S&P Global: Illegal mining is growing along with gold
Soaring gold prices are stimulating illegal mining, which fuels social conflicts, worsens the environment and harms legal gold miners, writes Platts, a division of S&P Global Commodity Insights.
"This is more of a catalyst than a reason," said Dominic Raab, former Deputy Prime Minister of the United Kingdom and current head of global relations at Appian Capital Advisory LLP. — But if the price of gold is so high, and the risks of cocaine smuggling due to the drug war are constantly increasing, then it is logical that criminal organizations are thinking about business diversification. Gold is easy to melt, easy to smuggle, and quite difficult to track."
Not all artisanal and artisanal gold mining is illegal, but such miners are often the target of organized crime and corruption in many countries.
According to the World Gold Council (WGC), with gold prices above $3,000 per ounce, small—scale artisanal and artisanal mining account for about 20% of global production, whereas in the 1990s it was about 4% when the price of gold was about $ 250.
Price stimulates activity,"Just as large mining companies begin to develop previously unprofitable resources at high prices, so there are more small—scale mining companies," said Terry Heymann, WGC Chief Financial Officer. "Many even give up their previous jobs in other industries and join prospectors in order to take advantage of more lucrative opportunities."
The price of gold on August 1, according to the London Stock Exchange (LBMA), closed at around 3346.85 dollars, which is 74% higher than just two years ago.
The price rose sharply for several reasons, including demand from investors seeking a safe haven from market volatility and geopolitical uncertainty.
"Ghana is a prime example; people are abandoning agriculture,— says Heymann. — For example, the cultivation of cocoa, its prices are also rising. One of the reasons for this growth is that people are abandoning cocoa cultivation and switching to artisanal gold mining."
Artisanal illegal mining is carried out in about 80 countries, but it is especially widespread in Africa, Asia and Latin America. "But despite the fact that profits from mining and selling gold are growing all over the world, illegal mining rarely leads to prosperity," says Helen Clark, chairman of the Board of Directors of the Extractive Industries Transparency Initiative.
According to her, illegal mining harms the environment using mercury, exploits children and does not comply with