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'Dirty' gold: The unseen yellow peril

By Darryl D'Monte

The gold industry consumes a tenth of the world's energy, spews out 30-50% of the globe's toxic emissions and imperils 40% of the frontier forests A single gold ring generates a staggering 20 tonnes of waste

John Maynard Keynes, the renowned British economist who famously advocated digging holes and filling them up during the Depression in the 1930s, once castigated gold as a "barbarous relic". But its peculiar appeal simply refuses to fade. Even in the 21 st century, when it has stopped serving as the reserve for currencies of the world, Fort Knox , the Reserve Bank in Mumbai and countless other central banks around the globe continue to hoard vast quantities of it, although the yellow metal does not appreciate in value or earn interest.

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India is the biggest consumer of this metal, some 950 tonnes of it annually, by some counts (accurate estimates are impossible to come by, considering that much of it is smuggled in, though not on the scale previously). Old-timers still recall "the bad old days" when Morarji Desai, as finance minister, imposed a Gold Control Order. Everyone had to declare his holdings, much to the chagrin of some householders, especially industrialists and sundry businessmen who hoard gold as unaccounted-for wealth.

According to the international lobby group known as the World Gold Council, "Gold was acquired in India in Roman times as part of the silk and spice trade, and the first gold ducats struck by the Venice Mint in 1285 went into the Levant (i.e. the countries

bordering the eastern Mediterranean ) and on into India . In the 17 th century the Dutch and English East India Companies paid for goods with gold and silver and during the American Civil War, India received gold from the US in return for the cotton that it supplied to make up for the lost crops in America. Estimates vary, but it is believed that at least 13,000 tonnes of gold rest in India - or approximately 9% of the world's cumulative mine production.

India in world gold industry

 

 

India(In Tonnes)

World (In Tonnes)

% Share

Total Stocks

13,000

145,000

9

Central Bank holding

400

28,000

1.4

Annual Production

2

2,600

0.08

Annual Recycling

100-300

1,100-1,200

13

Annual Demand

800

3700

22

 

 

 

 

Source: Multi Commodity Exchange of India Ltd, 2004

"The hoarding tendency is well ingrained in Indian society, not least because inheritance laws in the middle of the 20 th century lent a great desirability to anonymity. Indian people are renowned for saving for the future and the financial savings ratio is strong, with a ratio of financial assets-to-GDP of 93%. Gold is valued in India as a savings and investment vehicle and is the second preferred investment behind bank deposits. India is the world's largest consumer of gold in jewellery (much of which is purchased as investment). Gold circulates within the system and roughly 30% of gold jewellery fabrication is from recycled pieces. India is typically also the largest purchaser of coins and bars for investment (over 80 tonnes per year)."

What no one, either in industrial or developing countries, is at all aware of, is that this is arguably the world's most polluting industry, in the conventional sense of causing waste and toxic effluents. The top prize could go to the nuclear industry which, while admittedly not causing global warming, produces the most harmful waste, which remains radioactive for thousands of years and is virtually impossible to store, not counting the omnipresent risk of catastrophic accidents in power plants.

Payal Sampat, International Campaign Director at Earthworks (www.earthworksaction.org), a Washington, DC-based NGO working to protect communities and the environment from the impact of mineral development worldwide, recently gave a talk in Mumbai, where she cited how gold was so patently destructive. A single gold ring generates a staggering 20 tonnes of waste! Most people take gold for granted: something that one inherits, acquires on auspicious occasions and tries to accumulate as much as possible of. It is not for nothing that there is the adage, "old is gold". We seldom think about the environmental impact of pandering to our craze for the yellow metal.

The gold industry consumes a tenth of the world's energy, spews out 30-50% of the globe's toxic emissions and imperils 40% of the frontier forests. The entire process - from mining to jewellery - is highly polluting. When you dig for gold, you extract far more earth and rock than contains minute traces of this metal - if you are lucky, to begin with. Open pit mines generate huge piles of waste rock. Mine waste has polluted groundwater, leaving it thousands of times more acidic than battery acid.

As a recent report (www.nodirtygold.org) from Earthworks and Oxfam America observes, "Once it's extracted, the ore is crushed, piled into huge heaps and sprayed with cyanide, which causes the gold to leach out of the ore. Some mines use several tonnes of cyanide daily. A rice-grain sized dose of cyanide can be fatal. The cyanide contaminated waste ore is usually just abandoned." As a matter of fact, the usual restrictions applicable in this country and elsewhere to the solid and liquid wastes produced by other industries are missing for the mining industry, for inexplicable reasons.

Next in the process comes smelting and refining, where the remaining impurities are removed from the gold with intense energy-guzzling heat (though not as much as extracting aluminium, another very 'dirty' metal, consumes). Once gold is purified, it is turned into bars and traded to make jewellery, which accounts for the overwhelming bulk of consumption. The rest is bought - Indians please note! - by investors and hoarders or by the burgeoning electronics industry. Jewellery typically sells four or more times more than the value of the gold it contains, but few jewellers would be able to tell you where the gold comes from, much less the environmental damage that it causes in the country of origin as well as to the globe's environment.

Today, with concepts such as the Ecological Footprint, developed by Mathis Wackernagel (www.footprintnetwork.org), now based in Oakland, California, environmentalists are increasingly looking not just at the local impact of any human activity, but the 'footprint' or intervention anywhere on the globe. If all the world's productive areas - in terms of generation of natural resources -- were equitably distributed, each 'earthizen' would be entitled to 1.8 hectares. An American treads over almost ten hectares, while an Indian makes do with one, well under the ecological limit.

One of the worst cases of the havoc wrought by the gold industry is in the Yanacocha mine in northern Peru . In 2000, the mining company was guilty of allowing 150 kg of mercury (a by-product of the mine) to spill out of some poorly sealed containers and on to a 43-km-long stretch of roads running through several towns. Many locals, blissfully unaware of what it was, collected it in the belief that it might be valuable. Other villagers were hired by the Newmont Mining Company of the US , which co-owns the mine with the Buenaventura Mining of Peru and the World Bank's International Finance Co. (IFC), to clean up the waste without protective gear. It spent nearly $14 million in the clean-up, but was unable to account for 15% of the spilled mercury. Mercury can damage the lungs, kidneys and nervous system, not to mention causing birth defects.

Yanacocha, which nestles high in the Andes , is the most profitable gold mine in Latin America and the second biggest in the world, after Grasberg in Indonesia . Although Newmont claims it has been a good citizen - shades of Norsk Hydro, the Norwegian multinational, which was in an abortive joint venture to put up a bauxite mining plant in Raigadha district, Orissa, a few years ago - and has created some 1,600 jobs in the area, residents allege that it has displaced people and worsened their poverty. Since streams originate in precisely the same mountainous areas as where valuable ores are found (once again, the parallel with the aborted Orissa alumina project, as in Gandhamardhan in the same state more than a decade ago), they fear that their water has been contaminated.

Tests conducted by the Peruvian government and the company show that the water contains acids and concentrations of various metals, such as mercury and arsenic (again a bi-product of such mining) far in excess of WHO limits. A study recently commissioned by the IFC warns that acid leaching from the mine could further pollute the water sources.

There is a flashback here to one of India 's first environmental controversies. Gwalior Rayons, a Birla enterprise, was permitted in 1958 by the first communist party to be elected in the world (albeit in a state, not country) to produce its synthetic material from bamboo pulp at Mavoor, on the banks of the Chaliyar river, in Kerala. In 1979, traces of mercury were found in the river and confirmed by the State Health Minister and Water Pollution Control Board. In 1981, the Board sued Gwalior Rayon (closed down a few years ago, due to pollution and labour problems) for illegally discharging its effluents. However, it was later discovered that the toxic mercury was unearthed when gold prospectors were mining for gold in the upper reaches of the river, in the Western Ghats , and it had nothing to do with the plant.

Elsewhere, as in the Indonesian province of Kalimantan, the National Human Rights Commission corroborated claims of forced evictions around the PT Kelian gold mine, operated by the giant and most notorious British-Australian mining company, Rio Tinto (which has now begun some operations in India). Between 1989 and 1992, the Indonesian military, along with Rio Tinto security officers, burned villages around the mine and forcibly evicted small-scale miners from their claims. These 440 families only received minimal compensation, while the miners received nothing. In Ghana , in the 1990s, as many as 30,000 people were displaced by gold mines in Tarkwa district. As Earthworks observes, "Especially in parts of Africa and the Pacific region, large-scale mining tends to become 'militarised'. In such situations, the actions of the police, the military, or persons unknown have often resulted in the death or disappearance of mining opponents."

Gold may be the worst, but by no means the only, polluting industry when it comes to mining. In the US, the average consumption of 'newly-mined' (as opposed to those produced from recycling, as Indians are only too well aware) minerals comes to an astonishing 21 tonnes - over 57 kilos a day. As Earthworks puts it, almost like a rhyme, this is a daily "stupendous load of copper and tantalum, gold and platinum". The increasing use of aluminium cans even in India for soft drinks will place a huge load on the global environment, not least because of the tremendous use of energy in this industry. (Producing aluminium through recycling, incidentally, uses 90% less energy than producing it through newly-mined bauxite.) The exploding use of cell phones is yet another example of the demand for new minerals: silicon has never been mined in such quantities before and could well pose a personal health risk as well.

According to Sampat, the gold and mining industries should first of all be subjected to the same anti-pollution laws that are applicable to others. Secondly, they ought to be prevented from destroying protected natural areas, where mines ore often located (the state-owned Kudremukh iron ore mines in Karnataka's Western Ghats is a classic instance). Thirdly, the prior and informed consent of local inhabitants ought to be obtained before mining takes place, as is the case internationally with dams and so on. Consumers themselves are beginning to assert themselves and, at least in industrial countries to begin with, can coax the industry to adopt more humane and environment-friendly practices. In the US , this has happened with tobacco and before that, against the use of animal furs for coats and other personal attire.

Sampat makes it clear that she and fellow activists aren't campaigning for a ban on gold, which they know won't work, especially in this country and elsewhere in Asia . But there is no earthly reason - if you will pardon the pun - for all producers of metals not to employ environmental and social practices which are in keeping with these troubled times.

InfoChange News & Features, January 2005