The Jewelry Industry No Longer Needs Gold Mines!

By Patrick Schein

The figures speak for themselves. The World Gold Council, the organisation formed and funded by the world’s leading gold mining companies, has published the gold statistics for 2009 and they are quite eloquent in regard to gold recycling.

Globally, in 2009, the recycling of existing stocks of gold, mostly jewelry, almost equaled the demand for gold of the jewelry industry! Nearly 1,700 tons of already mined gold, mostly jewelry, were melted and refined in 2009 when, during the same period of time, manufacture of new jewelry absorbed a little over 1750 tonnes of gold. The coverage of the jewelry industry worldwide by reclaimed gold is therefore more than 95%!

More meaningful, in Europe, this rate has exceeded 100% to reach 135%! According to statistics, it has recycled 270 tons of gold while jewelry consumption of the continent has not exceeded 200 tons! Europe no longer needs mined gold for jewelry. Recycling is sufficient to meet the needs of the old continent.

At end of 2009 we had 84,000 tons of gold “above the ground stocks” of jewelry – which is equivalent of 30 years of 2009 mine output. This stock is in effect a new mine for us because it feeds our refineries today when jewelry fabrication in Europe is almost dead. The inflow of old jewelry that is being scrapped is due to 3 factors: the high price of gold, the economic crisis and a new collecting channel (the internet) that makes it easier to recycle. As a refining company, to take advantage of these trends, we launched in our base country France, Gold by Gold.

If all jewelry would now be made with recycled gold, which is entirely possible, the sector’s greatest environmental liablity would be eliminated.

So the question is: why continue extracting gold if the mining industry has a very high environmental impact, that gold is not essential to our lives and the jewelry demand can easily be met by existing above the ground gold stocks that end of 2009 represented nearly 65 years of mine production?

It is hard to justify gold mining on a large scale front if it does not bring local development. Much of the gold that comes out of the developing world, particularly from large scale mining companies, offers little benefit to local economies compared to the value created. In countries like Tanzania, for example, Gold worth $3 billion earned only $90 million as royalties during over a recent six year period—the equivalent of merely 0.03 per cent—according to an article published in the Citizen out of Dar es Salaam, by Polycarp Machira sighting a report by Tundu Lissu and Mark Curtis.

We can also consider Niger with its huge investment in the uranium industry even while it remains one of the poorest countries in the world.

For me, the real reason for the continuation of mining gold is the potential local economic benefit, and no where is that benefit more maximized then with the small scale artisan miner. Mining is justified only if it carries local development and a fairer distribution of the created value at the place where it is being mined. Countries must actively capture the value of their natural resources

This is what happened in the American West, Canada and Australia in the 1800s, where massive gold strikes resulted in local economies that built and developed cities. Today, artisanal gold mining supports over 60 million people worldwide by providing only 10-15% of global mine supply. It is a job provider for millions!

What we must focus on first is supporting these small scale miners in such a way as to build their capacity to mine with environmental responsibility and without undue damage to the environment. Secondly, we need to connect this responsibly mined gold directly to the market. This is what the Alliance for Responsible Mining and the Fairtrade Labeling Organization are working on in the marketing of FAIRTRADE & FAIRMINED gold.

Patrick Schein is the President-founder of Gold by Gold (an S&P Trading subsidiary) and a board member of the Alliance For Responsible Mining (ARM). He is a frequent contributor to fairjewelry.org.

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