SANTA MONICA, Calif. (MarketWatch) � While the United States, Australia, South Africa, and China are among the top gold-producing countries in the world, there is a scrum of developing world countries increasing their prospecting and offering the chance for a better and cleaner enterprise.
Peru, Indonesia, and Ghana are among a host of countries that are mining more. Accelerated production rates, following on the spike in gold prices since the 2008 economic downturn, have provided the incentive. At the same time, concerns about environmental and human rights consequences have heightened.
Gold mining creates both problems and opportunities. Problems arise when the environment is degraded and forced labor occurs. But therein lie opportunities for businesses that go beyond gold itself: sustainability standards can create enterprises that make mining more efficient, environmentally safer, and engender better working conditions.
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The World Gold Council has devised �conflict-standards,� which a spokesman says will be introduced this year. �The draft standard contains a demanding framework of benchmarks and prompts, through which companies must assess the adequacy of their systems and analyze their impacts upon those around them,� says Justine McGuinness, a consultant for the World Gold Council in London.
The Gold Council has been c! onsultin g with governments, investors, civil society groups and industry representatives �to solicit input from a wide range of participants in order to promote accountability and transparency in the intent and design of the standard,� it says. Last June it unveiled its standards� initiative to combat �conflict gold.�
It�s a must. And conflict standards should be adopted sooner than later.
In Guatemala, the Philippines and Peru protests have broken out over unfit conditions and sustainability issues. Mining is a dirty business � creating more toxic waste than any other business in the U.S., for example � and stresses local habitats. Just one ounce of gold requires tons of rock to be hacked and barrels of harmful chemicals to be used. Moreover, gold mining often takes place in areas where rebels and other! bad sor ts reign; workers have few if any rights.
The industry problems became so bad that retailers actually started speaking up and out.
Tiffany�s chief executive Mark Kowalski has gone as far as to take out full page advertisements in major publications calling for higher mining standards.
�Tiffany & Co. is committed to obtaining precious metals and gemstones and crafting our jewelry in ways that are socially and environmentally responsible. It is simply the right thing to do; and our customers expect and deserve nothing less,� Kowalski says.
Besides being the right thing to do, if real conflict-standards are embraced within the gold industry, complementary businesses will in turn take off. Investors, take note. Wastewater treatment companies and clean energy operators are sitting pretty as are corporate social responsibility reporting firms and due-diligence monitoring companies. Indeed, I have spoken with several South American consultants baited with anticipation for a conflict-standards framework to be adopted.
Mining is an important source of income to many developing countries. But that doesn�t mean standards have to be sacrificed and locals have to suffer. Rather, new enterprises that promote better social and environmental impact can thrive on the coattails of the gold industry�s profits.
The Kimberley Process � despite its faults � went a long way toward making the world aware of �blood diamonds� and setting the stage for better working conditions in the gem industry. Transparency and accountability throughout the supply chain should be de rigueur in any business, and especially those businesses that do the most damage to people and the planet.
Create new stand! ards. Cr eate new businesses. Create a better developing world; nay, world.