When people in the global North think about gold, “they think about something beautiful and precious, like your ring,” says Dajhanna Zarate, the daughter of a miner, referring to the gold engagement ring on my left hand. But when people who work at her father’s mine in Peru think about gold, she says, “they think about a metal — about rocks and hard labor.”
The band of my engagement ring, which supports a flower-shaped cluster of small, ethically sourced diamonds, is made of Fairtrade gold from the SOTRAMI mine in Peru where Zarate’s father has worked for 27 years.
“When someone buys Fairtrade gold jewelry, they give something precious to the miners and the community,” Zarate added near the end of our long, crackly conversation over WhatsApp.
Her words struck me in a visceral way. I knew in an intellectual sense that the gold in my ring came from SOTRAMI, because the mine is the singular source of gold used by the jeweler where my partner purchased my ring. But hearing her say that a purchase like ours gave a “precious gift” to the Santa Filomena community moved me in a way I had not expected.
Gold mined by children makes its way into the major refineries that supply the consumer electronics and jewelry industries.
Zarate’s parents moved in 1989, along with many others, to Santa Filomena to pursue artisanal gold mining at the site of an abandoned mine. With few viable economic options for the majority of Peruvians at that time, it was the promise of making a living from gold that drew them to the desert highlands of the country, about 390 miles south of Lima. After a few years of toil, the miners banded together under the name “Sociedad de Trabajadores Mineros” (Society of Mine Workers), and formed the worker-owned company known in the industry by its acronym, SOTRAMI.
Though remote, isolated and desolate — located high in the mountains where no vegetation can grow — Santa Filomena today is a very different community than it was 27 years ago. Zarate recounts that when she was a small child they had very limited access to water, only spotty electricity and had hardly anything in the way of services like education and health care. She says it is thanks entirely to participation in the Fairtrade program — launched in 2011 — that the community now has well-functioning schools and a hospital clinic, regular access to clean water and a constant source of electricity.
A student at Universidad San Ignacio de Loyola in Lima, Zarate, now 24 years old, will soon complete a bachelor’s degree in international relations with a focus on responsible development. Of this choice, she said, “I want to show people that another way is possible, that they can improve their communities and their lives.”
Why I Sought Out an Ethically Sourced Engagement Ring
As a researcher who has studied the hidden human and environmental costs of the consumer electronics industry, and of mass-produced goods generally, I know all too well about the exploitative practices and brutal conditions that surround the production of the goods we consume. The global mining industry is especially bad in this regard.
In terms of gold, the majority of the world’s supply comes from large-scale industrial mining operations that use mechanized techniques to extract and process ore. They involve very little labor, but tend to be quite destructive to the environment, causing deforestation, depletion of soil, and pollution of soil and water with toxic chemicals used in extraction and processing. Large-scale operations also routinely kick people off their land, forcing entire villages to relocate to less desirable places, and stripping them of most of their material and natural resources in the process.
“Suppliers cannot just choose out of the blue to change. There’s a whole ecosystem that needs to start moving in a new direction.”
Most of the labor in this industry — as many as 10-15 million people, according to the Artisanal Gold Council — is found in small-scale operations known as artisanal and small-scale mining (ASM). It is within this arm of the gold mining industry that human and labor rights violations are common, child labor proliferates, work is exceedingly dangerous and miners are paid criminally low rates by buyers who in some cases threaten them or carry out physical violence to earn compliance. Many working in artisanal and small-scale mining are situated in regions where the minerals trade is controlled by armed groups and enmeshed in violent conflict, particularly in the Democratic Republic of Congo and neighboring Central African countries, though this is the case in many other places around the world too.
According to the Heidelberg Institute’s 2015 Conflict Barometer report, there were nine conflicts, two of which were violent, surrounding mining throughout the regions of Asia and Oceania during 2015, and there were 10 violent conflicts in Central and South America, most notably in Colombia, where narco-traffickers control much of the mining industry.
Consequently miners — including children — and their families live in poverty, often in insecure and unsafe environments, and with little access to food and water. Most are also exposed to dangerous levels of mercury, which they use to extract gold from mined ore. Use of mercury within artisanal and small-scale mining also causes immediate environmental pollution within communities, and carries significant health risks.
My awareness of these issues led me into a search for an ethical jeweler in England, where my partner and I live. I didn’t know it at the time, but the one that we chose, CRED Jewellery, was the first in Europe to sell Fairtrade gold jewelry, according to Alan Frampton, managing director of the company.
What Fairtrade Certification Means
CRED was founded by Greg Valerio in 1996, as an enterprise to fund the CRED Foundation, which raises money to support locally run education, employment, environmental and community development projects around the world. During the 2000s, Valerio, together with the Alliance for Responsible Mining and Fairtrade, worked to establish the standards for Fairtrade-certified gold. The company shifted to a for-profit model when Frampton took over operations in 2010.
For five years, CRED has purchased all of its gold and silver from SOTRAMI, where Zarate’s father works, and over that time has paid $280,000 in Fairtrade premiums to the organization, which decides democratically how to invest the money in the community.
Despite oversight efforts, smelters and refiners remain “black boxes,” with much of their supply untraced.
Fairtrade certification seeks to guarantee via regular auditing that the gold is produced in a socially responsible manner, with protections in place for the environment as well. The standard for Fairtrade gold, developed in partnership with artisanal and small-scale mining, is extensive and detailed, but the highlights include the strengthening of democratically run mining organizations, improved working conditions in terms of health and safety, freedom of association and the right to collectively bargain, responsible and safe use of a reduced amount of chemicals, and strong protections for the local environment. Certification is only open to cooperatives and organizations of artisanal and small-scale miners.
In exchange for meeting these criteria, mining organizations have the opportunity to sell gold at a price that is guaranteed to be at least as high as 95 percent of the price for gold set by the London Bullion Market Association (LBMA). (Like all other traded commodities, the price for gold at the point of export fluctuates daily.) In addition, when a buyer purchases Fairtrade-certified gold, they are required to pay a social premium of $2,000 per kilogram to the mining organization. If the gold is also certified as ecological, which means its production ensures additional environmental protections, then a second premium of 15 percent of the LBMA price is assessed.
The Current Reach of the Fairtrade Market
The program for Fairtrade gold is fairly new, having debuted to consumers in Europe on Valentine’s Day in 2011. Currently, there are just three certified mining organizations: SOTRAMI, Aurelsa and Macdesa — all in the same region in Peru. Projects aimed at achieving certification are in the works with nine organizations across Kenya, Tanzania and Uganda. Frampton expects that some of the East African organizations will achieve certification soon, and that he will receive the first shipments of Fairtrade gold from Africa by autumn of this year.
Gonzaga Mungai, gold manager for Fairtrade Africa and network coordinator for the Fairtrade Gold Project, told Truthout via email that 330 kilograms of certified gold were purchased between 2011 and 2015, resulting in total premium payments of $700,000 to ASM organizations.
According to Mungai, there are now 400 goldsmiths and 120 businesses in the jewelry sector purchasing Fairtrade gold, and jewelry made from Fairtrade gold is now available in 14 countries, including the US, UK, Switzerland, Germany, the Netherlands and Austria.
Mungai reports that the jewelry industry is the primary consumer of certified gold currently, but added, “We are also seeing increased interest from the manufacturing and investment sectors, with new entrants from these in 2015.” He credited this shift to the creation of new business models for Fairtrade gold that are “designed to accommodate large-volume consumers.”
Despite what Mungai calls “encouraging growth,” the market for Fairtrade gold remains small. Experts estimate that artisanal and small-scale mining yields about 15 percent of the annual gold mine production. By this estimate, the 330 kilograms of Fairtrade gold purchased since 2011 represent just 0.01 percent of total 2014 gold mine production — a “minute fraction” in Mungai’s words. But the importance of the program in the context of the norms of artisanal and small-scale mining and its impact in participating mining communities is huge. In particular, it stands out from existing “conflict-free” sourcing schemes for its ability to address issues that fall outside the very limited scope of programs designed to ensure that the purchase of minerals does not fund armed conflict in the Democratic Republic of Congo (DRC) and neighboring countries.
Problems With the “Conflict Minerals” Framework
In 2010, the Dodd-Frank Act was passed and included a provision addressing the use of “conflict minerals” — tin, tungsten, tantalum and gold, or “3TG” — in goods produced by companies based in the United States. It requires US companies that rely on these minerals in their products to report annually to the Securities and Exchange Commission (SEC) on whether any of these minerals in their supply chains came from the DRC or neighboring countries. For those that did originate in that region, the company must report on the due diligence efforts it is taking to understand the source and chain of custody of those minerals. The provision and its reporting requirements are designed to reduce the ability of violent groups to rely on the mining of 3TG to fund their operations.
“Making real and lasting systemic change will require a shift from voluntary to legally required corporate due diligence.”
Apple has garnered a lot of attention for its disclosures and due diligence efforts in this regard, and rightfully so. The company has emerged as an industry leader for its work to map its supply chain down to the level of the smelters and refiners that process mined materials. In its most recent SEC filing to fulfill the Dodd-Frank requirement, Apple reported that it went from identifying zero of the smelters in its supply chain in 2009 to identifying and auditing all 242 during 2015. During this six-year period of identification and auditing, Apple required the smelters in its supply chain to become certified by the Conflict-Free Sourcing Program. Apple reports that its efforts pushed smelters to join the program and do the required due diligence of their own supply chains, and as a consequence, today all of the smelters in Apple’s supply chain have been verified as conflict-free.
However, the focus on “conflict-free” as it is defined by Dodd-Frank is troublingly limited to the DRC and its neighboring countries, and to 3TG. This framework leaves out most countries and most minerals. Further, the definition of conflict specifically as armed conflict funded by mining operations fails to account for problems that run rampant throughout artisanal and small-scale mining, like child labor, dangerous and toxic working conditions, and environmental pollution and degradation.
The Centre for Research on Multinational Corporations, based in Amsterdam and known as SOMO, released a report in 2015 that illustrates the limitations and failures of a due diligence system that focuses exclusively on armed conflict. Through extensive field work conducted in Mali, where as many as 200,000 children work in artisanal and small-scale gold mines, SOMO found that gold mined by children makes its way into the major refineries that supply the consumer electronics and jewelry industries. Refineries including Valcambi and Metalor in Switzerland are verified by the Conflict-Free Sourcing Program, and boast several other accreditations, including from the Responsible Jewellery Council and LBMA Responsible Gold. Yet, per the report, as many as 1 million children around the world are mining the gold that feeds into these and other certified facilities.
The conditions and consequences are dire for children working in gold mining. SOMO reports:
While artisanal gold mining is dangerous for adult miners, the impact is even harder on children…. Work-related illnesses include respiratory and pulmonary disease from excessive exposure to dust, skeletal injuries from heavy lifting, various eye and skin conditions (body wounds that become infected in the poor hygienic conditions of the ponds that some children stand in all day), and fatigue because of the long hours and hard work. Shaft accidents and exposure to mercury were not encountered during this research but they are a known problem in artisanal gold mining.
Beyond Mali, SOMO reports that child labor is present in gold mining in as many as 30 other countries. Across them, many children suffer sexual violence at mining sites.
Barriers to the Growth of the Fairtrade Program
The Fairtrade certification program addresses a number of issues for which the conflict-free framework fails to account. Another program, Fairmined, was developed by the Alliance for Responsible Mining simultaneously with Fairtrade, and works with 10 certified mining organizations, according to email communication from Fairmined marketing coordinator Conny Havel. A key difference between the two programs is that Fairmined requires buyers to pay a $4,000 premium per kilogram of gold (double the Fairtrade premium). This has the potential to direct much more money into community development, but according to Frampton, the high price makes market development difficult for this certification.
Indeed, programs like Fairtrade and Fairmined are faced with significant struggles as they seek to grow and broaden their positive impact. Frampton told Truthout that all nine mining organizations in Africa failed their first attempts at Fairtrade certification. “The Fairtrade standard is such a formal management system that for African miners who have been used to the most Dickensian methods and informal structures forever, establishing a really good robust framework has been extremely difficult,” he said.
Frampton also said that common practices of price setting within the jewelry industry can hinder the appeal of Fairtrade gold jewelry to consumers. Frampton explained that a jeweler pays 2.8 to 3 percent more for Fairtrade gold, and that many multiply that percentage up through all of the costs of production, sometimes even including tax. This inflates the price of Fairtrade gold jewelry considerably. Frampton believes that simply adding the modest increase in gold cost onto the final price tag is the better approach because it leads to only a modest price increase for the consumer, and allows Fairtrade gold jewelry to compete with standard gold.
Despite these struggles, use of Fairtrade and Fairmined gold is growing in the jewelry industry, and in some others, like housewares. Meanwhile, however, the complex nature of supply chains for consumer electronics makes it difficult to get certified gold into them.
Difficulties in Tracing Gold Used in Electronics
Bibi Bleekemolen, who oversees impact and development for Fairphone — an Amsterdam-based social enterprise whose mission is to demonstrate that a smartphone can be made in an ethical way — told Truthout that traceability of gold for consumer electronics stops once it reaches the Shanghai Gold Exchange in China. China’s trade rules require all gold imported into the country to pass through the exchange, where the entire supply is mixed, and the ability to trace the origins of the gold back to a specific mine vanishes. This directly affects most consumer electronics because production of many components and most final assembly takes place in China.
Because of this, when leaders at Fairphone decided to support ethical and fully traceable gold with the printed circuit boards (PCBs) of its phones, they realized they had to find a way to work around the Shanghai Gold Exchange.
Bleekemolen explained that Fairphone managed to get Fairtrade gold into the supply chain by buying certified gold from the Valcambi refinery in Switzerland, which has a segregated Fairtrade production line for gold sourced from SOTRAMI. They then shipped it to Kanfort in Hong Kong, which is the parent company of Zhaojin Kanfort in China, the facility that turns refined gold into the gold salt needed for the PCB production process. Because Hong Kong and China have “favorable” trade relations, as Bleekemolen put it, they were able to prevent their gold from passing through the exchange. (See this illustrative infographic that Fairphone produced.)
However, the traceability of the certified gold disappeared at the point of the gold salt processing facility, because the 100 grams purchased by Fairphone for production of 100,000 PCBs was not enough volume to allow for segregated production. So, at Zhaojin Kanfort, the certified gold was mixed with standard gold, and turned into the gold salt that is used to electroplate PCBs.
Consequently, Fairphone can’t say for sure whether Fairtrade-certified gold ended up in their phones specifically, or whether those PCBs went into the smartphones of other brands, but nonetheless they succeeded in getting it into the electronics supply chain.
While this itself is a landmark achievement for the electronics sector, Bleekemolen told Truthout that equally important was the process of talking with Fairphone’s suppliers about why they wanted to source Fairtrade gold and how they would go about doing it.
Of the process, she said, “We had much more direct conversations with suppliers, which was for us one of the objectives, to engage in these conversations with the suppliers, because if you can collaborate with a Chinese supplier that has never heard of Fairtrade principles, and you can work together with them to connect them to Fairtrade gold, it also has an educational campaigning element to it in the supply chain.”
Bleekemolen told Truthout that since Fairphone secured Fairtrade gold, representatives from other industries have reached out to find out how to acquire it for their products. She also reported that Fairphone suppliers in China have received inquires from other electronics customers who are interested in incorporating Fairtrade gold into their products.
But, Bleekemolen explained, adopting ethical gold within the electronics industry will be a long and difficult process due to the complex nature of both the gold and electronics supply chains. “Suppliers cannot just choose out of the blue to change. There’s a whole ecosystem that needs to start moving in a new direction, and you cannot do that as one party. You need that ecosystem to move with you,” she said.
Obstacles to Systemic Change
Most researchers, scholars and activists who monitor the human and environmental costs of producing electronics believe that achieving the change within the “ecosystem” that Bleekemolen references requires more than certification systems and voluntary corporate social responsibility efforts.
Pauline Overeem, a researcher at SOMO and coordinator of the Amsterdam-based GoodElectronics Network, explained to Truthout in an email that one of the challenges standing in the way of needed systemic change within the mining industry is a lack of collaboration within the electronics sector, and a lack of cross-sectoral collaboration between electronics and other manufacturing industries. Overeem also sees a need for greater exchange and collaboration between industry and civil society, calling current efforts “insufficient.”
But the biggest challenge, according to Overeem, is a lack of supply chain transparency within the mining industry. Despite efforts like the Conflict-Free Sourcing Program, smelters and refiners remain “black boxes,” with much of their supply untraced. “The current initiatives with regard to conflict minerals are not sufficiently challenging this status quo,” Overeem wrote.
Speaking to the limitations of the “conflict-free” framework, Overeem explained that the GoodElectronics Network “is arguing for a more comprehensive notion of ‘conflict-free’ or ‘responsible’ mining, which should be based on an understanding of and a focus on a much broader gamut of human rights, including working conditions, child labor, community rights, economic development, environmental protection/destruction, use of mercury, a better balance between large-scale and small-scale artisanal mining, corruption, and responsible tax behavior.”
The efforts of GoodElectronics to foster collaboration on these issues within the industry, and between industry and nongovernmental organizations working in mining communities, were on display at the Dutch Ministry of Foreign Affairs in The Hague on April 19, 2016, when the organization hosted a Round Table on Responsible Mining. The daylong event was attended by representatives of major electronics brands and industry organizations, like the Electronic Industry Citizenship Coalition (EICC), as well as nongovernmental organization representatives, researchers and activists.
Overeem, who hosted the event in her role as the coordinator of GoodElectronics, reflected optimistically. “EICC, Global e-Sustainability Initiative, and individual companies have clearly expressed a willingness to move the focus beyond conflict minerals,” she told Truthout. But, she added, “How the electronics industry will move on is not yet clear. No concrete plans have been shared so far.”
To move the industry along, SOMO is advocating for more robust legislative measures that will hold corporations accountable for what happens in their supply chains. In a January 2015 report titled “There Is More Than 3TG,” SOMO spotlighted the problem of international standards like OECD Due Diligence guidelines regarding conflict minerals being nothing but voluntary, given that they have yet to be integrated into legislation within the European Union. In the report, SOMO observes, based on research, “Without such legal obligations, companies are significantly less likely to conduct due diligence when sourcing minerals that may be linked to conflict.”
SOMO positions the Dodd-Frank Act in the US as an important “first step,” but observes, as do Overeem and other critics, that the limited regional specificity and “arbitrary” focus on 3TG are problems that must be addressed.
So, while certification programs like Fairtrade and Fairmined are facilitating important economic, social and environmental changes in mining communities, it seems that making real and lasting systemic change will require much more effort on the part of the jewelry and electronics industries. It will also require a shift from voluntary to legally required corporate due diligence to account for many issues in addition to conflict minerals.