Inside Colombia’s Multimillion-Dollar Black Market Explosives Trade

Colombia’s flourishing gold illegal mining business requires explosives, many of which are sourced illicitly. This essential yet overlooked trade has opened the door for powerful criminal bosses to forge a lucrative black market that involves a large cast of characters, including assassins, legal mining companies and even the Colombian army.

In Segovia, a few hours north of Colombia’s second-biggest city, Medellín, fluorescent bulbs light a mine where people are not digging gold, but carefully removing serial numbers from military-issue explosives.

Only the Colombian army can distribute these powerful “Indugel” explosives, which are the favored option for opening up mining tunnels in this gold-rich region. But it’s not just legal companies that use them. Tons are diverted to the black market every year to supply the thousands of informal miners working without proper permits.

A security force raid on January 14 shut down this clandestine operation. Almost 3 metric tons of explosives were seized and two people were arrested, El Colombiano reported.

A short while later, authorities told InSight Crime, the mine’s owner apparently received a call from a member of the Urabeños, Colombia’s most powerful criminal group. They wanted to know how the owner had allowed so much explosive material to be seized, and demanded payment in return.

According to judicial and government officials consulted by InSight Crime, there are indications that the Urabeños hold a near monopoly over this highly profitable black market in the department of Antioquia, where Segovia is located. Sources suggested that the crime group sees illegal explosives as a simpler source of revenue than drug trafficking, the traditional cash cow for Colombian criminals.

Several factors make illegal explosives a worthwhile investment for the Urabeños, even though the group already has stakes in illegal mining, the drug trade, sex trafficking and other criminal industries.

One is the huge demand. The immense gold reserves in Antioquia department are the livelihood of thousands of miners. Those who have not been hired by legal companies require explosives to carve out their own clandestine tunnels. But the homemade alternative to Indugel, commonly called “polvo loco” (“crazy powder”), is considered dangerous and unstable.

Secondly, these miners cannot go elsewhere. To secure their hold over the trade, the Urabeños allegedly summoned miners from the region to a meeting in which they warned that no one was permitted to sell Indugel explosives outside of their network. “Pirate” groups who have tried to trade independently of the Urabeños have allegedly been exterminated, while others who resell their own explosives must pay extortion fees to the Urabeños.

Perhaps most importantly for the crime group, this is a low-risk enterprise. Until approximately a year ago, when authorities opened investigations into this illegal network, almost no one has looked into the issue. Indeed, judicial officials confirmed to InSight Crime that only low-level crooks such as transporters have been detained so far, although bigger arrests are expected in the future.

How the Black Market Works

Operations have so far revealed at least 60 mining associations buying into the Urabeños-controlled explosives black market in just two Antioquian mining towns, generating around $350,000 in proceeds per month — over $4 million a year.

This criminal network requires collaborators in the legal sphere, judicial sources explained. Formal mining companies need to have a mining title and seemingly endless paperwork to receive authorization from the Mining Secretariat, the Defense Ministry’s weapons control department (Departamento Control Comercio de Armas Municiones y Explosivos – DCCA) and environmental authorities. With this they can buy mining explosives from Colombia’s only legal producer, the military manufacturer Indumil.

Once they have this valuable permit, co-opted companies purchase explosives from the military, with some allegedly bribing officials to give them extra “manos” (an explosives unit worth around $250) off the books. Investigations suggest that these manos are then delivered to the Urabeños, who resell the product at a black market rate of up to $1,500, a profit margin of around 500 percent.

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Source: InSight Crime