Artisanal gold mining is on the rise, and abuses along with it
While the West wants ethically sourced gold, some parts of the world have no such qualms about trading in gold mined under poor conditions
Entebbe — A rapid rise in the price of gold since 2000 has driven millions of people to deposits in Africa, South America and elsewhere where they dig for gold using basic technology.
Such informal digging — known as artisanal or small-scale mining (ASM) — has been around for centuries, and gold offers cash to communities that may lack alternatives. There are now about 15-million to 20-million artisanal miners, and millions more depend on them, Delve, a global platform for ASM data, estimates.
More and more people are trying to bring this fast-growing trade into the formal economy, but it has generated toxic waste and fed labour abuses, organised crime and prostitution, according to groups including the UN and the Organisation for Economic Co-operation and Development (OECD).
What is artisanal mining?
ASM miners often operate freelance, sometimes paying landowners to access a site, or handing bosses a share of their ore. Many work with little more than pickaxes and shovels and carry what they dig on their backs. Others use diggers and crushers.
Often, miners use mercury to extract the gold, then turn it into semi-pure nuggets of doré gold to sell to traders.
Why has it increased?
Consumption of gold has risen, as rapid economic growth in China created millions of new gold buyers and the economic crisis of 2008 drove investors into assets — such as bullion — expected to hold their value. That pushed prices from less than $300 an ounce in 2000 to about $1,500 now, making mining more attractive than farming for many in countries with often rapidly growing populations.
It is hard to measure the output of artisanal and small-scale miners but consultancy Metals Focus estimates they now produce about 560 tonnes of gold a year worth some $27bn. Mechanised mines produce about 2,900 tonnes a year, it says.
What problems does this create?
It can leak toxins and pollute water systems. Informal mines often collapse. Children often work on sites, sometimes forced by unscrupulous bosses to squeeze into narrow pits.
Such mining feeds a shadow economy that deprives states of taxes: gold worth billions of dollars is smuggled from Africa every year. Narcotics dealers and warlords use the gold to launder profits or buy arms.
Who buys artisanal gold?
Consumers in the West increasingly want products that are ethically sourced, so many large banks, jewellers and gold refineries are wary of artisanal gold. Typically they only buy from carefully monitored schemes that ensure miners are treated fairly and the source of gold is traceable. But the amount produced this way is small.
Much of the rest goes to buyers under less scrutiny, in places such as the Middle East and India, according to trade data and people in the industry. The gold can enter the global system from there.