Introducing Fairtrade Gold.
The Fairtrade Gold standard represents the pioneering work of the Fairtrade Labeling Organisation. Fairtrade alongside many other international development organisations have worked very diligently to create this ground-breaking opportunity the results of which will create real developmental opportunities for the small-scale miners, their communities and transparent and traceable supplies of gold for jewellers.
Why we need Fairtrade Gold?
Artisanal and small-scale mining (ASM) faces huge challenges in every area. Firstly small-scale miners are the forgotten majority in the mining and jewellery trade. It is now estimated that over 100 million people globally are dependent on ASM for their livelihoods. ASM is a poverty driven activity with the average daily wage being an estimated $2. Politically national legislators have ignored ASM because it is usually a difficult sector to regulate and control. Advocacy for good legislation is very important to maximize the economic opportunity that ASM presents for southern governments.
Due to the social and economic vulnerability of miners they are open to exploitation on price by disreputable traders who take advantage of their geographical remoteness and lack of knowledge on pricing to buy cheap gold. Couple this with the poverty in the sector, the irresponsible use of chemicals like mercury and cyanide in the extraction of the gold, lack of health and safety in ASM and gender inequality, the gold industry really is a sector that has needed a Fairtrade intervention for many years.
Fairtrade Gold has many positive outcomes on the challenges faced by artisanal small-scale mining communities. Key areas of focus within the Fairtrade Gold standard are:
- Health & safety requirements in the mining
- Gender equality standards across the organisation and mining operation
- Organisational transparency and democracy.
- Labour standards including child labour
- Environmental standards and the handling of toxic chemicals, inc mercury & cyanide.
- Fairtrade minimum price of 95% of LBMA* daily fix
- Premium paid to mining groups of $2000 USD per kilo or 15% for Ecological Fairtrade Gold and 10% for Fairtrade Silver.
- Transparent and traceable audited supply chains – from mine to retail.
- Independent third-party verification of consumer claims and Fairtrade standard compliance at the ASMO level.
- Producer support for monitoring progress of groups.
Each of these headings are broken down into more detail and separated out into two sections; minimum requirements that must be complied with to achieve certification and progressive requirements so that each group is focused on making continual improvements over a period of time.
The Fairtrade revolution in the gold trade is having considerable impacts on the ground for the mining communities involved. Fairtrade premium payments are being invested into community development projects that impact beyond the immediate.
Ecological Fairtrade Gold.
Gold mining methods vary according to the geology of the area where the gold deposit is found. In certain places in the world gold can be found in riverbeds and miners use a process called ‘panning’ with basic tools to find nuggets of fully-formed gold which is ready to sell. This is called alluvial gold and can be processed ready for sale without the use of any chemicals. In the vast majority of cases however, mineral deposits are found underground in hard rock called ore. Hard rock mining requires miners to process the ore above ground in order to extract gold deposits. Chemicals such as mercury and cyanide are used to help separate the gold particles from the rest of the ore. Most commonly in ASM the ore is mixed with mercury, which is cheap, readily available to miners and effective at extracting gold from the ore. Mercury is mixed with ore and water to form a mixture known as an amalgam, which is then heated causing the mercury to evaporate, leaving residual gold and other metals. It is an effective method, however mercury is a highly toxic neuro-chemical which causes long-term damage to human health and the environment.
Are there any alternatives?
Some ASM use cyanidation as an alternative to mercury. While cyanide is still a dangerous chemical, it breaks down much quicker than mercury and can be used in a safer manner if the proper precautions are observed. Cyanide leaches the gold from the crushed ore, dissolving it in the water. As the process requires substantial investment, special training, a longer processing time and significant financial capacity, it is less widely-used by ASM. However when used properly, cyanidation enables miners to eliminate mercury completely and increase gold recovery rates.
Some alternative technologies are available to replace the use of toxic chemicals in gold mining. However they have been developed for medium and large-scale mining companies and are largely beyond the financial capacity of ASM. Mercury is ubiquitous as the cheapest and most readily available method, least dependent on technical capacity. In October 2013 UNEP ratified the Minamata Convention which will eliminate the production and use of mercury worldwide, including in ASM gold mining.
The Minamata Convention on mercury is a global treaty to protect human health and the environment from the adverse effects of mercury. The major highlights include a ban on new mercury mines, the phase-out of existing ones, control measures on air emissions, and the international regulation of the informal sector for artisanal and small-scale gold mining. Mercury from small-scale gold-mining and from coal-fired power stations represent the biggest source of mercury pollution worldwide. Miners inhale mercury during smelting, and mercury run-off into rivers and streams contaminates fish, the food chain and people downstream.
Under the Minamata Convention, Governments have agreed that countries will draw up strategies to reduce the amount of mercury used by small-scale miners and that national plans will be drawn up within three years of the treaty entering into force to reduce – and if possible eliminate – mercury.
What is the impact of using toxic chemicals to extract gold on miners and the environment?
The environmental impacts of ASM depend on where it occurs, but can include deforestation, land degradation through air, water and soil pollution from dust, mud or toxic substances, as well as impact on local wildlife. There are severe risks to health from daily contact with toxic chemicals used to process gold, such as mercury, cyanide and nitric acid. Exposure to mercury vapours and ingestion from contaminated water and food can lead to colic, vomiting, gastroenteritis, kidney complaints, muscular tremors and ulceration of gums. Chronic mercury poisoning can result in speech disturbances, lack of concentration, depression, muscular atrophy and seizures.
ASM is the biggest source of mercury air and water pollution in the world, contaminating soils and water supplies leading to degradation of agricultural land and also entering the human food chain through soil-grown foods and fish. However ASM is not significantly dirtier per unit of output than large-scale mining activities, and since ASM processes much less ore than large-scale mining per ounce of gold, the magnitude of its impact on the land is much smaller. The environmental issues associated with ASM stem from the fact that unlike large-scale mining, it is largely unregulated and therefore harder to manage responsibly.
What chemicals are normally used by Fairtrade miners?
Currently all Fairtrade certified mining organizations use cyanidation to process their gold, however the pilot groups we are working with in East Africa use mercury. The Fairtrade Standards require mining organizations which use mercury and cyanide to do so at the highest standards of health and safety for miners. In the case of mercury, this means using personal protective equipment (gloves, masks etc) when amalgamating the mercury with gold, and using retorts, a simple piece of equipment which captures mercury vapour when burning the amalgam.
Greg Valerio is working alongside Environmental Women in Action for Development, Fairtrade Africa and The CRED Foundation to secure an ecological mercury free gold processing system for the Fairtrade Gold pilot mining communities in Busia Region of eastern Uganda.
The term ‘conflict minerals’ refers to tin, tantalum, tungsten or gold which has been sourced, extracted or processed in a situation of armed conflict and has contributed to financing and abetting armed groups or engendered human rights abuses. Armed conflict may take an international or non-international character or could include wars of liberation, insurgencies, civil wars, particularly in the Democratic Republic of Congo-Brazzaville, and surrounding countries of Kenya, Rwanda, South Sudan, Tanzania, Uganda and Zambia.
Under the scope of Section 1502 of the Dodd Frank Act, all USA-based and USA publicly listed companies that manufacture products which use ‘conflict minerals are required to undergo a compliance process and report on the country, location and mine of origin. Dodd Frank Act specifies conflict minerals as those originating from the Democratic Republic of Congo (DRC), companies are then required to report on whether the minerals they have sourced are ‘DRC Conflict Free’ or ‘Not Found to be DRC Conflict Free’. In the latter case, this leads to further due diligence requirements to be carried out on their supply chains. The result of this had been many US-based companies ceasing to source from the Great Lakes region in order to avoid enhanced scrutiny of their supply chains, negatively impacting artisanal mining communities whose only source of income is gold mining.
The International Community of the Great Lake Regions (ICGLR’)s Regional Certification Mechanism also focuses on the four so-called conflict minerals (tin, tungsten, tantalum, gold), encompassing all 11 nations of the African Great Lakes region and aims to end the connection between minerals and conflict by:
- A regional mineral tracking and certification scheme.
- The harmonisation of mining legislation in the 11 member states.
- The creation of a database to track the trade in minerals in the region.
- The formalization of artisanal and small-scale mining.
- The establishment of a whistle blowing mechanism.
- The promotion of the Extractive Industry Transparency Initiative (EITI).
The Organisation for Economic Cooperation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas are voluntary, non-binding recommendations which conform with Section 1502 of the Dodd Frank Act, and many other conflict minerals initiatives build on it. Unlike the Dodd Frank Act, the OECD Due Diligence Guidance do not specify a country or region as being linked to conflict minerals.
In March 2014 the European Commission (EC) released a Draft Proposal for a Regulation on Conflict Minerals Regulation and a Joint Communication on ‘Responsible sourcing of minerals originating in conflict-affected and high-risk areas: Towards an integrated EU approach.’ The proposed regulation is a voluntary self-certification system for EU importers of tin, tantalum and gold. If importers want to become ‘responsible importers’ they can sign up and will have to comply with the EU law (still in draft proposal state), which includes compliance with the OECD Due Diligence Guidelines.
The benefits of Fairtrade Gold will positively affect everyone within the gold supply chain, from the mining communities through to the gold wedding ring that the customer purchases. It is important to us that our jewellery leaves a positive legacy for everyone who touches the physical product. For the customers of our gold jewellery, it removes the anxiety that the gold engagement ring they are looking to buy, not only positively benefits the producing community, it also removes conflict and toxicity out of the purchase. Valerio and Reflective Images Jewelry is at the fore-front of pioneering a new market sector that is Fairtrade certified and a brand new industry opportunity to continue to demonstrate its desire to be as ethical as possible
This chain of custody approach to jewellery is very different from how the industry has traditionally worked. The Fairtrade mine to retail story gives us a very real opportunity to place social and environmental integrity at the very heart of the relationship we have with our customers. A truly unique opportunity for us all..
I am of the conviction that this is a very significant development for the Jewellery profession as well as the Fairtrade movement as a whole. For the first time Fairtrade has migrated away from agricultural products and is now operating in the exclusively luxury market of gold and fine jewellery. This will present a new set of challenges in the movement, but these challenges are the bedrock of what makes Fairtrade such a dynamic and entrepreneurial movement. Gold is one of the oldest markets in the world and demonstrates how Fairtrade has moved from being caricatured as a niche movement and is now moving in the mainstream of global economics and all areas of commerce. The deist and moral economist Adam Smith would be proud of us.
For the detail of what this means for miners we encourage everyone to read the Fairtrade Gold and Precious Metals Standard that is available for download here. Fairtrade_Gold-and-Precious_Metals_2015-04-15_EN
*LBMA is short for London Bullion Market Association. The LBMA fix is the daily price for gold which sets the international price for trading on the day of its publication.