increasing number of Shanglin immigrants have even settled down there and married local women. Casinos have thrived as well because of their enthusiasm for gambling. Rumours are that some 20 per cent of the money earned by Shanglin people has been lost to gambling.

Life in Ghana, however, is far from a fairy tale. Shanglin workers say they are frequently threatened and robbed, if not harassed by corrupt local officials. On many occasions, they say they were able to buy their way out - but not always. In March, a Shanglin man died after being shot 27 times by a robber.