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  Number 397 | Agosto 2014
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Latin America

We need a mining moratorium given the obsession for gold

It’s hard to argue that community wellbeing or the planet’s industrial development depends on continued mining for gold, which is advancing at breakneck speed, when the gold is then mostly used for jewelry and the financial world. An environmentally responsible social response to this dramatic situation is a moratorium.

Eduardo Gudynas

Gold mining has become a scourge plaguing many Latin American countries. A few transnational giants are operating in certain places but hundreds, thousands, of people throng together in other areas, sifting through the rivers of the rainforests or in the bowels of the mountains in search of a few ounces of gold.

Both are inefficient and
they often work together

The large corporations insist they are using the latest technology and are helping economic growth and providing employment while small-scale informal or illegal mining is accompanied by pollution, violence and poverty. Actually, they’re both equally terrible. Large-scale gold mining creates all sorts of territorial and environmental impact and repeated promises of technological and managerial excellence have failed. Pascua Lama, a massive mining operation shared by Argentina and Chile in the Andes mountains, repeatedly promised it would be an example of careful environmental work. But the reality has been different; the Chilean justice system fined the company for mismanagement and incompliance and suspended its operations.

Gold mining is also one of the most inefficient extraction activities known. The world’s top 50 mining companies only obtain an average of 0.1763 ounces of gold per ton of rock extracted. Given these figures it’s no surprise that this activity has profound and intense environmental impacts.

Small-scale gold mining isn’t immune to problems either. In various Amazonian sites in Colombia, Brazil, Ecuador and Peru, these activities are plunging communities into social and environmental desolation. In regions such as Madre de Dios, in the south of Peru, gold mining has become one of the main factors in the destruction of the Amazonian jungle and the creation of local violence. Mining advances there by deforesting the jungle and polluting the waters and soils.

Individual or family gold mining ends up being an illusion, as hundreds and thousands of people toil in the same regions, accumulating and multiplying the negative impacts. The image of a man hunched over a river scooping up and processing sand is now a thing of the past in many places.

The large mining companies have worked out how to transport and operate enormous dredging machines to the most remote corners of the Amazon. This sustained expansion is only possible because small-scale gold mining has ended up coordinating with the formal markets…and the gold they extract often ends in the hands of the same mining companies.

What do they want so much gold for?

Despite all the evidence, mining in general and especially gold mining continues to be hotly defended. Mining projects are presented as economic blessings and export successes. The propaganda makes the need for gold appear as enormously important to human wellbeing and development, thus justifying all the destruction caused by its extraction. Is this true?

Does gold have uses essential for people’s quality of life or indispensable to some key industrial chain? If we don’t export gold, will some production chain collapse? Do national economies plummet? None of the above. Only 10% of the demand for gold is used by some technologies or medicine. The rest has two main uses: jewelry (just over 40%) and financial resources—managed by investors—either minted as coins or kept as ingots in central bank deposits (just over 40%).

In 2012, the world demand for gold was estimated at 4,415 tons: 1,896 tons (42.9%) for jewelry, 1,568 tons (35.5%) for “investors,” and 544 tons (12.3%) for central bank purchases. That’s over 90% for luxury uses, exhibitionist jewelry consumption or speculation and financial backing. Given these figures, it can hardly be seriously argued that global welfare depends on continuing to mine gold.

China: Pioneers in the gold greed

A large part of all gold in circulation comes from reuse and recycling, but the demand is so high that there’s pressure for more extractive mining and gold mining has broken records in recent years. In 2012, a total of 2,982 tons of gold were extracted worldwide.

China is the biggest mining country in the world, extracting over 400 tons, while an American country, Peru, is ranked fifth. China has also become the primary gold consumer, as its needs have quadrupled in the last decade… mainly for making jewelry.

So we can see that the enormous harm to the environment and to communities from obtaining gold isn’t justified by feeding any key industrial process or addressing any basic need, but rather is tied to global jewelry fashions and, especially, the consumerist desires of wealthy families from China and other countries, or the needs of financiers. If Latin America stopped providing gold for these ends, there wouldn’t be any collapse. On the contrary, the quality of life of many communities on our continent would be much improved.

Gold only has symbolic value

The best way to describe what’s happening with gold is to revive the concept of “preciosities” proposed by Immanuel Wallerstein in the mid-seventies. These are goods that are essentially expensive because of their symbolic value. Those who have them ostentatiously flaunt wealth and power.

Other examples of preciosities are diamonds, rubies and other precious stones, coats made from the fur of exotic animals, caviar… These assets don’t perform any role similar to other globally traded raw materials, such as those used for manufacturing food or industrializing the population’s other needs or those, such as iron, used as components in industrial processes. In Latin America gold mining isn’t even an “industry,” since it doesn’t involve any manufacturing process.

These conditions define corporate as well as informal and illegal gold mining. In whichever of its versions, they are doing the same thing: extracting. Both have negative social, environmental and economic effects and both are tied to the global markets. The corporate version has even inserted the informal one to be able to export more gold.

Advantages that bring violence

Governmental responsibilities in all this can’t be forgotten, as they promote the political and economic conditions that repeatedly reproduce mining. They have given the big mining companies and their investments every possible support—mostly covert or indirect—from granting them territories to ensuring their exports. In some cases they have even granted the companies subsidies and/or provided police and military personnel to defend them. They are also responsible for the countless families who have no option but to earn a few cents looking for gold nuggets in the jungle, as the State has left them homeless and without any other viable options.

The results of this profitable situation are that once the companies or the thousands of small-scale miners are installed the State can no longer control them… or doesn’t want to. Both have political power. The corporate power is more subtle but stronger and more extensive, and operates from national chambers of commerce and the media. The individual, sometimes illegal miners rely for their power on local strongmen, mayors and even some legislators, as has been noted in Peru. Violence and illegality are seen in both cases, but in different ways.

This has to be stopped

This situation must be stopped. And this kind of development must be reversed as soon as possible. Mining for gold and other “preciosities” must be resolved, whether it’s a large, medium or small-scale operation, or one managed by individuals, cooperatives or the State itself.

Responses must be radical because the environmental damage and social impacts are mounting and becoming more serious. The problems can no longer be resolved with new mining technology, corporate social responsibility or a new kind of public policy, because gold mining today is advancing at breakneck speed.

Reaction can’t wait for years, until the industrialized countries’ consumption patterns and the nouveau riche of Asia understand how foolish ostentatious jewelry is and global demand finally falls. Nor can we continue waiting for sudden repentance by those in the financial world currently seeking more and more gold.

The solution is a moratorium

Solutions have to be built by Latin Americans, as they are the most interested in defending their own communities and environment. And the mechanism they must apply is obvious: a moratorium on gold mining.

This implies suspending new mining projects and starting to dismantle those already here. At the same time, a regional regulatory framework must be created to prevent the entry of newly mined gold, which would make the informal sector quickly disappear. On the other hand, trade based on reusing and recycling gold already extracted should be permitted and encouraged. At the same time, the State must redirect all the financial, human and political resources that have been supporting corporate mining up to now to provide support and dignified productive options to all the rural families engaged in artisanal mining.

There’s no reason to fear the idea of a moratorium on gold mining. It’s a needed step to deal with a situation that has become truly dramatic. Postponements are unacceptable if life is really to be defended.


Eduardo Gudynas is an analyst for the Latin American Center for Social Ecology (CLAES). This text originally appeared in ALAI (Latin American Information Agency). Subtitles are by envío.

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