When a customer walks into a jewelry store, weddings or special occasions are usually front of mind. Rarely does that customer think of where the jewelry comes from, let alone its social and environmental costs.
The tragedy of “blood diamonds” – illegally traded diamonds used to fund conflicts in Africa – has managed to permeate consumer consciousness and generate change, yet most consumers have little idea of where their gold jewelry comes from or how it’s produced.
Around 20% of the gold in a jewelry store comes from artisanal and small-scale gold mining. And this sector is now the leading source of man-made mercury pollution in the world, emitting 727 metric tons of mercury into the environment in 2013, more than twice the amount in 2005.
Mercury is a potent neurotoxin that harms the brains, muscles and vital organs of adults and especially children. While most people now know about the threat from mercury in their tuna, few know of its connection to the jewelry on the hand lifting their fork.
Restoring luster to the jewelry industry requires understanding what made it tarnish. A journey to the remote mountains, deserts, and rainforests housing the world’s gold deposits reveals the story of desperate subsistence miners relying on mercury to make ends meet.
Mercury in gold mining
The artisanal and small-scale gold mining sector comprises 15-30 million men, women, and children in over 60 developing countries using rudimentary tools to mine small volumes of gold.
In researching ethics and global businesses, I’ve dug into how artisanal gold is produced and traded using reports from intergovernmental organizations, nongovernmental organizations, and academics, as well as my own interviews with activists and industry representatives.
Mining often occurs informally, meaning that miners forego acquiring permits to work whatever land they can find, be that land owned by large-scale multinational mining firms or ecologically sensitive land protected by the government.
Once miners dig up a portion of promising earth from mountainsides or riverbeds, they grind it, mix it with water and then pour pure or elemental mercury on top, which binds to the gold in the earth thanks to the chemical attraction between the two elements. This divides the slurry into balls of a mercury-gold amalgam and a soup of muddy mercury-laced wastewater called “tailings.”
The tailings are dumped into local waterways, where the mercury is ingested by microorganisms and accumulates up aquatic food chains to end up in fish like tuna. Meanwhile, the mercury-gold amalgam balls are burned with blow torches or on kitchen stovetops, a process which vaporizes the mercury into the atmosphere, leaving behind a semi-pure, sellable piece of gold.
Miners use mercury because it is the cheapest, easiest and fastest way to mine gold, and because they are unaware of its risks or ways of avoiding them.
Miners buy mercury from local black market dealers and many have no way of knowing that the invisible, odorless mercury vapor toxin is the source of their health problems, since it causes symptoms similar to other local ailments, such as malaria and STDs.
Some miners, such as the Aurelsa cooperative in Peru, have managed to save enough money to upgrade to the cyanide leaching technique used by large-scale mining firms, which as the recent Colorado mining disaster shows, carries its own suite of hazards.
But the experience of miners in places like Tanzania, Mongolia and Indonesia is more typical: families toil for generations without breaking above the poverty line or transitioning to safer livelihoods. Children often skip school to help their families mine, only to fall sick and never return. With no education, their only option is to continue the cycle of mining and poverty as adults.
A top-heavy value chain
With an everyday commodity like coffee, it’s understandable why producers don’t make much. There’s little scarcity in the natural world, and consumers purchase it every day with little fanfare. But luxury goods are very different. Gold wedding rings are (theoretically…) once-in-a-lifetime purchases steeped in sentimental meaning. People do research and save for years in order to buy a ring that matches their preferences.
My own research shows that the price for an 18 karat gold wedding ring of average size and width can vary from about US$200 at Amazon.com to about $800 at Tiffany & Co. A typical price is around $500.
The value of the gold in a ring is set daily by the London Bullion Market Association. When miners sell their gold into the value chain, large-scale firms earn about 98% of this value, while artisanal miners earn at most 70%. This amounts to $74 for a typical $500 wedding ring and an average annual income hovering near or well below the World Bank’s measures for extreme and moderate poverty ($1.25 to $2.50 per day). Without the money to send children to school and invest in cleaner technology, the mercury problem will persist.
So where is the rest of the $500 going? While this varies, my interviews with jewelry store owners in the US, UK and Canada suggest that over 75% of the customer’s dollars go to the last two links in the value chain – the wholesaler and the retailer.
The first three links – the traders who buy gold from artisanal mines, the mostly Swiss refineries who purify it, and the manufacturers who alloy it into jewelry inputs – collectively take only 7% of the $500. Compared to the roughly 15% that goes to the miner, it’s easy to see why some actors are enjoying market power, while others are relying on toxins to survive.
Fair trade for gold
Until very recently, jewelry consumers were blind to where their money went and whether it supported mercury pollution. Today, however, they can choose to see. Two new value chain certification and labeling programs provide consumers with full knowledge of how and where their gold was produced.
In 2011, Fairtrade International expanded its focus from agricultural goods to minerals by partnering with the Alliance for Responsible Mining to bring the first ethical artisanal gold to market. In 2013, the organizations split and now offer competing programs.
Both programs require miners to acquire permits, use a mercury-reducing device called a retort, and ban children from the mining site. In return, both pay miners 95% of the international gold price plus a social premium miners invest in their communities. Gold sourced in this way that is also fully traceable may bear the program’s label. And both programs offer a semi-traceable, non-labeled option for businesses wanting to mix certified with noncertified gold.
Fairtrade’s approach of keeping premiums and, therefore, jewelry prices low may help drive sales, as may their policy of waiving licensing fees for small businesses. The Alliance’s model gives more money to miners upfront and hopes to offset any lower sales by allowing large businesses to donate to the Alliance instead of sourcing gold from certified mines.
Which organization’s approach will result in better poverty and pollution outcomes is an open question. Until we get more money to miners and other subsistence producers, pollution problems will continue.
Currently, one in seven people in developing countries die of toxic pollution each year, and 19 million are at risk of mercury associated harm worldwide. This is a horrible price for luxury that the world can’t afford to pay.