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Soaring Prices Drive a Dangerous Rush for Gold

July 15, 2008

By Anna Stablum

Poor men and women in Ghana, former militia fighters in eastern Congo and farmers in Peru are among those joining the ranks of illegal miners and risking their lives as they seek to profit from soaring gold prices.

As a new gold rush spreads to the world’s remotest corners, the face-off between illegal, small-scale miners and multinational companies has cost millions of dollars and claimed lives.

Not all small-scale miners work illegally, but as international companies move into ever more remote and politically risky countries, they sometimes tread on the toes of miners who have worked that land for years.

Alternatively, the mining conglomerates’ trucks and cranes can act as magnets that draw small-scale miners to a previously unexplored area.

Whatever the dynamic, the result can be explosive.

“The higher prices of gold have made illegal mining become an issue in areas where there wasn’t any problem before,” said Olle Ostensson, chief of the natural resources section at the United Nations Conference on Trade and Development, or Unctad.

Gold prices have tripled over the past five years. After coming off recent highs, spot gold rose to above $950 an ounce last week as tensions in the Middle East continued to encourage investors to seek haven in bullion.

There are about 13 million to 20 million small-scale miners around the world, according to Communities and Small-Scale Mining, or CASM, a group that focuses on social and environmental problems facing artisanal mining communities.

Artisanal miners account for about 10 percent of the global production of metals and diamonds and 75 percent of all other gemstones. Around 100 million people are directly or indirectly dependent on small-scale mining.

High commodity prices and declining resources “are going to mean this is a growing phenomenon in many countries,” said Jon Hobbs of the Department for International Development in Britain.

Hobbs is also chairman of CASM, which works with multinational companies to draw up guidelines on how to tackle illegal mining.

As security costs and the threat of plant closures mount, international companies are trying to find a solution.

“Companies have realized this is their biggest social problem,” said Kevin D’Souza, a mining engineer and technical director at the consultant Wardell Armstrong, who added that mines were getting 6,000 illegal miners on their sites a week.

In mineral-rich but often inaccessible parts of Africa, six million to eight million people work as small-scale miners.

CASM says there are 800,000 to 1.5 million artisanal miners in Congo, 350,000 to 650,000 in Sierra Leone, and 150,000 to 250,000 in Ghana, with millions more across the continent.

As prices on world markets rise and reserves decline, areas that were once seen as too remote for mainstream operations are being opened up.

The intense battle for resources is sometimes causing violent clashes between multinational companies and what some industry officials call “cowboys.”

In Ghana, the second-largest gold miner in Africa after South Africa, illegal miners, known as galamseyers, have disrupted operations in several mines and are costing companies millions of dollars.

Some of the miners are local men and women, but mining companies say others come in from nearby countries.

“They are not poor locals,” said Chris Anderson, director of corporate and external affairs in Africa for the mining giant Newmont, adding that the illegal miners in Ghana were coming from as far away as Burkina Faso, Togo, Benin and Ivory Coast.

“They are mostly men between 15 and 40, and there is a real cowboy macho culture that exists around them,” he added. Newmont operates the Ahafo mine in Ghana.

Some industry officials say that wealthy investors are financing informal operators in some parts of Africa. Thieves are also targeting mines to steal diesel or copper cables, causing power cuts that can trap mine workers underground.

At least six illegal miners, aged 14 to 20, died at AngloGold Ashanti’s Obuasi mine in Ghana in the past month, officials said.

In Peru, the world’s leading silver producer and the fifth- largest producer of gold, a growing number of small-scale farmers have turned to mining, said Ostensson of Unctad.

“Instead of earning $1 a day by farming the land, people prefer to earn $2 to $3 by standing in a river mining gold,” he said.

These miners often do not fully benefit from higher world prices because they usually live in remote areas where one buyer dominates the market, and they cannot afford to stockpile.

“The tragedy in all this is that the smaller miner is not being lifted out of poverty,” said Paul Hollesen, vice president of environment and community affairs at AngloGold Ashanti.

“It is the financier and the chain of middle people who are involved who are making more of the money,” he said. Industry officials say the middlemen can include tribal chiefs or anyone with capital to invest in equipment.

The miners, though, are the ones taking the risks.

Gold mining is particularly dangerous because mercury, a toxic heavy metal, is often used to wash ore in fresh streams that also provide water for surrounding communities.

Mercury cannot be degraded and persists in soil, water and living organisms. Exposure to high doses of mercury can be fatal, and relatively low doses can damage the brain, nervous system and fetuses.

But particularly in parts of Africa, where decades of conflict have destroyed industry and infrastructure, people often have no choice but to seek their fortune in the ground.

D’Souza of Wardell Armstrong said that as the war finished in Congo and militias were disbanded, “it was easy to take up the spade and start digging.”

The country’s eastern borderlands are a patchwork of militia- controlled zones and rebel fiefdoms where, despite government efforts and an official end to the 1998-2003 war, violence has persisted.

Up to 80 percent of all fighters demobilized in the eastern Ituri district since the war ended are believed to be illegal miners. Congo is rich in gold, copper, cobalt and diamonds.

“The problems are bonded labor, exploitation of the workers, safety and the environment,” said Richard Robinson, the Congo representative for Pact, an international nongovernmental organization.

Working conditions in most Ituri mines are atrocious, and deadly cave-ins are commonplace.

There is virtually no government presence, and the miners live in hastily established communities.

Illegal miners, especially ex-militia soldiers, can pose a serious security threat to established companies.

“In places like Ghana, we are not armed,” said Hollesen of AngloGold Ashanti. “But when our security encounter a group of 30 to 40 people with machetes and clubs, we have incidents.”

“The risk of this becoming a more common event is certainly there,” he added.

Gavin Hilson, a lecturer in environment and development at the University of Reading in Britain, said the solution was simple – mining companies should give up some land for artisanal mining to allow the poor to sustain their livelihoods.

“Once they are formalized and operate under a regulatory umbrella, then we can go in and provide them with equipment and provide them with loans and so on,” Hilson said.

He added: “If we look at the issue pragmatically, what needs to be done is that these companies have to free up areas they are not using – and that is not happening.”

Originally published by Reuters.

(c) 2008 International Herald Tribune. Provided by ProQuest Information and Learning. All rights Reserved.




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