The ethical gold initiative aims to change that by selling directly to wholesale consumers at a 10 percent premium in exchange for assurances that they are rewarding fair labor practices and a commitment to environmental protection.
“I was so frustrated with the industry before,” said Amanda Li Hope, a London-based jeweler who was one of the first to buy ethical gold. “No bullion dealer could 100 percent guarantee where anything was coming from.”
Li Hope markets her guilt-free gold rings, necklaces and earrings online, and has bought about 130g of gold labeled “fairmined” or “fairtrade” since 2011.
Peru’s government estimates that more than 100,000 illegal miners are now working in the country of 30 million, though others say the true number of wildcatters is closer to 500,000.
High gold prices have especially lured poor Peruvians to the Amazon, where more than 50,000 hectares of rainforest have been destroyed to make way for makeshift alluvial mines, according to researchers at the Carnegie Department of Global Ecology. The boom has resulted in more than 2,700 tonnes of mercury leaked or dumped into the country’s rivers, according to the government.
In one area rife with wildcatting, nearly 80 percent of the population has dangerous levels of mercury in their bodies, researchers from the Carnegie Institution for Science found.
The gold rush is also tied to a host of social ills, from prostitution in boomtown brothels to child labor in the pits.
Peru’s gold output was 137 tonnes last year, but government statistics show that it exports roughly 20 percent more than it produces. Economist Elmer Cuba says it is a sign that illicit gold — the kind often linked to organized crime and deforestation — is regularly laundered into the export market.
While Peru tries to crack down on illegal mining, advocates of ethical gold say lasting solutions lie not in police operations, but in business savvy and financial incentives.
ARM and another group, Fairtrade International, put their “fairmined” and “fairtrade” stamps of approval on gold in exchange for commitments by the small mining firms to adhere to environmental, social and labor standards.
Both use similar compliance guidelines and perform surprise inspections on miners whose products they endorse. They say they do not trade in gold or take a cut of exports.
The initiative builds on similar efforts to get big mining companies to source ore under tougher standards and to prevent the international trade in “blood diamonds” from conflict zones.
Aurelsa mine manager Maria Rosa Reyes said word is spreading that formalizing a mining operation as required by law can bring big benefits.
“Without being organized as a formal company, there is no legal way to buy inputs like dynamite and cyanide, there’s no way to get financing,” she said. “And without those things you can’t produce” at an export scale.
Aurelsa’s first batch of certified gold sold directly to an overseas buyer went to Ethical Metalsmiths, a US boutique jewelry consortium.
Ethical Metalsmiths executive director Christina Miller said the transaction took much longer than she expected — a potential obstacle for ethical gold producers new to exporting — but that she is still planning future purchases.
Aurelsa and the other certified mines in South America will probably produce more than a tonne of gold by 2015, ARM business liaison Kenneth Porter said.