Markets working to support sustainable development

Fairtrade Gold: raising the bar?

05 Mar 2015

To mark the second week of Fairtrade Fortnight; for those hearing wedding bells, thinking about Mother’s day gifts or considering buying some bling, you need to know about Fairtrade Gold.  While consumers are increasingly able to obtain information about where their flowers or fresh produce come from, this information has been hard to come by for the piece bought in your local jewellers.

Fairtrade Gold not only attempts to correct this, but also aims to bring safety and improved income to artisanal and small-scale miners as well as the communities they live in. ASM mining takes place in remote areas and usually involves poor and vulnerable people – including women and children – and is often associated with pollution and harsh working conditions.   ASM miners often lack access to mining rights, along with financial services, technology and market information that can make their work prosperous and reduce environmental impacts.  Artisanal miners in Africa can typically earn less than $1 a day.  Many are forced to operate illegally and exploitation by middle men is frequent. Development agencies and national authorities have historically made little effort to improve the sustainability of the sector – despite the large numbers of people whose livelihoods depend on it – instead choosing to focus on large-scale mining. 


Cut in a gold mine. Source: Wikipedia

In order to meet the Fairtrade Gold standard, small-scale mining organisations, downstream operators who buy directly from miners and those trading in Fairtrade Gold must meet standards relating to the transparency and physical traceability of their mining operation, responsible environmental management practices, democratic decision-making and organisational management, improving working conditions and women’s rights, eradicating child labour, as well as standards relating to clean technology and health and safety – gold mining is often plagued by the use of dangerous extraction techniques which use toxic chemicals such cyanide or arsenic.

Upon meeting the standards, jewellery and gold products can be branded with the Fairtrade Gold mark, and miners receive a guaranteed minimum price of 95% London Bullion Market Exchange (LBMA) plus a Fairtrade premium of USD 2,000 per kilo to put back into project that supports local community or business development. Fairtrade Gold has operated in some form since 2006, but has only entered the UK then European and Asian markets from 2011. At this early point in Fairtade Gold, there are two certified Fairtrade Gold mining organisations; AURELSA and SOTRAMI, both operating in Peru. Fairtrade Gold is working on a series of pilot projects with mining groups in Tanzania, Kenya and Uganda to bring Fairtrade certification to East Africa. These pilot projects are funded in a three-year programme by Comic Relief.  

The Ecologist recently profiled Sotrami – one of the gold mining companies in Peru which has received Fairtrade certification. Sotrami implements the Fairtrade Gold environmental standards on top of the social objectives by paying taxes and reinvesting profits back into the company and the local community. This community contribution is linked to profits, and goes to helping provide water and electricity infrastructure, and supporting healthcare and education in the area. "We're pioneers in this type of organisation", says Benjamín Vásquez, the production director.  Sotrami's 260 workers are actively engaged in the company through a workers committee. Half of employees are split underground and the rest work in the processing of gold and in administrative duties. ASM miners in the area, not directly employed through Sotrami, are allowed to work in the concession as long as they sell their production to Sotrami for processing. However Sotrami still sells the bulk of its gold for non- Fairtrade purposes without the premium, primarily because of a lack of a market. Trading for Development, a UK-based Fair Trade company is attempting to increase the amount of output which goes on the Fairtrade market, by linking the company with jewellers in Lima that operate under the principles. 

With a UK survey showing that only 16% of participants knew of the existence of Fairtrade Gold, there have been attempts to boost recognition of the scheme, including an 'I Do' campaign backed by top designers such as Katharine Hamnett to convince people to buy Fairtrade rings. The Fairtrade Foundation calculates that if 50,000 couples choose gold Fairtrade wedding rings that this could equate to £650,000 going to the poorest mining communities.

Fairtrade boss Michael Gidney recently argued that: ‘The history of gold is one of corruption and exploitation but we can change that. We’d like people to ask jewellers about where their gold comes from and to use their consumer power to make a positive difference to the lives of thousands of miners and their families’.  

The message is clear; consumers and jewellers need to step up and demand Fairtrade Gold, rewarding producers and helping workers in gold mining areas to not only improve their working lives through greater pay and better conditions, but by putting money back into the communities they live in. It’s also going to important to continue to monitor the implementation and impact of Fairtrade gold to ensure it is having the intended impact on artisanal and small-scale miners.

For more information about Fairtrade Gold, please see the profile here on the Shaping Sustainable Markets website.