Q & A

What is artisanal and small-scale mining (ASM)?

ASM is labour intensive but requires little specialist technology, knowledge or skill. The mining method differs depending on geology. For example, artisanal miners in the Choco region of Colombia pan for gold in water, whereas those working in the hills of Arequipa in Peru carry out hard-rock mining using dynamite and machinery to extract ore, which is then processed to extract gold.

ASM attracts economically disadvantaged and vulnerable people seeking a higher income. It is also seen as an important alternative to less attractive or less profitable activities and as a chance to improve economic situations. These miners produce just 15% of global gold supplies, but make up as much as 90% of the labour force in the gold industry.

What challenges do ASM miners face?

Globally, roughly 30 million people earn a livelihood mining gold, characterised by high levels of poverty from disadvantaged parts of society with no other option but to turn to ASM.  They often do not receive the full price for their gold – sometimes as little as 70% of the internationally agreed price.  Most mining communities lack basic sanitation and access to clean and safe drinking water. They often have poor housing, little or no access to education and healthcare, and are financially unstable. Lack of transparency in supply chains makes it virtually impossible for consumers to know where and under what conditions the gold in their jewellery was mined.

Mining laws are usually geared towards large-scale industrial mining and governments tend to give the large-scale industry preferential mining rights. This leaves small-scale miners, who find it hard to access legal mining rights, more vulnerable and pushes them into informal or illegal operations where working conditions are hazardous and health and safety measures are non-existent. The unskilled handling of toxic chemicals such as mercury and cyanide poses severe risks to miners’ health and the natural environment around the mine.

What is Fairtrade gold?

Fairtrade certified gold comes from artisanal and small-scale mining organisations (ASMOs) that meet the Fairtrade Standard for Gold and Precious Metals. This means the gold has been responsibly mined and that the miners have received a Fairtrade Minimum Price and Premium, which assists social, environmental and economic development in the communities.

What is the potential for Fairtrade in the ASM industry?

The majority of gold produced worldwide is used in jewellery, a high profile consumer product and a multi-million dollar global industry.  This creates significant potential for Fairtrade to bring positive change in ASM livelihoods, by stamping certified products with the FAIRTRADE Mark and raising consumer awareness of the challenges involved in conventional ASM while offering them an ethical alternative.  International market access on Fairtrade terms supports miners to tackle their most pressing development needs: environmental damage (notably mercury and cyanide use), poor health and safety, labour conditions, child labour, gender discrimination, production efficiency and livelihood diversification.

Besides impacting the miners in the Fairtrade system, our work in gold is an opportunity for Fairtrade to be at the forefront of reforming the wider ASM sector.  Fairtrade is one of the very few engaged in this area.  There is a very high degree of interest from media and policy makers, and consumer interest far outweighs the current size of the Fairtrade gold market.

What are the benefits of Fairtrade certification to miners?

Like producer organisations certified for other Fairtrade products, mining organisations and their communities gain a better deal through Fairtrade. Miners get market access and a fair price for their gold and increased security from the Fairtrade Premium, which is invested in economic, social or environmental projects.

The Fairtrade Mark ensures that gold has been extracted and processed in a fair and responsible manner. This means:

• Miners’ organizations are strengthened
  Miners form groups to give themselves better bargaining power with traders, to get a fairer return for their gold, and gain greater control over the jewellery supply chain. They are required to participate in the social development of their communities.
• Child labour
  Miners’ organisations must eliminate child labour from their organisation. No one under 15 years old must be contracted to work in the mining organisation. Those under 18 must not work in hazardous or dangerous conditions.
• Working conditions are improved
  Fairtrade certification requires mandatory use of protective gear and health and safety training for all miners.
• Freedom of association and collective bargaining is respected
  Miners’ organisations recognise the right of all workers to establish and join trade unions and collectively negotiate their working conditions.
• Responsible use of chemicals is mandatory
  Miners must use safe and responsible practices for management of toxic chemicals, such as mercury and cyanide, in gold recovery. Chemicals have to be reduced to a minimum and where possible eliminated over an agreed time period.

Where are the miners Fairtrade works with?

Fairtrade gold comes from certified mining organizations in Latin America.  Currently our two certified mines, SOTRAMI and AURELSA, are both in the Arequipa region of Peru.  We are also working with miners in East Africa (Kenya, Uganda & Tanzania) and we hope to bring them into the Fairtrade system in 2015.

The scope of Fairtrade’s work in gold only covers ASM and not medium or large-scale industrial mining operations. The potential for the greatest impact of Fairtrade certification is with ASM. Other initiatives support improvements in medium- and large-scale mining such as the Responsible Jewellery Council.

How will I know the product I have bought is from a certified Fairtrade mining organisation?

By creating fully transparent and traceable supply chains, consumers and retailers can have confidence that miners are getting a fairer deal and responsible practices have been used. Consumers can recognise Fairtrade products as their packaging will carry the FAIRTRADE Mark and the jewellery product a stamp (similar to the hallmark). Consumers will recognise products made from ecological gold as it will carry a slightly different label and stamp.

How will the Fairtrade Minimum Price and Premium be calculated?

Most Fairtrade products have a minimum price determined based on their cost of sustainable production (COSP) but it is not feasible to calculate this for gold, due to the geological characteristics of mineral deposits. Therefore the Fairtrade Minimum Price is set differently and based on the London Bullion Market Association’s (LBMA) fixing for gold. The LBMA is the London-based trade association that represents the wholesale market for gold and silver in London. The Fairtrade Minimum Price for the pure gold content (in unrefined gold) is set at 95% of the LBMA fixing at the FOB export point which is substantially higher than the 70% many often receive.

• In addition, buyers must pay a Fairtrade Premium of $2000 USD per kilo sold.
• For Fairtrade Ecological Gold an ecological premium calculated at 15% of the LBMA fixing is payable.
• The Fairtrade Premium for silver is set at 10% of the LBMA price on the day of purchase.
• The Fairtrade Premium for Platinum is 15% of the LPPM price on the day of purchase.

Do artisanal and small-scale miners use chemicals to extract gold?

Mining methods vary according to geology of the area. The gold found in riverbeds is easier to extract from the surface without chemicals using just basic tools, river terraces or digging pits. Hard-rock mining underground extracts ore which is processed on the surface to extract the gold. Most commonly, it is mixed with mercury, which captures the gold to form a mixture known as amalgam. The amalgam is then heated which evaporates the mercury, leaving residual gold and other metals. The Fairtrade Standards outline procedures for the safe handling and disposal of mercury.

Some small-scale miners use cyanidation as an alternative to mercury. While cyanide is still a dangerous chemical, it breaks down much quicker than mercury and can be used in a safer manner if the proper precautions are observed. Cyanide leaches the gold from the crushed ore, dissolving it in the water. As this process requires substantial investment, special training, a longer processing time, and significant financial capacity, it is less widely-used by ASM miners. However when used properly, cyanidation enables miners to eliminate mercury completely and increase gold recovery rates.

Will Fairtrade certified gold produced without the use of chemicals be available?

Fairtrade is working with artisanal mining organisations that do not use chemicals to extract gold and can therefore sell their produce at a higher Premium which recognises the additional costs of maintaining environmental controls.  However, these mines are not currently certified and therefore there is no available supply of ‘Ecological Gold’. 

What is the environmental impact of ASM?

The environmental impacts of ASM depend on where it occurs, but can include deforestation, land degradation through air, water and soil pollution from dust, mud or toxic substances, as well as impact on local wildlife. By working with the mining organisations before certification, it is possible to drastically reduce these impacts with the proper support and incentives. ASM is not significantly dirtier per unit of output than other mining activities, and since ASM processes much less ore than large-scale mining per ounce of gold, the magnitude of its impact on the land is much smaller.

The issue of chemical use in ASM is a delicate balancing act. If chemical use were not permitted by Fairtrade standards, the vast majority of all artisanal miners would be excluded from the Fairtrade system. However, the standards set out a process to support artisanal mining organisations to minimise the use of mercury and cyanide over an agreed period of time through responsible practices and technologies to mitigate impact on the environment and human health. The Fairtrade standards require miners to use a process which ensures that mercury emissions are drastically reduced.

For some miners‘’organizations, the Fairtrade Premium can provide the only opportunity to invest in more environmentally efficient technologies.

Would it be better to recycle unwanted gold instead of extracting more to limit the environmental impact of mining?

The jewellery industry has always recycled gold and precious metals. It has one of the highest rates of recycling in any industry in the world. So this age old practice historically called ‘scrapping’ has not changed, excepting it has been renamed ‘recycling’. The practice of recycling gold is not proven to reduce the negative impacts of primary mining on the environment or reduce human rights issues associated with extractive industries. Only 30% of the market for gold can be satisfied from such sources. It is therefore imperative to address the problems associated with gold mining. Fairtrade certified gold will provide direct developmental impacts for artisanal miners and improve conditions in what is traditionally a very hard industry.