The Arrival of Fairtrade Gold

By David Rhode

Thanks mainly to the movie Blood Diamond, most consumers know there are big ethical headaches in store for anyone buying a piece of fine jewellery. What most people don’t know is that these days the issue around conflict diamonds is a relatively small part of the problem – exploitative labour practices and environmental damage are at least as significant, and these apply as much to the production of precious metals as to diamonds.

Though small-scale gold miners account for only 15% of global production, they make up 90% of the workforce – over one hundred million people around the world depend on small-scale gold mining for a living.

Typically, they work in harsh conditions with little or no provision for health and safety. Although they may be aware of the market value of their gold, their lack of access to the market means they often receive only 70-75% of its true value, as dealers take advantage of their desperation to drive them down on price. Exploitative supply chains often leave them trapped in horrific poverty.

It’s against this backdrop that the Fairtrade Labelling Organisation has moved to introduce independent certification for gold. Fairtrade gold will be launched in the UK in 2011, and later introduced internationally. The long-term goal is to gain 5% of the gold jewellery market, which would ultimately account for annual production of approximately fifteen tonnes.

In the short term, the aim is to level the playing field for producers in the developing world, while providing interested consumers with peace of mind. In the words of Harret Lamb, Executive Director at the Fairtrade Foundation
“Companies and consumers will embrace this golden opportunity to make a real difference to miners’ lives. The launch of Fairtrade and Fairmined standards for gold provides a lifeline for communities who find themselves at the mercy of unbalanced markets, when agriculture and other livelihoods are not viable…Our research shows that customers believe buying jewellery for a special occasion holds greater value and significance if it carried the Fairtrade and Fairmined hallmark. People said that the label reassures both the giver and receiver that the miners are getting a better deal.”

The new Fairtrade Standards will impact the miners in a few key areas

  • Miners will be guaranteed a minimum price for their gold, set at 95% of the spot price in London.
  • In addition, miners will receive a Fairtrade Premium (10% of the spot price, or 15% for gold that has been extracted without chemicals).
  • Certified miners will use only safe procedures in the extraction of gold, with chemicals reduced to a minimum and in many cases eliminated.

The jewellery business is hardly known for being progressive. Most jewellers reacted to the conflict diamond controversy in one of two ways. Either they buried their heads in the sand, and pretended there never was a problem; or the more cynical ones started using phrases like ‘conflict-free’ in their marketing, while continuing to do business within the same supply chains as before.

The launch of Fairtrade Gold will go a long way to raising consumer awareness of the other big problems in the industry. Confronted by an increasingly well-informed public, jewellers will be forced to question whether they can afford to keep ignoring the dirty reality of where their gold comes from.

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