The real price of gold

The best ore has already been mined in developed countries so developing countries, such as the Philippines, are next on the list. Pictures / Reuters

The lust for gold has reached record levels worldwide as India and China have joined developed nations in demanding more jewellery. On the back of this surge, gold prices have reached a 17-year high to more than US$474 ($670) an ounce. But the world's remaining gold deposits are microscopic and the environmental costs of extracting them are profound.

A wedding ring - equivalent to one ounce of gold - creates up to 30 tons of toxic waste. To produce that single ounce, miners must quarry hundreds of tons of rock, which are then doused in a liquid cyanide solution to separate the gold.

Payal Sampat, the campaign director for Earthworks, the mining watchdog, says, "Gold mining is arguably the world's dirtiest and most polluting industry."

A growing alliance of conservationists and local communities affected by mining operations is pushing governments, corporations and consumers to consider the real cost of gold.

"The industry has not been under public scrutiny and people don't really know where their gold is coming from," Sampat said. "The mining industry could be making changes which could provide consumers with a product which is far more clean."

Writers from Shakespeare to Shelley have lamented the lure of this precious metal, but today's gold fever neither seeks to bolster empires nor underpin currencies. It is fuelled by our desire for jewellery.

Of the gold mined today, 80 per cent is produced to feed the demand for status symbols. Campaigners try to dissuade shoppers from buying "dirty gold", which is extracted using cyanide leaching, but they face an uphill struggle.

Newly affluent consumers have pushed jewellery sales to a record US$38 billion ($53 billion) this year, according to the World Gold Council.

With the best ore already mined in most developed countries, the industry is turning to the world's poorest countries.

Up to 70 per cent of gold is mined in developing countries, such as Peru and the Philippines. Vast tracts of the developing world are being laid to waste, leaving a multibillion-dollar toxic time bomb.

United States environment agencies have described disused heavy-metal mines as an equivalent to nuclear waste dumps, which must be secured and maintained for the foreseeable future.

America's Environmental Protection Agency estimates the costs associated with the clean-up of metal mines could rise to US$58 billion ($82 billion), according to the New York Times.

The mining industry argues that it brings much-needed investment, infrastructure and jobs to the poor, an argument that is backed by the World Bank, which has pushed more than 100 governments into making tax breaks and subsidies to big mining companies.

A flood of complaints, protests and lethal spillages prompted the bank into a two-year moratorium on financing mining in 2001. That resulted in calls for the mining industry to reduce the use of cyanide and stop dumping toxic waste.

But these calls were dismissed by the industry as impractical, and the World Bank is now giving multimillion-dollar loans to multinationals.

The first loan after the moratorium went to the Canadian company Glamis Gold for a project in Guatemala that has faced heavy opposition from Mayan Indians.

At the root of the environmental problem is the industry's reliance on old mining technology called "heap-leaching". Leach mining allows miners to coax tiny flecks of gold from low-grade ore. Cyanide is the chemical of choice and more than 90 per cent of the 2500 tons of annual global gold production is extracted in this way.

In a typical heap-leach operation, huge quantities of rock are crushed and stacked on top of clay and plastic liners to create piles the size of pyramids, which are then drizzled with the cyanide solution for years.

As the chemical passes through the rock layers, it teases the gold out of the ore, where it is collected at the bottom and processed further.

As little as one ounce of gold can be extracted from 30 tons of low-grade ore.

Cyanide is toxic - one teaspoon of 2 per cent cyanide solution is enough to kill a human. This dangerous chemical is used in gold extraction operations from Peru to Ghana, and it has left a toxic legacy in its wake.

The cyanide waste produced from gold mining is stored in reservoirs. Spills from these lakes have made their way into water systems with fatal consequences for the environment, wildlife and local communities.

Just such a leak in Romania in 2000 led to the worst environmental disaster in the region since the meltdown of the nuclear reactor at Chernobyl.

Tons of cyanide-laced water broke through a dam and poured into the Tisza and Danube rivers from the Aural gold mine near Baia Mare. The results were devastating; more than 1000 tons of fish were killed and plantlife and birds along the river were devastated.

In the five years since the Baia Mare accident, mines owned by international corporations have been responsible for spills in Ghana, Western Australia, Papua New Guinea, China, Honduras and Nicaragua.

During that time the United Nations Environment Programme has been locked in negotiations with the mining industry to produce a self-regulatory code.

Desta Mebratu, a UNEP official, admitted the mining industry's activities presented a serious environmental hazard but said they were working towards lessening this.

"We are working with the mining companies to help prevent the occurrence of accidents," he said.

But the code, which was unveiled this month, has been dismissed by environmental watchdogs as toothless. A review of the voluntary code by Bankwatch and Friends of the Earth Europe said the code was "greenwashing intended to create the appearance that mining companies are addressing environmental issues".

Australia's remote Lake Cowal in New South Wales is the latest battleground between mining multinationals and indigenous people.

Neville Williams, 61, who represents the Mooka owners council clan of the Wiradjuri nation, says the fight is essential, although he knows the odds are stacked against them as the mining companies enjoy government backing. "We have no resources but we are taking the fight because of the prospect of cyanide poisoning."

Gold and minerals in New Zealand

Gold-hunting techniques used in New Zealand do not include heap leaching.

New Zealand Minerals Industry Association president Peter Atkinson said heap leaching was not a suitable technique for extracting gold in New Zealand, which was geologically much younger.

This meant less porous rock, which was needed if cyanide solution was to be leached through it.

Ore in New Zealand is ground into a fine powder, which is then put into a tank with the cyanide solution. At the Martha Mine in Waihi, this process extracted between 93 per cent and 94 per cent of the gold. Leaching processes like that used in the US often got between 60 per cent and 80 per cent.

The process was more suitable for low-grade ore and was cheaper than spending $50 million on a processing plant.

The search for gold and minerals is heating up across New Zealand The amount spent on exploration and prospecting has soared by nearly 130 per cent in the past year.

Crown Minerals, a branch of the Ministry of Economic Development, said the jump was boosted by an increase in gold exploration in the Coromandel region.

The High Court has also confirmed an Environment Court ruling against a prohibition imposed by the Thames Coromandel District Council in 1998 on mining in coastal and conservation zones and in all recreation and open-space policy areas.

Crown Minerals also said the world's largest gold company, Newmont Mining, had been given 10 gold and silver exploration permits for areas in the southern Coromandel near Te Aroha.

The Crown owns all oil and gas reserves beneath the land's surface, as well as all gold, silver and precious metals. Royalties are paid to the Government as part of the mining process.

- INDEPENDENT