Tales of recent cases of gold theft

Authored by AXA XL Underwriting Manager for Fine Art & Specie Des Partridge

For more than one hundred years, gold thefts have been an ongoing scourge in Western Australia's goldfields region. AXA XL's Underwriting Manager for Fine Art & Specie in Australia describes some recent cases highlighting the continuing allure of the shiny metal.

In the early 1900s, a special police force, the Gold Stealing Detection Unit (GSDU), was formed following a series of gold robberies in Western Australia's (WA) goldfields region. According to the WA Police website:

Gold stealing was rife on the Kalgoorlie goldfields almost from the day the first prospector arrived there. Goldminers would smuggle out what gold they could while working, and the thieving was commonly regarded as a miner's privilege. Everyone seemed to be profiting from the proceeds of gold stealing, much to the frustration of the mining companies and despair of the local police, who were simply unable to keep up with the number of complaints they received.

Although the words "gold robbery" might rustle up nostalgic images of horse-bound bandits taking over a train, the allure remains, and the GSDU continues to provide the only regular police service to the many remote mines in the gold-producing state.

Devilishly detailed, or opportunistic punters?

Aristotle was the first to elaborate on money as a medium of exchange and an instrument for storing value. He also noted that, whatever form it takes, money is most useful when it is:

• Durable; it doesn't fade, corrode or change over time
• Portable; it carries a high amount of value relative to its size and weight
• Divisible; it can be separated or combined without changing its fundamental characteristics
• Intrinsically valuable; its value is independent of other objects and contained in the money itself.

Gold comes close to meeting all of these criteria, which is why it has been a preferred medium of exchange for millennia. And it is also why the ore remains intrinsically valuable; it is currently trading for around AUD 2,500 per ounce (gold is traditionally valued in ounces). There also are traders in countries around the world actively buying and selling gold, and some are not always so scrupulous in checking the provenance of the goods.

All of which means that the GSDU still has plenty of cases to investigate and media reports from the past five years show that the shiny metal attracts some devilishly detailed, wannabe Oceans-11 style crews:

• August 2016: Perpetrators used a stolen waste truck to gain entry to a mine site dam, before filling it with gold-bearing concentrate with the intention of removing it for further refining.
• December 2018: Two men made multiple entries into a gold room mill, using a hammer drill to dig up the concrete flooring and a vacuum cleaner to hoover up the gold specks they loosened. However, one of them attempted to refine the gold in his grandmother's shed, and due to mercury exposure, suffered some memory loss.
• April 2020: Thieves used a front-end loader to transport a two-tonne safe containing a large amount of refined gold. The perpetrators were able to make their escape by using vehicles stolen on-site to block entries and exits.
• January 2021: An insider helped thieves make off with over eight thousand tonnes of gold ore, worth more than one million Australian dollars at the time.

However, there also are multiple examples of opportunistic punters who happened to be in the right place at the right time (or, depending on the point-of-view, the wrong place at the wrong time):

• October 2019: A man was discovered with twenty buckets of unrefined ore weighing almost 600kg in his backyard; he later claimed he had found it at a rubbish tip.
• June 2016: Three men enjoying a barbeque stumbled across AUD 62,000 worth of gold nuggets on a mine site. They took the gold home and set up a Facebook page to try to sell it; that subsequently led to their arrest and the seizure of the gold. Interestingly, it was later determined that the WA government owned the gold; even though it had been discovered on a tenement, the mining operator had not yet commenced any operations at the site.
• June 2016: Four men were exploring an established mine tenement when they came across a rare leaf-patterned gold nugget estimated to be worth AUD 50,000. They smashed the chunk to share the booty amongst the group, only realizing later it could have been worth much more as a collectors' item.
• February 2017: A mine worker was operating a sump when a large pile of dirt fell out of the side, containing gold worth around AUD 200,000. The worker took the gold home and then sold some to a trader who attempted to sell it to the Perth Mint. However, when the Perth Mint couldn't verify the origin of the gold, the perpetrator was nabbed, and the gold returned to the mining company; the gold trader also was reimbursed for its payment. In an interesting twist, the mining company flew the now-former employee to its head office, where he helped remedy deficiencies in the processes which led to the opportunistic theft in the first place. The company later noted that it regretted losing such a valuable employee.

Minimising the risks

As this last example shows, mining companies always need to be alert to the involvement of an insider, someone who knows the security protocols and possible ways of circumventing them. That is why mining companies—like other businesses that routinely handle large sums of money—carefully screen potential employees and often juggle shifts and work teams to limit the possibility of employees colluding in a heist. They also maintain robust systems for keeping track of their inventories.

Even so, the allure remains and thieves, whether clever or merely opportunistic, do succeed on occasion. That is also why many mining companies often purchase a dedicated Specie policy that includes a fidelity cover, i.e., theft by employees. While these coverages can be a vital element within a company's risk management programme, insurance is a last resort and shouldn't diminish efforts to minimise the risk. Also, the involvement of a company owner/director in a theft generally is excluded.

AXA XL's fine art and specie insurance policies cover a wide range of business operations and valuable assets, ranging from gold mining, cash in transit, jewellers block and precious metals to art and jewellery in storage or on display. These are assets and operations where we have considerable expertise in understanding the unique nature of the threats and working with diverse clients to minimise and mitigate the risks.