Dirty, Dirty Gold

By Ben Janowski

This story appears in the February 2010 issue of JCK Magazine.

I watched the 60 Minutes piece on the abusive conditions surrounding artisanal gold mining in the Democratic Republic of Congo. It was a typical TV exposé: show the dangerous conditions at hand-dug excavations along a river; the toxic and primitive extraction of tiny amounts of gold from its natural matrix, particularly mercury pollution; and the exploitative methods of local bosses. Then show that retailers and dealers in neighboring Uganda don't care about the source of the gold, and finish with an interview with Matt Runci of Jewelers of America aimed at showing the ineptitude and inaction of the industry. Matt answered questions carefully and avoided commitments of any kind. My instinct would be to go after the real issues, but that might have been unwise, as investigative reporting looks to create controversy and shape responses to suit a predetermined conclusion.

Everyone wants an end to environmental destruction and abuse of people, so what's the point of the exposé? Does CBS think our industry can solve the problem?

It was, first, the bullying of an industry with no ability to correct political conditions that even the UN can't reach. The implication is a demand to track a fungible product that's easily transported and mixed with legitimate gold. We're being asked to handle an international disaster—a flow of gold that passes through porous borders.

That's playing dirty with dirty gold.

The program did state that Tiffany enforces a process whereby domestic manufacturing of gold products uses metal from specific, well-run mines. That's commendable, but how does everybody else do that? Perhaps a trail could be built from mines to refiners to manufacturers to retailers, whereby we could verify that some gold we use is abuse-free. Maybe the U.S. government could require that all gold sold in the United States come from approved sources. But thousands of foreign manufacturers provide the bulk of U.S. consumption, so that might not help. The trickle of gold from Congo would be lost in a web of transactions.

For several decades we've seen governments reduce gold stockpiles because they believed gold wasn't needed to buttress currencies and hedge against inflation. That has turned around sharply, and governments are buying large quantities of gold as a hedge because of huge expenditures by central banks to counter the recession. There's a belief we're headed for significant inflation, and gold is seen as the best asset to hold. The Indian government recently bought 200 tons from the IMF, which has put up over 400 tons for sale to governments for that purpose. Has anybody checked where all that gold came from, or is the IMF exempt from such trivialities?

We've been through this before with conflict diamonds (see Our World, JCK, October 2009, p. 38), another stubborn problem with elusive solutions. And diamonds are far easier to control than gold. Our industry doesn't even account for most gold usage anymore—trading and investing do.

But we're an easy target. We're small, highly fragmented, with little unified power, dealing in a product not essential to life. It makes good TV to show us in a bad light. We've all heard how oil is the most abusive of all commodities—we are, after all, financing both sides of the wars we're fighting by buying Mideast oil—but that would make an uninteresting program.

The program itself suggested the kind of action that might solve the problem. Mentioned briefly was the fact that Congo is the source of coltan (columbite–tantalite), a mineral essential to cell phone production. In fact, Congo is about the only place where significant quantities are available. It has been the cause of horrendous fighting (possibly killing 5.4 million people in the last 11 years) and has financed African civil wars. Gold pales in comparison as a source of human misery. So the governments of the world need only require proof that cell phones and other electronics do not use Congo coltan, and the problems in that country would be resolved! Solving the gold problem would be a minor side benefit.

That won't happen, because huge interests would be adversely affected. Apple doesn't want to police Congo for the sake of I-phones, so we need to look the other way. And CBS can take shots at us because it's easy; because we have no good answers; and because it makes them feel like the good guys when they make us squirm.

benjanow@gmail.com