Who is mining the Gold?

 The rising price of gold in the global market has led to a boom in small-scale/artisanal mining. Although the mining is called ‘small-scale,’ the huge number of miners operating in Peru is creating an ecological catastrophe in the Amazon River basin.

Over 20,000 small-scale miners work in Peru in the Madre de Dios region. Although the Madre de Dios is Peru’s third-leading regional producer of gold, it yields 70% of the gold produced by small-scale miners in the country.[1] The small-scale miners, who often work on illegal claims, account for 20-30% of Peru’s annual gold production.[2]

The miners are normally extremely poor, and many are immigrants to the Madre de Dios region. The boomtowns where the miners live are havens of violence, illegal activity and child exploitation.[3]

Why are they Mining?

In the past decade, the price of gold has risen dramatically. Gold reached a record price of over $1800/oz in September 2011, and continues to command prices over $1600/oz.[13] The record demand for gold is partially due to global economic volatility, as investors purchase gold to hedge against market risks.

 How is the Gold mined?

The miners are generally poor and have very few resources or equipment available. The most common technique in Madre de Dios is to use a water hose to turn the banks of a riverbed into mud. The miners then add toxic mercury to the muddy mix to bind with the gold, and use a variety of techniques to separate the gold/mercury amalgam from the mud. Often, the small-scale miners mix in the mercury by spinning a stone in the mud with their feet.[4] Because much of the small-scale mining in Madre de Dios is done illegally and without a permit, government health and environmental regulations are not stringently enforced. It is estimated that over 90% of the gold claims in Madre de Dios are illegal.[5]

Deforestation 

In addition to the hazards of releasing liquid mercury into the water supply and releasing mercury vapors into the air, small-scale mining is exacerbating the terrible deforestation of pristine rainforests in Peru.[16] It is estimated that small-scale mining deforested 16,000 acres between 2003 and 2009, with this rate expected to increase each year.[17] While this amount is not as great as the number of acres deforested due to agriculture and development, the destruction is much more severe because, in addition to the trees, the soil is removed and the area is left with long-lasting chemical pollution. Throughout Peru, over 64,000 acres of rainforest have been destroyed by the gold mining process.[18]

Why Use Mercury?

The chemical composition of mercury allows it to bind with many metals, including gold. When mercury is added into muddy water containing fine particles of gold, it binds together the gold flakes to form nuggets.[14] This technique, called amalgamation, was used by gold miners throughout the world in the 1800s.   Due to its severe environmental impact, however, this process has been highly regulated and predominantly replaced by different techniques in the developed world. Unfortunately, the small-scale miners in Peru continue to use the amalgamation process. The easy availability and low cost of mercury has led to widespread use.[15]

What Happens to the Mercury?

In the small-scale mining process, excess mercury runs off into the river basin and contaminates the surrounding ecosystem. Some techniques are so crude that, for every 1 gram of gold produced, more than 3 grams of mercury run off into the water.[6]

The gold nuggets extracted by small-scale miners contain high levels of mercury. In order to purify the gold ore, the excess mercury is burned away from the amalgam, releasing toxic fumes into the air.[7] Mercury is toxic to the miners and their families and devastating to the ecosystem of the headwaters of the Amazon.[8]  It is estimated that 35 tons of toxic mercury are released into the air and water of the Madre de Dios region each year.[9]

Cycle of Mercury

It is estimated that 2000 tons of mercury are used globally each year. The leading producer and exporter of mercury is China, which produced nearly 70% of the mercury mined in 2011.[19] The countries with the largest remaining reserves of mercury are China, Kyrgyzstan, Mexico, Peru, Russia, Slovenia and Spain.[20]

It is difficult to determine how the miners in Madre de Dios acquire mercury, because it is imported into the country for legitimate purposes such as dentistry.

However, the Superintendencia Nacional de Aduanas del Peru estimates that 95% of all mercury imports are used in small-scale mining operations.   Despite this fact, the Peruvian Government does not restrict imports of mercury into the country.[21] The amount of mercury imported into Peru has increased with the rising price of gold in recent years. In 2010, Peru imported 280 tons of mercury. By 2011, however, an estimated 500 tons of mercury were imported.[22]

Toxic Mercury

Mercury is widely considered one of the most toxic metals to human health and the environment.[23]  Small-scale gold is the second largest source of mercury pollution in the world, after coal-fired power plant emissions.[24]

Mercury exposure by miners occurs throughout the cycle of gold. Contact with skin occurs when the mercury is mixed with river mud to amalgamate the gold nuggets. When the gold ore is melted and refined (which is often done indoors with little ventilation) the miners and their families are exposed to the toxic mercury vapors.   Additionally, the mercury that runs off into the water quickly works its way through the ecosystem and food chain. The fish that are caught for food near the mining sites contain dangerous levels of methylmercury, an even more toxic form of the metal.   Mercury contamination causes severe disorders of the brain and central nervous system. Mercury contamination also can poison the lungs, kidneys and liver.[25]

What happens to the Gold?

Most small-scale miners sell their gold to on-site buyers. The buyers then refine the gold by melting what they receive from the miners. This melting process usually occurs in the villages near the mining areas, exposing the families and children of miners to toxic mercury fumes.[10] The gold refiners then sell the product to regional and international traders. The international trades sell to investment banks and bullion dealers, who primarily trade gold on the London Bullion Market.[11]

Who buys the gold?

The largest markets for gold are India and the Middle East, followed by the United States and China. 50% of global gold demand is used for jewelry. Other prominent uses include dentistry, electronics and investment. [12]

The global supply chain for gold makes it difficult for a purchaser to determine where any individual piece of gold was mined.   Additionally, much of the gold on the global market is blended, further increasing the difficulty of distinguishing the gold that is mined in a responsible manner.

 

[1]Swenson, J.J., Carter, C.E. Domec, J-C, Delgado, C.I. (2011). Gold Mining in the Peruvian Amazon: Global Prices, Deforestation, and Mercury Imports. PLoS ONE. 6(4): e18875.

[2] “In Peru, Gold Rush leads to Mercury Contamination Concerns.” Pulitzer Center on Crisis Reporting. December 27, 2011.

[3] Webster, Donovan, “The Devastating Costs of the Amazon Gold Rush,” Smithsonian, February 2012, p. 50

[4] United Nations, Global Mercury Project, “Protocols for Environmental and Health Assessment of Mercury Released by Artisanal and Small-Scale Gold Miners,” p. 22

[5] Webster, Donovan, “The Devastating Costs of the Amazon Gold Rush,” Smithsonian, February 2012, p. 40

[6] “Fair Trade and Fair Mined Gold,” A Fairtrade Foundation and Alliance for Responsible Mining Report. January 2011, p. 7.

[7] United Nations, Global Mercury Project, “Protocols for Environmental and Health Assessment of Mercury Released by Artisanal and Small-Scale Gold Miners,” p. 27

[8] “In Peru, Gold Rush leads to Mercury Contamination Concerns.” Pulitzer Center on Crisis Reporting. December 27, 2011.

[9] “Digging for Gold in the Peruvian Rainforest.” Pulitzer Center on Crisis Reporting. August 15, 2011.

[10] United Nations, Global Mercury Project, “Protocols for Environmental and Health Assessment of Mercury Released by Artisanal and Small-Scale Gold Miners,” p. 32

[11] “Fair Trade and Fair Mined Gold,” A Fairtrade Foundation and Alliance for Responsible Mining Report. January 2011, p. 7.

[12]World Gold Council , “Demand and Supply Statistics” http://www.gold.org/investment/statistics/demand_and_supply_statistics/

[13] London Bullion Market Association, “Historical Statistics: Gold Fixing,” Accessed April 12, 2012.

[14] United Nations, Global Mercury Project, “Protocols for Environmental and Health Assessment of Mercury Released by Artisanal and Small-Scale Gold Miners,” p. 20

[15] United Nations, Global Mercury Project, “Protocols for Environmental and Health Assessment of Mercury Released by Artisanal and Small-Scale Gold Miners.”

[16] European Commission, Science for Environment Policy, “Rising Gold Prices Drive Peruvian Deforestation and Mercury Imports,” September 8, 2011.

[17]Swenson, J.J., Carter, C.E. Domec, J-C, Delgado, C.I. (2011). Gold Mining in the Peruvian Amazon: Global Prices, Deforestation, and Mercury Imports. PLoS ONE. 6(4): e18875.

[18] Webster, Donovan, “The Devastating Costs of the Amazon Gold Rush,” Smithsonian, February 2012, p. 40

[19] U.S. Geological Survey, “Mineral Commodity Summaries 2012,” United States Department of the Interior, January 24, 2012, p. 106.

[20] U.S. Geological Survey, “Mineral Commodity Summaries 2012,” United States Department of the Interior, January 24, 2012, p. 106.

[21]Swenson, J.J., Carter, C.E. Domec, J-C, Delgado, C.I. (2011). Gold Mining in the Peruvian Amazon: Global Prices, Deforestation, and Mercury Imports. PLoS ONE. 6(4): e18875.

[22] European Commission, Science for Environment Policy, “Rising Gold Prices Drive Peruvian Deforestation and Mercury Imports,” September 8, 2011.

[23] United Nations, Global Mercury Project, “Protocols for Environmental and Health Assessment of Mercury Released by Artisanal and Small-Scale Gold Miners,” p. 140

[24] European Commission, Science for Environment Policy, “Rising Gold Prices Drive Peruvian Deforestation and Mercury Imports,” September 8, 2011.

[25] United Nations, Global Mercury Project, “Protocols for Environmental and Health Assessment of Mercury Released by Artisanal and Small-Scale Gold Miners,” p. 144