A Large Room Half Full Of Gold: Exploring The Gold Commodity Chain
By Ruth You Ree Kim
Lead Introduction:
This fine scholarly article was written by Ruth You Ree Kim, who is entering her fourth and final year of undergraduate studies at the University of British Columbia. She plans a career in education in the hopes of helping others to understand the deeper connections between people and places.
Special thanks to Ruth for permission to reprint this article, a version of which is going to be published in an academic journal.
~Marc Choyt, Publisher, fairjewelry.org
Abstract:
Although some 15 to 20 percent of the world’s gold is currently supplied by artisanal and small-scale gold miners, their identity and the significance of the role they play in the mining community often go unnoticed in the public sector (Schein). The various social and environmental processes that bring artisanally mined gold to the North American market also remain hidden through the process of commodity fetishism, whereby the crucial linkages between geographies of production and consumption are ignored. Through a commodity chain analysis, I will explore these complex middle linkages and trace the path artisanal gold makes on its journey from the informal mines in Peru to North American and world gold markets.
“The desire for gold is the most universal and deeply rooted
commercial instinct of the human race.”
—- Gerald M. Loeb
Introduction
As in the sixteenth century, when the Spanish Francisco Pizarro deceived Atahuallpa– the last indigenous Incan king– into giving him a large room half full of gold and two rooms full of silver, today the demand for gold remains high. The President of Peru, Alejandro Toledo, recently claimed that the country of Peru cannot “allow minerals to remain underground, dead, when Peru needs them” (Hall). In 2000, mining exports brought Peru more than $3.2 billion, accounting for nearly half of its export earnings and “a much-needed boost to a standstill economy” (Veiga, “New Technologies” 41).
Gold consistently remains as one of the most sought-after commodities in the world, but in general most locally produced gold is not bought by local consumers. Just as Peruvian gold was seized by foreigners led by Pizarro in 1532, today most Peruvian gold still ends up in foreign hands, albeit through different methods. Moreover, most consumers of this commodity remain unaware of the painstaking labour and social costs required to bring gold to the North American market.
Although some 15 to 20 percent of the world’s gold is currently supplied by artisanal and small-scale mines (ASM), the significant role artisanal and small-scale gold miners play in the intricacies of the world’s gold market remains obscure (Schein). Since ASM provides such a large portion of the gold supply, it is imperative to examine the identity and work of artisanal miners. Furthermore, the social and environmental implications of ASM extend beyond production locales to have over-reaching effects and influences on a global scale. This paper provides an analysis of how the social and environmental conditions of ASM gold production and consumption are obscured through a fetishization of the commodity. To do so, a commodity chain approach is used to trace the path artisanal gold makes on its journey from the informal mines in Peru to the hands of North American consumers.
Commodity Fetishism and Commodity Chains
Karl Marx used the phrase “the fetishism of commodities” to explain the social and geographical relations concealed by the market (qtd. in Harvey 422). In his interpretation of commodity fetishism, Harvey states that the items put for sale on the supermarket shelf “are mute” and consumers “cannot see the fingerprints of exploitation upon them or tell immediately what part of the world they are from” (Ibid). The fingerprints have been conveniently “wiped off”, in the sense that the complex social practises and relationships that connect geographical places of production and consumption have been erased or hidden, to the benefit and profit of multinational corporations (Sundberg).
One way to examine the social and environmental geographies of a commodity is through a commodity chain, which traces the “production of tradable goods from their inception through their elaboration and transport to their final destination in the hands of consumers” (Topik, Marichal, and Frank 14). Thus, a commodity chain analysis plots the geographical interactions, connections and linkages that carry the product from its place of origin to its consumption by the market. Commodity chains rarely comprise singular and direct paths between the locality of production and the destination of consumption, however— their associated network geographies are most complex.
Introduction to Artisanal and Small Scale Mining in Latin America
As the price of gold has soared–-it has risen “235 percent in the past eight years”– the number of artisanal gold miners has also risen (Larmer). Today, the estimated number of artisanal gold miners is between 10 and 15 million people in over 70 countries, with some 50-100 million people directly and indirectly involved with artisanal gold mining in what Veiga refers to as the “biggest gold rush the world has ever seen” (Veiga, “Global Mercury Project” 4).
Although artisanal and small-scale mining operations embody various characteristics that are “site-specific and fraught with cultural and economic significance,” a general definition for ASM encompasses “small, medium, informal, legal, and illegal miners who use rudimentary techniques to extract any kind of mineral substance” (Veiga, Maxson, and Hylander 436). Hentschel, Hruschka, and Priester further characterize ASM as involving a “lack or a very reduced degree of mechanization” coupled with a “lack of social security” (5). Often, the workers of artisanal mines are thought of as a well-kept secret, tucked away from public view and discussions so that they may not “tarnish the image of [the] mining industry” (Veiga, “New Technologies” 4).
Production of Artisanal Gold in Peru
In recent years, Peru has risen to prominence as the most important gold-producing country in Latin America. In Peru, many gold deposits are recovered from the alluvial and terrace deposits in Madre de Dios and its tributary rivers (Veiga, “Mercury in Artisanal Gold Mining” 4). Once the hard rocks are crushed and ground, the gold is separated by means of gravity concentration and is amalgamated, typically with mercury.
After the process of amalgamation, the excess mercury is removed, commonly by retorting or burning the amalgam, leaving a “gold doré”. Typically, it is at this stage that the gold is sold by the miner to a local village gold or jewellery shop, where it is once again re-melted in order to separate the still sizeable presence of mercury in the metal. In Peru, all gold is sold to gold shops, where the miners get reasonably fair prices for their gold (Veiga).
Artisanal Miners and their Social Conditions
Typically, artisanal gold miners are “poor, hard working, illiterate, with little or no formal education, under health stresses, malnourished, and often somewhat transient” (Veiga, Maxson, and Hylander 1). Although the informality of artisanal mining allows members of rural communities to join the labour force easily with low investment costs, there is little to no technical assistance provided for ASM workers; most of the training and knowledge is passed along by word-of-mouth (Veiga, “New Technologies” 7). Moreover, inadequate governmental regulations often fail to set any kind of legal framework with which the miners may safely work. People come to ASM out of a strict and necessary obligation to find work amidst a poverty-stricken environment, and to avoid “complete social marginalization” (Schein; Veiga, “New Technologies” 6).
It is estimated that approximately “30 percent of the world’s artisanal miners are women” (Hinton, Veiga, and Beinhoff 1). The majority of these women work on “transporting and processing materials as opposed to ‘digging,’” and in “gendered roles” as, for instance, cooks and prostitutes (Hinton, Veiga, and Beinhoff 2; Lima 7). The processing of gold in ASM is “all women”, according to Veiga. In addition, because mercury retorting commonly takes place inside the home and many gold shops are located near markets and in residential neighbourhoods near schools, many women and children unknowingly consume large quantities of toxic mercury vapours. Women who breast-feed soon after amalgam is burned in the same room may also be exposed mercury levels at least double the World Health Organization’s instantaneous risk limit for acute toxicity (Cordy). Over the years, some international environmental organizations have pressured Latin American governments to enforce better regulations for dealing with artisanal miners (Veiga, “New Technologies” 5), but the inability to identify alternative sources of employment means that the situation remains fundamentally unresolved.
Environmental consequences
Over 70 countries are documented as releasing between 640 to 1350 tonnes of mercury per annum into the environment by means of artisanal and small-scale gold mining (Veiga). Mercury, whether it is released through tailings dumped into the river or as aerosols, severely contaminates natural sites with poorly understood repercussions on the flora and fauna (Cordy). Among its many detrimental side effects, some of the symptoms associated with mercury poisoning include progressive loss of fine motor control– possibly leading to partial crippling, memory loss, renal dysfunction, visual impairment, numbness of the extremities, and impairment of hearing and speech (Cordy; Veiga, “Mercury in Artisanal Gold Mining” 10).
Other environmental problems caused by artisanal gold mining include water siltation, soil and landscape degradation, destruction of habitats, loss of organic soil, and deforestation (Veiga, “Global Mercury Project” 8). Swamps and soil may be polluted with oil and toxic chemicals kept near the processing sites, and the pollution and siltation of rivers and creeks affect drinking water, forcing people to go long distances to fetch relatively cleaner water. These environmental concerns never remain localized or site-specific; pollution eventually spreads out to different parts of the globe regardless of its place of origin. Thus, environmental concerns are a huge factor in prompting more research and awareness on ASM activities.
Distribution and Transportation Networks
Once the artisanally mined gold has left the miner’s hands, both the environmental repercussions of its production and the gold itself assume a face of anonymity. The gold shops, after buying mixed gold from ASM, sell it to a refiner, which is usually located in a larger city. At the refineries, the gold is refined and purified with acids and is sold to large corporations. Since jewellery accounts for about two-thirds of the demand for gold, “generating a record $53.5 billion in worldwide sales in 2007,” most of the gold sold by refineries goes to large jewellery manufacturing corporations (Larmer).
Gold, especially artisanal gold, is problematic to trace as gold from ASM and non-ASM “are mixed at the national buyer or refiner site” (Schein). In essence, as soon as the gold is melted down and refined, it becomes mixed with other refined gold from all over the world making it almost impossible to trace the exact path gold makes from point of production to consumption. Furthermore, in order to meet the demands of investors and jewellers, refiners buy unrefined gold from miners or recyclers, further complicating the traceability of gold in today’s markets (Schein).
This has implications for Canadian gold as well. Although Canada produces much of its own gold, major Canadian organizations such as the Royal Canadian Mint or Kitco sell and buy other varieties of gold on the market. Hence, some of the gold inevitably comes from mixed sources and gets trickled down into the department store retailers (Schein). A jewellery manufacturer in Canada can also purchase pure gold from “a distributor, bank, bullion house and from US refiners,” all of which may contain gold with ASM sources (Larmer).
Gold in Western Society: Symbolisms, Identities, and Global Perspectives
Consumers of gold have often been seduced and conditioned to consume gold products through enticing advertisements that obscure the often detrimental social and environmental consequences involved with unregulated productions. By ignoring the complex connections between geographies of production and consumption, consumers create barriers that separate them from the reality of social conditions of producers. They have too readily accepted minimal accountability and responsibility as a way of life, widening the gap that exists between producers and consumers. It is only when they increase their awareness and knowledge, and exercise their consumer power with discretion and forethought, that they can begin to take steps to better understand some of the social implications behind their purchases.
Because gold’s footsteps are essentially invisible, purchasers of gold are often unable to recognize exploitation processes involved in its production. One possible solution is to purchase fair trade gold. Currently, the Association for Responsible Mining (ARM) in collaboration with Fairtrade Gold is offering traceability of responsible ASM gold from artisanal mining communities. Fair trade gold is much easier to track than ASM and non-ASM gold, although this represents only a partial response to the problem of unequal power relations within the gold commodity chain.
Veiga outlines some further steps that may be helpful in increasing awareness of ASM and offering solutions to some of its social and environmental degradations. Firstly, it is vital to treat dredged materials and remove mercury from them. Secondly, spreading knowledge and awareness of environmental issues to local communities and offering education and training in proper gold processing methods may also help to curb the often-unconscious destruction of the environment degradations (Veiga, “New Technologies 53-58). In addition, technical assistance from NGOs, researchers and governmental agencies may also prove helpful. Lastly, governmental law enforcement and monitoring of ASM activities is crucial, both to assist workers and to reduce environmental degradation. It may also be useful to fund the introduction and demonstration of cleaner technology (Cordy).
Conclusions
It is vital that socially active and aware consumers attempt to understand and unravel the complicated linkages between the production and consumption of artisanal and small-scale gold via its commodity chain. It is necessary to problematize the illusion of a boundary separating ‘us’ as consumers in North America, with ‘them’ as producers in Latin America, by taking action with regards to policy and political change. Observing and recognizing how these material processes are defined by space and time is the first step consumers can take as responsible and conscious citizens, but spreading awareness and knowledge about the issues at hand will also help to broaden our understandings of such distantiated forms of commodity production and consumption.
ACKNOWLEDGEMENTS
This paper could not have been completed without the assistance, guidance, and patience of the following researchers, professors, and experts in the field. Thanks to Dr. Marcello Veiga, for his provision of abundant materials and for granting me priceless interviews in the midst of a busy season. Thanks as well to Paul Cordy for his editing assistance and technical advising. I also greatly appreciate the assistance of Patrick Schein, who patiently and extensively answered all of my questions all the way from France, and I am thankful to Marc Choyt for his enthusiasm to help and his list of invaluable contacts. Finally, a special thank you to Juanita Sundberg whose advice and editing assistance was most helpful in the preparation of this paper.
Works Cited:
