What is the goal of gold mining

The national economy

Measured against global gold production, only around 10 to 20 percent comes from small-scale mining, where small amounts of minerals are extracted using simple methods. Nevertheless, around 90 percent of gold miners are employed in small-scale mining and generate their income here. In total, it feeds around 100 million people, the majority of whom come from developing countries in Latin America, Africa and Asia.

The social and ecological challenges in small-scale gold mining are considerable compared to large-scale industrial mining. For the miners concerned, work in small-scale mining is usually associated with harsh and dangerous working conditions. Child labor is also widespread. In addition, mercury is very often used in gold mining, which can damage the health of miners as well as the environment. After all, in certain regions gold serves as an important source of income for armed and criminal groups and can thus fuel or intensify conflicts in politically unstable regions.

Switzerland is a leader in gold processing

Switzerland is an important trading center for gold. In 2015, a total of over 2,500 tonnes with a value of around CHF 69 billion were imported. Switzerland is also a leader in processing and smelting with four of the six largest gold refineries in the world. It is estimated that around two thirds of the gold extracted globally is refined in this country. This privileged position in the gold market is based on a long tradition, which is based on the one hand on political and economic stability and legal security in Switzerland. On the other hand, Switzerland's favorable position as a trading hub and the efficiency of the national financial and logistics systems also have a positive effect. This eminently important position in the gold sector is also accompanied by a responsibility on the part of industry and the federal government.

In the basic report on raw materials [1], which the Federal Council published in 2013, the associated challenges in terms of human rights, environmental damage and corruption are highlighted in addition to the great economic and financial significance of the raw materials industry. For the gold sector, the Federal Council has recommended the creation of value chains for fair and sustainable gold mined and traded.

A broad-based initiative

The “Better Gold Initiative for Artisanal and Small-Scale Mining” was launched in 2013 with the aim of improving the situation in ASM. This is a public-private partnership between the Swiss Better Gold Association (SBGA) and the State Secretariat for Economic Affairs (Seco). The SBGA includes the most important players in the Swiss gold market, such as refineries, goldsmiths, watch manufacturers and financial institutions. Since then, thanks to the initiative, over a ton of responsibly mined gold has been imported into Switzerland from certified Peruvian mines and sold at a fair price.

The initiative supports small mines and mining cooperatives with certification in order to improve the technical, organizational, social and ecological conditions in mining. The program is based on the voluntary sustainability standards prevailing in the gold sector, such as Fairtrade Gold, Fairmined or the Responsible Jewelry Council.

In addition, Seco also supports a political dialogue with the authorities in the relevant countries in order to formalize ASM. In this way, the prerequisites for sustainable gold mining are to be created.

Finally, through close cooperation with the SBGA, the demand for responsibly mined gold from ASM is channeled and corresponding value chains created. The members of the SBGA have agreed to buy the available gold from the certified mines. The end users, including jewelers or banks, pay a premium, which the gold mines receive as a financial incentive to continue this business model.

This first phase of the initiative was completed at the end of 2016. The second phase has been implemented since January 2017. In addition to Peru, the initiative has now also been extended to Colombia and Bolivia. In the second phase, the traded amount of responsible gold from ASM is to be increased substantially. For this purpose, a so-called minimum standard is to be created, since the small mines can sometimes only meet the requirements of the currently existing standards with difficulty. The minimum standard is intended to ensure that more gold miners and their families and communities can benefit from improved living and production conditions. Such a minimum standard is currently being developed in close cooperation between the SBGA and Seco.

No total solution for the gold sector

The initiative played an important pioneering role in creating sustainable value chains for gold from ASM. It has contributed to giving consumers in Switzerland and Europe the opportunity to buy watches, jewelry, electronic devices and financial products that are made with responsible gold.

How much the amount of responsibly mined and traded gold from ASM will actually increase is determined by the development of supply and demand. The demand depends on the one hand on whether the increased interest of consumers in sustainable gold is also articulated in concrete purchase decisions. On the other hand, the commitment of the private sector to the promotion of sustainable value chains is also crucial.

On the supply side, it must be confirmed that the cost-benefit ratio of the voluntary standards for the small gold mines is positive. However, the gold volumes traded through the initiative will only make up a small part of total gold imports in the future - the vast majority comes from large-scale industrial mining. Therefore, the initiative does not represent a total solution for the sector. Further efforts are necessary so that those affected in developing countries can benefit effectively from gold mining. With the Recordon postulate [2] and against the background of the risks associated with gold mining in developing countries, the legal framework, the applicable international standards and other voluntary measures are currently being analyzed.

  1. You can find the report online at News.admin.ch. []
  2. Postulate 15.3877 «Gold trade and violation of human rights». Online at Parlament.ch. []