By John Shanahan
All jewelry tells a story, whether it’s of the designer’s idea, the customer’s dream, or the sentiment behind its giving. More and more, however, socially savvy jewelers and their customers are asking to be told another story for their money: the story of how responsibly their precious metals and stones are sourced, and how it helps change the way things in the industry are done. It’s the story of artisanal mining.
From the time someone first realized that the earth held precious materials for the taking, there have been people working to get them out. Alone or in small groups, they were the first artisanal miners. These days the term is used to differentiate the activities of individuals or groups of various sizes versus mega-scale industrial mining operations. According to The Blacksmith Institute, quoting a 2004 report by M.M. Vega and R. Baker, it is estimated that there are between 10 and 15 million artisanal and small-scale gold miners worldwide, including 4.5 million women and 600,000 children. “Those miners are also responsible for another 100 million people depending directly on them for their sustenance and survival,” says jeweler and industry activist Toby Pomeroy of Corvallis, Oregon, an active board member with both the Alliance for Responsible Mining (ARM) and Ethical Metalsmiths.
Eric Braunwart, president of Columbia Gem House in Vancouver, Washington, which deals in responsibly sourced materials, estimates that 85 percent of all colored gemstones sourced around the world come from artisanal or what he refers to as “small mechanized” mining operations. “That would be a locally owned mine that might employ a dozen people and have some small equipment,” he says. “They’re more organized than the small mines, and fall in between major mining and artisanal mining.”
While artisanal mines can be just a handful of people working the earth where they live, quite often, they get their start when groups of miners or mining communities in resource-rich areas opt to work together in order to improve their production. “One of the groups we work with in Peru, there were about 300 mines, all working independently,” says Stewart Grice, vice president, mill products with Hoover & Strong in North Chesterfield, Virginia. “They were all getting paid 50 to 60 percent of the value of the gold, the assays were fixed, the scales were fixed. So they got together and said, we’ve had enough of this. They formed a cooperative and used any money they got to buy equipment and improve processes. Now they are at the point where they employ miners from other parts of Peru; they employ engineers, metallurgists, and chemists. It’s still a cooperative; it’s still a community. The people get a good living wage and a place to live.”
Whether digging for precious metals or semi-precious stones, one unfortunate fact resonates throughout the world of artisanal mining: By and large, these laborers often work in unsafe conditions, with less than adequate tools, using hazardous chemicals, and are either sorely underpaid for their goods or, quite simply, ripped off by people further down the chain.
However, there is a rising tide of awareness in the jewelry world that demands fair treatment, fair pay, and full transparency along the supply chain for goods sourced from artisanal miners. It looks to improve not just the efficiency and ecological impact of these mines, but also the overall welfare of the people and communities around them. And now channels are becoming more apparent and available for jewelers who want to ensure that they are sourcing stones and precious metals from operations that are making a commitment to changing for the better the way artisanal goods find their way into the market.
There are essentially two fronts at work in the initiative to improve the conditions and welfare of artisanal miners: companies committed to supporting and selling responsibly sourced materials, and organizations that help to certify the mines and the companies that buy from them, as well as overseeing continued adherence to regulations on both sides of the equation. Fairmined, which is an affiliate of the Envigado, Colombia-based ARM, and Fairtrade are two of the major players on the trade side. While Fairmined’s sole scope is mining, Fairtrade has long been involved in reducing worker exploitation in a number of fields globally. Another organization overseeing responsible mining is Pure Earth, which looks to reduce, control, or eliminate the use of hazardous chemicals such as mercury and cyanide.
According to Conny Havel, head of marketing and communications with ARM, “The ARM works by setting up standards for mining operations that are focused on organizational and social development, miner safety, reduced ecological impact, and traceability. Its most important standard is the ‘Fairmined Standard.’ The miners and ARM work together in a process that usually takes 18 to 36 months or more to make improvements within the mining organization. At the end of that time, the miners may receive the Fairmined Certification that can entitle them to a premium over the current cost of gold, silver, or platinum, and a guaranteed minimum price.”
Not all mines will initially qualify for certification, however. “There are situations where Fairmined Certification isn’t viable,” Havel says. “For example, when the miners aren’t organized but work informally on their own. Fairmined Certification requires a level of organization. If the miners are willing to organize, ARM can help in this process. Furthermore, some organizations produce very little quantities, where the costs to achieve and maintain certification may be too high compared to the benefits.”
To that end, ARM is developing a Market Entry Standard directed at those operations for which certification is currently unattainable. “It aims at eliminating the worst practices in artisanal and small-scale mining and will be a step-wise approach toward higher-level standard requirements,” she says.
The certification process covers criteria in a number of areas. There are general requirements, such as accepting the annual audits, registering all miners in-volved in the operation, and agreeing to rules against discrimination. Other areas cover environmental protection, including handling of toxic substances; labor conditions, including prohibitions on forced labor; and trading relationships, which insist upon written or electronic agreements and contracts for all entities a mine works with. The standards are broken out across a several-year plan with landmarks for each segment of the process. For example, with labor conditions, part of the Year 0 guidelines cover how many hours workers are allowed to work, and how much rest they must be given. The next step moves to Year 3, and discusses adding employees to profit-sharing programs. After that, in Year 6, the mine must agree that all work is done by full-time workers.
Pomeroy notes that there are two levels of certification for a mine to work toward. “If they mine without mercury or cyanide, they can get a Fairmined Ecological Gold certification, which qualifies the mining organization to a higher premium than they would receive for regular Fairmined Gold.” The standard certification allows them to still use mercury or cyanide, but it must be contained and used in a responsible manner according to stringent standards for community health and environmental safety.
When the certification process has been completed and the mine’s standing with Fairmined established, they can enjoy the premium on their production. “Sellers who purchase gold from the mine will pay a small percentage below market price—for example 97 percent of the gold market price—and then also pay a fixed premium per kilo to the mine,” Grice explains. “Percentage-wise that premium can be in the region of 10 percent, but it will depend on the gold market price at the time of sale.”
The disbursement and use of premiums, while not dictated by these regulatory organizations, is most often overseen by them to make sure the money is spent within keeping of the overall goal of improving working conditions and community. Certified mines and sellers are subject to third-party audits in order to retain their standing. “With Fairtrade and Fairmined, the mine will go through an on-site audit every year,” says Grice. “As a seller you go through a desk audit every year. Every two years with Fairtrade there’s an on-site audit, and with Fairmined this can be every 18 months or longer, depending on your performance and perceived risk.”
During the desk audit, the certified entity needs to open their books, show that their paperwork is in order, and indicate which companies they’re dealing with are registered with Fairtrade or Fairmined. “That determines if they’re allowed to use the Fairtrade or Fairmined name and marks,” Grice explains. “Anyone can buy Fairtrade or Fairmined metal offers, but they can only call it that if they’re registered with that organization.” This includes metal suppliers such as Hoover & Strong, who are subject to the same kinds of audits and guidelines as the mines. “This is to make sure that the sellers—who buy the gold from the mine—pay the fair market price and premiums to the mine. They also have to report who they sell the gold to, regardless of whether the final user, such as a jeweler, is registered or not.” On-site audits examine whether conditions and practices are in keeping with the standards.
Furthermore, Pomeroy says, “When a Fairmined certified mining organization receives the Fairmined premium, they’re required to have a democratic team from the community to decide how to distribute it, whether it’s an improved water supply system, more effective and cleaner mining, or schools or health care.” In fact, he was fortunate enough to sit in on one of their board meetings.
“In 2014 I was in the southwest part of the Colombian Andes visiting the Coodmilla Mining Cooperative in the community called La Llanada with a population of perhaps 1,200 people. It’s about four and a half hours from Pasto by a dirt and gravel road. I met with the 13 people who were on the board of the cooperative who were in the process of applying for their Fairmined Certification. They were curious as to what I was doing there. Why was I interested? I shared with them that I appreciated their leadership in responsible mining, their going through the difficulty, the costs, and the challenges of becoming certified. I saw them as heroes for leading the mining world as people who are doing mining right. After what I said was translated, one gentleman stood up—his eyes appeared to brim with emotion—and he said, ‘We have mined this way our whole lives. We thought the world would never know what we do.’ He said, ‘Let us drink coffee and be friends.’ It was one of my life’s most treasured moments.”
The improvements a community deems necessary could even be strictly for local morale. At the SOTRAMI mine 9,000 feet up in the Peruvian Andes, they decided that since they had already added electricity and a medical clinic with their premiums, what they really needed was a soccer pitch. “They use it all the time,” says Grice. “They invite other mines to come over and play. They have a sort of league. It’s quite uplifting to see it.”
These systems of standards and premiums, however, largely speak only to the precious metals side of artisanal mining. On the colored stone side, unfortunately, while there are concerns and companies interested in and dedicated to helping mines work better and safer, there is not the same level of support that gold has. “Only a few companies, of which we are one, are doing this as a business model,” Braunwart says. “There are people talking about it, and thinking about it, but there’s a caveat that everyone seems to miss. Let’s say you’re going to pay somebody 5 percent extra for their gold because they didn’t mine with mercury. Gold is cash. It’s got a spot market price. You know exactly what it’s worth. It’s more difficult in color. Color is a luxury—there is no commodity price for it.”
In lieu of a premium, Braunwart sometimes turns to creating microfinancing opportunities. He regards this as an aspect of research and development—and it’s an investment, not a sure bet. “Cash flow is vital to these people,” he says. “They have to sell tomorrow or their kids starve the next day. So do they have time to talk about what’s a better price or time to process the rough or understand it? No, they need to get to town and sell it. Some level of microfinancing is needed for these people. It allows them to ‘test exploit’ a potential mining location that many would just have to give up on because they can’t go dig for product for two months with no income.”
The way it works is that when a miner comes to Braunwart with some small output that he feels could have greater value, he makes the miner a proposition. “I tell them, if you work with me, I will give you $500. We’re going to use that to buy tools, and when you come back and show me what you’ve got, if we’re getting more and it’s what I want, then let’s find a way to do a $5,000 financed operation.” That next-level investment can let the miner bring friends or other workers into the operation, and they can all potentially make money. “If we can work with these people so that they have rubber boots instead of going barefoot into the mines, or so that they have a pick and shovel instead of a stick, that’s the first stage. In that fashion we try to grow it into a small organized mining operation where they can exploit the resources instead of just scratching in the dirt.”
Of course, it doesn’t always work. “If they get no rough, or rough with no value, they are even,” Braunwart explains. “They do not owe us anything. Maybe one or two times out of 10 it pays off, and the other times we lose our money.”
Braunwart ties an educational element into his microfinancing arrangements as well. Because many of these miners bring whatever they find to market and often take whatever they can get, he tries to give them a way to add value. “We talk about what the rough is and what value it might have,” he says. “It puts them in a better position to partner with people in the West to get them a better deal for their products.”
Investment in mining can also be more directly community-based, in a way that initially looks to improve conditions, with the potential to translate into better production. Monica Stephenson, owner of ANZA Gems in Seattle, works this way in her dealings with bringing gemstones from East Africa to the U.S.
Much of her company’s focus centers around education in all aspects of gemology and mining. “There’s a Masai primary school that I help support along with other people in the gem trade. It’s about 450 students, near a ruby mine in Tanzania. We also help support a trade vocational school. Through a couple of different organizations, we try to make scholarships available, particularly to at-risk women who might not otherwise have another opportunity to get this kind of education or trade background.”
The trade school, she notes, has a tuition cost that is typically aimed at middle-class Tanzanians, which is out of reach for many people in the community. “We’re trying to provide modern equipment and things that these students need to learn about gemology, especially how to facet gems,” she says. “The goal is a cutting center so they can add to the local economy and participate at a higher level than just selling the rough gemstones at the lowest price possible. It’s a circle of development: We’re trying to fuel education at the primary and trade level to increase their participation in the global gem trade.”
The response to all the efforts she’s been part of has been overwhelmingly positive. “I can’t tell you how many times in East Africa someone has grabbed my hand and said, ‘Tell people what we have. We want people in the Western world to know.’ It’s a very generous culture, so they’re appreciative of an opportunity to get an education that might help earn a good living and support their families and communities.”
Responsibly sourced metals and stones eventually find their way out of the mines, through the supply chain, and then on to where suppliers and jewelers can buy them. But what’s the incentive to do so, especially when—for gold, at least—the price of both stock and finished product can be higher?
The answer is twofold: Story, and growing demand.
“Consumers now are asking these questions about origin,” Stephenson says. “They care where their vegetables come from, so of course they’re going to care where their jewelry comes from. It’s meant to celebrate certain events and milestones, and where things come from continues to become more important.”
For sellers, the story is just as important—both as a sales tool and as a model of business ethics. “We have customers who sell [responsibly sourced goods] because they believe it’s the right thing to do,” Grice says. “It’s also good for their business in that they can say they have a line that’s made from responsibly sourced gold. There are a lot of people out there who want to know exactly where it comes from and what that extra money is going to do. Millennials love this stuff, and it gives jewelers a story to tell. It gives them the opportunity to say that although the customer pays a higher price, what they’re paying is going to do some good. Somewhere out there in the world, somebody is going to be better off for their buying it. That can be a great, powerful story.”
Braunwart notes that he will often offer customers two products that are virtually identical in type, color, quality, and cut. One is responsibly sourced, and noted as such, and has a higher price tag. “It’s an emotional premium,” he says. “And when they’re this similar, I have rarely had someone choose the lower-priced one.”
One issue for end users in getting a hold of responsibly sourced materials is that, as noted, it’s not a major groundswell of awareness at the moment. It is growing, but it’s not everywhere. So, since you’re not likely to head for the mines to deal with them and the bureaucratic nightmare of importing rough (leave that to the pros!), how can jewelers get their hands on it?
Stephenson recommends considering joining an organization such as Ethical Metalsmiths. “By joining Ethical Metalsmiths and agreeing to a checklist of responsible practices, it allows you access to a network of people who also prioritize those practices,” she says.
One other way, she says, is even easier. “Ask. I was in Tucson and as I was walking around, I realized that even some of the dealers don’t know where these gems are coming from. You have to ask, because your customers are going to ask. If your gem dealer doesn’t know, they have to find out. You need to ask your suppliers ‘Where does this come from?’ You need to ask someone you know and respect for their responsible practices, ‘Who should I call for gems?’ You have to do the legwork. It’s easy to just buy something that’s pretty and sparkly. The more we ask, the more this whole chain becomes transparent.”
And when the chain from artisanal miner to consumer is transparent, the stories will be told clearly.