At the end of January 2015, the International Council on Mining and Metals (ICMM) released its second global overview of the mining industry’s contribution to national economies. The index found that mining continues to play an expanding role in many national economies, especially those of emerging countries, with 33 of the 35 nations most dependent on mining designated as less developed or emerging countries.
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This is an unsurprising result, given the widely acknowledged role of resource development and the export of mining products for countries in the process of modernisation. But as ICMM president Anthony Hodge noted in his foreword to the report: "Numbers tell important stories. But they never tell the whole story."
There’s no doubt that the revenues generated by the mining sector – through foreign investment, exports and taxes – have the raw potential to drive economic growth and sustainable development. But there’s a fine line to walk if that growth is to be fair, constructive and environmentally sound.
"Only by working collaboratively with others as development partners can the industry ensure that the catalytic impact of mining is fulsome and positive, and the perils of the resource curse averted," wrote Hodge. "Best results depend on crisply defined and bounded responsibilities and systems of accountability for companies, governments, communities and civil society organizations."
South American gold mining: a rainforest crisis?
With ecosystems as fragile and globally vital as South America’s tropical rainforests, it’s especially important that the industry, governments and other agencies work together to ensure that the local environment is safeguarded by Hodge’s "crisply defined" rules and regulations.
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By GlobalDataHowever, evidence is building that the economic benefits brought about by gold mining in South America are coming at considerable expense to the health of unique rainforest habitats – some of the most important areas of biodiversity in the world and crucial natural mediators of climate change.
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Two recently published academic studies highlight the ecological issues facing the continent’s jungles. Published in January 2015, research from the University of Puerto Rico revealed the growing footprint of gold mining in the region. The study, which covered tropical and subtropical jungle in countries including Brazil, Ecuador, Venezuela, Peru, Bolivia and Colombia, showed that between 2001 and 2013, gold mining directly caused the deforestation of around 1,680km² of rainforest, with the region’s combined gold mining sites growing from 377km² to 1,303km² since the global economic crisis began in 2007.
The damage being wrought by gold mining in South American rainforests isn’t specifically a matter of the scale of deforestation. After all, the amount of jungle hacked away by gold miners is small compared to the space cleared for agriculture, and according to the WWF, mining operations as a whole cause deforestation of 6,100km² every year in Brazil’s copper-rich Carajas Mineral Province alone.
While the scale of gold mining deforestation might pale in comparison to other forces, the sensitive location of gold mines – 89% of gold mining deforestation was carried out in just four regions during the studied period – could cause a disproportionate impact. "Deforestation due to mining is occurring in some of the most biologically diverse regions in the tropics," said the study’s lead author Nora L. Álvarez Berríos. Around a third of this forest loss also took place within 10km of protected ecosystems, which makes them more vulnerable to chemical pollutants.
Beyond deforestation: harm to humans and wildlife
And deforestation is only part of the story. A Duke University study also published in January 2015 documented for the first time the worrying levels of mercury – used to improve gold extraction rates, especially in small-scale, often illegal operations – in Peru’s Madre de Dios region in the southern Amazon, an area that Peruvian authorities have described as a global ‘capital of biodiversity’.
Not only does mercury exposure pose risks for miners and their families, it has also been shown to travel at least 350 miles downriver, cropping up as a deadly neurotoxin in the food chains of local wildlife. Toxic fish also spread health risks beyond the local area to other human communities.
"The calculations were made assuming that people ate two fish meals per week," said the report’s co-lead Heileen Hsu-Kim. "However, we have preliminary data from household health surveys indicating that fish consumption is actually much higher in many communities, which could increase the body burden and exceed safety limits even for healthy adults."
The prevalence of small-scale gold mining can also be to the detriment of traditional indigenous communities. Tensions do arise between these communities and large companies, but illegal miners and prospectors – who number in the tens of thousands across the Amazon, according to charities – aren’t bound by the same restrictions as responsible companies. As well as indigenous tribes being affected by mercury poisoning and the introduction of illnesses to which they have little resistance, tension between these two groups fuels conflict.
"Illegal mining has intensified land use conflicts and also give incentives to encroach and access remote areas within protected areas in the Amazon, frequently with great conflicts with indigenous and other traditional populations," said WWF Brazil’s Marco W. Lentini and Jean Timmers.
Commodity prices and the environment: a lose-lose situation
At the root of all these problems is the simple market mechanism of supply and demand. Increased demand for gold as a commodity has outstripped global supply, especially after the financial crisis in 2007 set many to scurrying for gold as a safe haven against market uncertainty. This reinforced the momentum of already surging gold prices, which have risen from $250 per ounce in 2000 to $1,208 per ounce at the time of writing.
The attractive and rock-solid price of gold has dangerous implications for gold-bearing, environmentally sensitive areas like the Amazon. As gold prices make projects ever more attractive, tricky areas like the depths of the rainforest start getting tapped where they might not have been considered in previous years.
A 2011 Duke University study found a direct correlation between rising gold prices and environmental damage to the Amazon ecosystem in Peru. "Since 2003, recent mining deforestation in Madre de Dios, Peru is increasing nonlinearly alongside a constant annual rate of increase in international gold price," reads the study’s abstract. "We show that gold price is linked with exponential increases in Peruvian national mercury imports over time."
But there is also anecdotal evidence that temporary slumps in the gold price can also spell bad news for the Amazon. In Peru, a drop in the commodity prices prompted legislation by President Ollanta Humala that included relaxed environmental regulation as the country worked to boost private investment.
Ecologia Environment has worked amongst some of the most delicate ecosystems on the planet.
"Price declines and slower growth make nations more desperate, and they can be more apt to weakening environmental standards in order to grab at any investment," Boston University development economist Kevin Gallagher told the Washington Post at the end of 2014.
Looking for answers
It would appear that, for the most part, unrestrained market forces push the Amazon’s delicate ecosystem into a lose-lose situation. It’s clear, therefore, that the world cannot look to the market alone for answers. Many charities and academics argue that improving social awareness of the environmental damage caused by certain gold mining operations could have a positive effect.
While gold is included in fair trade schemes, incorporating ecological awareness as well as fair treatment of artisanal miners could help rebalance economic and environmental needs. Just as the ‘conflict diamond’ designation has helped to reduce market access for the illicit diamond trade, ‘dirty gold’ that has been mined irresponsibly could also lose its allure through greater awareness among buyers and investors.
"To decrease the amount of deforestation that is occurring as a result of gold mining in the tropical forests, it is important that awareness is raised among gold consumers to understand the environmental and social impacts of buying gold jewellery or investing in gold," said Berríos.
A similar mechanism has already been put in place for another, albeit very different, commodity that has caused deforestation in South America. Brazil’s voluntary Soy Moratorium, which was recently extended for the eighth time to May 2016, is an agreement among the country’s soybean traders not to buy soy grown on deforested land. Certainly, a similar arrangement would be more difficult in the more globalised gold market, but eco-conscious investment and purchasing choices point the way to a more sustainable mining industry in South America’s rainforests.
Other important methods of reducing the environmental impacts of gold mining include the introduction of gold extraction methods that don’t involve the use of mercury to artisanal miners, as has been done on a small scale in Mongolia with four mercury-free gold processing facilities. Illegal mining must also be the subject of more frequent crackdowns and more serious consequences for offenders; campaigners argue that the fines dished out by the Brazilian government are inadequate to discourage black market miners from returning.
Making these sorts of changes, along with the ongoing process of industry development and smart policy decisions, will hopefully create a more advanced and astute gold mining sector in the South American rainforest. But this unique region and its resources remain an incredibly complex conundrum for governments, industry and communities to solve, and it remains to be seen if change can come quickly enough.
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