Business

No 'moral' or 'business case' for use of conflict gold

Chantelle Benjamin

The 2013 African Mining Indaba has been told that investors are becoming increasingly interested in human rights matters around the precious metal.

According to Rand Refinery chief executive Howard Craig, it is estimated that about 20 to 40 tonnes of gold is mined by illegal miners annually in South Africa. (AFP)

Rand Refinery chief executive Howard Craig was speaking at the first day of the mining indaba on Monday where he was part of a panel of gold industry leaders introducing the conflict-free gold standard, which is to be rolled out by the end of the year.

According to Craig, it's estimated that about 20 to 40 tonnes are mined by illegal miners annually. “To explain it, it would be about half of South Africa's gold production,” he said.

The conflict-free gold standard, developed by the World Gold Council, is supported by leading companies in the gold industry and was intended to prevent gold from being used to fund armed conflict.

Nick Holland, chief executive of Goldfields, which is a member company, said the gold sector needed to ensure that the gold sold was not used to fund conflict or contribute to human rights abuses.

“It does not just make moral sense, there is also a business case,” said Holland. “We found investors are increasingly interested in non-operational matters, like health, safety, human rights and how we interact with communities. In fact some investors would only ask about these, rather than the operational and financial performance of the company.” 

Reputable dealers
The major mining companies, which make up about 60% of the gold mining sector have agreed to cooperate with the standard, and it is hoped the remainder will come on board as well.

Howard, the largest gold refiner in South Africa, said on Monday that gold mining companies could play a role to ensure that the work done by the mines did not undermine the security of a country.

“It's important that African gold is not stigmatised and confused with conflict gold. We need to have procedures in place to ensure that African gold can be proudly marketed."

He said as a refiner they only deal with reputable dealers or with banks, when it came to legal artisanal miners. In the case of scrap metal, Rand Refinery only deals with companies they know and whose products they can source.

Robert Duffy, executive vice-president for Continental Africa, Anglo Gold Ashanti, Paul Mabolia, national coordinator for the ProMines Project, Democratic Republic of the Congo, said the artisanal mining sector was the most vulnerable to armed groups and gold was increasingly popular because it was easy to transport and difficult to track.

An artisanal miner or small-scale miner is, in effect, a subsistence miner, who works independently, mining or panning for gold. In some cases these miners are legally employed, but it’s the illegal miners and the conditions under which they operate, including using child labour and poor safety regulations, that concerns organised labour. Not to mention that some of the money from this sector is used to fund rebel movements.

Cooperation
Asked if there was not a need for greater cooperation between governments and the mining companies, Duffy said they believed this was essential but that it tended to be very complex to set up. 

He said they had an effective relationship with the government in Tanzania where there were about 200 active pits in the area they mined. Duffy said the company was leading multiple stakeholder discussions about how best to assist this group that in many cases were surviving on the money made from these mines.

“The state and mining companies need to work together to remove the illegal miners and provide them with alternatives, because they will simply pop up somewhere else or return to the property,” said Holland.

He pointed out that technical training could be provided for illegal miners and they could be brought legally into the system. “Let's train them how to mine and make them subject to standards. They need to pay tax.”

He said by making them legal it made it easier to monitor where the gold came from and where it was going. 

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