What Makes The New “Fair Trade” Gold Fair?
Exclusive Interview with Patrick Schein, Part I
Last week, on March 17th , ARM and FLO announced their fair trade gold. This is the first time that a hard rock mining product can be certified by a third party as “fair trade.”
| (Patrick Schein) |
Here, in an interview with Patrick Schein, we learn more about the processes involved in this remarkable step forward in ethical jewelry sourcing.
Patrick is an Executive Board Member of the Alliance for Responsible Mining (ARM) as well as the President of S & P Trading, a precious metal trader and refiner based in Paris.
The first part of this two part interview covers what processes that take place at the mining site. The second part of the interview, which will be published in a few days, covers marketing issues.
Anyone interested in the fair trade gold issue will want to read this entire interview, which covers a wide range of social and economic issues.
~ Marc Choyt, Publisher
Marc: First, for those who are not familiar with your long work as a pioneer in artisanal mining sector, tell us about what exactly the objective of the Association of Responsible Mining (ARM).
Patrick: The Alliance for Responsible Mining (ARM) is a global independent pioneer initiative whose objective is to enhance the quality of life of the Artisanal and Small-Scale (ASM) miners. Its mission is to contribute to the transformation and recognition of ASM as a responsible activity facilitating a just and transparent supply chain.
Marc: Among the myriad objects that are mined by small scale miners, why did you choose gold?
Patrick: Gold mining affect an estimated 60 million people. Fifty countries in the Southern hemisphere are involved in gold mining. Also, gold has a direct link to the consumer through jewelry with its symbolic emotions and emblematic brands.
Marc: So in your model, you focused first on the supply chain?
Patrick: Right. For the last 5 years, ARM has focused on the supply side through producer support, miner’s capacity building, empowerment and elaboration of the Gold Standard Zero.
(Peruvian miners at work)
Standard Zero defines the criteria of fair trade gold. It represents the foundation allowing the link between the consumer and the miner.
Being a miner based initiative, ARM decided to liaise with a consumer facing Fair Trade organization, and a strategic partnership was sealed 2 years ago. We work with the leading fair trade organization, the Fairtrade Labelling Organization (FLO) out of Germany.
Marc: Why not just develop your own initiative instead of working with FLO?
Patrick: Working with FLO allows us to reach the market. FLO is an international non-profit organization with 24 national initiatives working to secure a better deal for producers. In the US, they are known through their national initiative TRANSFAIR USA. They already have an established label.
Marc: ARM and FLO are formally allied?
Patrick: Yes, with the objective to create the Fairtrade & Fairmined label for gold to hit the market within a year with jewelry made of Fairtrade & Fairmined Gold in the UK first, and then in all other countries where FLO is active with their national initiative interest to launch the product.
Marc: Where is this gold coming from?
Patrick: The standards have been tested on the ground since 2007 in 9 pilot mining communities in South America. The first labeled Fairtrade & Fairmined Gold will come from them.
Marc: Why South America as opposed to Africa, which also has so much ASM gold?
Patrick: The choice of South America is due to 2 reasons: first ARM is born in South America and managed from there and thus has its broadest networks of stakeholders and potential producer support organizations on that continent.
Second, Latin American miners have reached significant levels of organization, so that they are empowered and have a fairly good chance of being certified.
(A Bolivian Miner with Retort)
Once the Fairtrade & Fairmined Gold is launched into the market and the demand grows, we will reach toward Africa where we have already made scoping studies to identify potential partners and mining producers. After Africa, we will then approach countries in Asia.
Marc: Which countries are you working with?
Patrick: The first countries hosting pilot projects are Bolivia, Colombia, Peru and Ecuador.
The pilot communities are diverse and represent a wide range of characteristics such as:
Marc: How were you able to organize these communities so that they would engage in this fair trade gold process? It must have been very difficult.
Patrick: The key factor was that in each country, we had supporting organizations. These groups empowered communities of miners. They did great work assisting the mining organizations in understanding the concept of fair trade, understanding and adopting the standards and getting all the administrative work done.
Nevertheless, the driving force in adopting the Fairtrade & Fairmined gold was the miners’ willingness and desire to work within a fair trade model as economic, social and political stakeholder. They wanted to gain dignity, respect and legitimacy. They knew that fair trade was a good tool to achieve that goal. They also understood that they are their own actors for their future, and organized themselves in federations with strong leaders, such as Manuel Reinoso in Peru.
Marc: How much of a premium do the miners get from selling this gold through your certification process?
Patrick: The Fairtrade & Fairmined premium will represent 10% of the London Market Fixing for gold (the world reference market) with an extra 5% premium for ecological gold produced under stringent environmental practices.
(Miners in Peru ready to head down)
Marc: What do the practices look like on the ground for eco gold?
Patrick: The ecological gold is produced exclusively under gravimetric methods, with no mercury or cyanide. It also involves restoration. Forest restoration is key, as forests are areas of high biodiversity.
Marc: How would the fair trade gold process significantly improve the communities that are involved, besides the slightly higher price?
Patrick: The Premium is a tool for development and empowerment. It is an opportunity for miners to invest in the economic, social or environmental development of their organization, its members and their families, and the surrounding community.
The Premium is not the only benefit the miners will get for adopting the fair trade model. By having shorter commercialization routes and greater transparency with their transactions, the miners are getting a better price for their gold. We have seen that during the pilot period. Miners got better commercial conditions for their gold and, in some cases, by formalizing their operations, they also got fiscal benefits like VAT reimbursement because of their new exporter status, for example, in Peru.
Marc: Are there additional benefits for these communities by engaging with FLO and ARM?
Patrick: It is common knowledge that ASM miners have a bad reputation among governments for their illegal activities. Fairtrade & Fairmined certification gives the miners a recognition as an economic, social and political stakeholder. Through its responsible practices, Fairtrade & Fairmined mining helps to change the ASM image. Governments are realizing that ASM is an important opportunity to reduce poverty if well managed, and crucial for national economies. It works like a lobbying tool for them. Economically and socially, ASM gives work to a lot of people and cannot be ignored, marginalized or sometimes demonized.
Fairtrade & Fairmined certification will also allow pre-finance for the miners at current market prices. This is also an economic benefit for the miners because they will not be obliged to sell their gold everyday to get the necessary cash to live. They will be able to stockpile bigger lots and thus get better prices. It will also work towards mercury abatement by favoring cyanidation which is a longer process but offers a much better productivity.
Marc: Cyanide is a better agent than mercury?
Patrick: ARM favors cyanide leaching over mercury amalgamation as the environmentally superior technology, but actively promotes cyanide-free gold processing. Amalgamation is a speedy process that can be carried out by individuals, while cyanide leaching is a slow process that usually requires substantial investment in the construction of a processing plant.
The large scale mining sector replaced amalgamation by leaching some decades ago, eliminating mercury use from its gold processing operations. Artisanal miners in many countries have proved that amalgamation can be replaced by leaching at their level of production if they organize, obtain the necessary finance to invest and start using small processing plants for processing mineral ore. As cyanide can be detoxified and is even biodegradable with exposure to UV light and oxygen, leaching is considered much more environmentally friendly than mercury amalgamation using an element that is toxic and persistent. If your readers want to know more about this position , I invite them to see: http://communitymining.org/pdf/ARM_Mercury_Position-2.pdf
(A cyanide vat with gold )
Marc: How can you assure that the miners are not buying gold from somewhere else and merely selling it to you at a better price?
Patrick:All the mines will be audited by an independent certification body, FLO – Cert using mining professionals. The first audit is the certification which involves regular audits. So the grade of the ore and the plant capacities are known. In addition, the number of miners and their productivity is known.
So as the organizations must declare all those variables to the system, any discrepancy or important variation can be detected and verification action initiated on the ground to understand those variations. If you see that the volume of ore treated is going down and the gold production not declining, then the grade of the ore must obligatory be higher and you can specifically check this point with the organization.
In mining, everything is logic and as all processes are traced and reported, it is quite easy to identify discrepancies.
Marc: What takes place in the mines, in terms of environmental safeguards, verses, perhaps, a typical gold refining operation by small scale miners?
Patrick: Responsible ASM actively encourages better preventive and restorative environmental practices and the application of responsible methods of production. Responsible miners abide by the environmental laws in their countries, contribute to environmental protection, human health and ecological restoration in its operations and communities, and mitigate negative impacts.
Respecting protected areas, avoiding damaging important biodiversity, minimizing the ecological footprint of mining, and, where possible, restoring or replacing biodiversity, and where this is not possible, compensating for that residual loss, are principles for environmental protection.
Marc: Can you give me an example?
Patrick: Let’s take the example of mercury. In many cases amalgamation is the only gold recovery technology available to artisanal miners. This applies to the average artisanal miner, who is poor.
The greatest loss of mercury in the amalgamation process occurs when whole ore amalgamation is carried out without using a mercury recovery device (retort or similar equipment) during amalgam decomposition.
The Fairtrade & Fairmined Gold standard minimum requirements oblige artisanal miners to use a concentration process (gravimetry, flotation, hand-sorting, etc.) prior to amalgamation, and makes the use of retorts or other mercury recovery devices during amalgam decomposition compulsory.
Both requirements ensure that mercury emissions are drastically reduced and both can be implemented without jeopardizing the human rights of artisanal miners and their families to satisfy their basic needs.
You can use mercury responsibly. Look in the US and Europe where Compact Fluorescent Light Bulbs are getting popular, they contain approx 3 milligrams of mercury each. Their recycling is far to be perfect, but the advantages they bring are improving the current electricity usage.
