A remote settlement in northeastern Somalia has rapidly developed into a major gold mining center, drawing attention from international observers concerned about the lack of regulation in the sector.
According to a report by the Global Initiative Against Transnational Organized Crime, the town of Milxo has experienced dramatic growth over the past decade as gold mining activities expanded. Once a small settlement with only a few hundred residents in 2016, the area now hosts an estimated population of between 10,000 and 15,000 people.
The report indicates that the town has become part of a rapidly growing, largely unregulated gold industry supplying international markets. The region has long been disputed, with claims at various times by Puntland, Somaliland, the Federal Government of Somalia, and more recently the SSC-Khatumo administration, which received recognition from the federal authorities in 2023.
Researchers identified at least 20 active mining sites in the area operated by no fewer than 18 commercial companies. Several of these operators reportedly employ foreign technical experts while using basic and hazardous extraction techniques, including the use of mercury and cyanide to process gold.
The study also found that most mining operators appear to lack official licenses from Puntland, which currently does not have binding legislation governing mining activities. Government revenue from the trade is therefore minimal, limited mainly to a small customs levy collected at Bosaso Airport, which captures only a fraction of the sector’s potential income.
Efforts to introduce formal regulation have so far stalled. Authorities in Puntland have drafted multiple mining laws and revenue frameworks since 2014, but none have been enacted, leaving the industry to operate through informal arrangements and irregular payments.
The absence of clear regulations, the report warns, has created an environment vulnerable to political influence and exploitation. Evidence gathered by investigators suggests that at least one major mining operator may have links to Puntland’s political leadership.
The report also noted that the militant group Al-Shabaab, which maintains a presence in the nearby Golis Mountains, has attempted to impose taxes or infiltrate mining activities. Phone records and witness testimonies cited by the researchers indicate instances of extortion, often framed as religious zakat contributions.
