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Polishing the Tarnished Jewellery Industry

A handful of jewellers are addressing the iniquities of a supply chain that connects the luxury industry with millions of destitute miners digging for gold in atrocious conditions.
Gold on a wash pan | Source: Shutterstock
By
  • Robb Young

GEITA, Tanzania — "We only have four minutes to get out of the pit before this thing explodes," whispers George Masahi, whose bulging eyes only magnify a surreal situation getting more extraordinary by the minute.

The cherubic miner is standing in the middle of one of the most remote gold concessions in the world, grasping a stick of dynamite that dangles ominously from a very short fuse. Gesturing toward the word hatari, which has been carved in giant letters on a shed packed with sundry explosives, he flashes a cheeky grin before delivering a deadpan remark. "Swahili word — means 'danger.'"

Located on the edge of a jungle more than 1000 kilometres from Tanzania’s de facto capital through the wilds of the savannah and a perilous boat ride across Africa’s largest lake, the Nsangano Gold Mine is where Masahi works. Given that some of the pits here reach as far as 120 metres below the surface, it is a small relief to learn that he is a spry young chap of 25 who, according to his supervisor, uses “quick muscles” to scramble up and down the claustrophobic shafts.

Yet for all the unnerving qualities of this otherworldly scene, there is a veneer of modernity and an air of hope here. Inside the shed, a ‘blasting certificate’ is proudly displayed behind framed glass declaring that George Masahi has passed his explosives training at a technical school somewhere beyond this no-man’s-land. And despite the sweltering heat and dust, he and other miners toiling around him are all wearing hard hats, fluorescent vests and hi-vis safety gear.

The mine, which relies on manual labour to produce a mere 12 kilograms of gold per year, is miniscule in comparison to multinational giants like the AngloGold Ashanti mine, which pumps out a thousand times more using industrial machinery bellowing from the far end of the road where dirt finally becomes tarmac. By contrast, the isolation and desperately small scale of the Nsangano mine underscore the lengths that people go to feed what has become a notoriously murky and untraceable supply chain for the global jewellery trade. Until now, that is.

Creating a Better Deal

In 2012, the Nsangano Gold Mine became part of a pilot programme created by Fairtrade Africa that makes incremental improvements in worker welfare, ecology and sustainability at nine artisanal small-scale mines (ASMs) across Tanzania, Kenya and Uganda. Once the mines gain official accreditation status (which is expected next month), the first Fairtrade gold from Africa will begin flowing through a transparent ‘closed pipe’ supply chain directly from the source to jewellers in Europe.

A miner at the Nsangano Gold Mine, Tanzania | Photo: Andy Pilsbury/Rose Dunne

“We came to the Nsangano mine with an open mind,” says Judith Lockwood, the managing director of an ethical jewellery brand from the UK called Arctic Circle Diamonds, which uses fully-traceable diamonds sourced from Canada and Fairtrade gold to make wedding rings and the like.

“You can see there are still things they need to do before becoming fully accredited but when we sat down to talk with the workers here, we better understood the changes. Relatively speaking — I mean compared to the other small-scale mines in this region — the changes here are pretty radical," says Lockwood.

At first glance, it is hard to detect the fruits of the Fairtrade Foundation’s labours. By Western standards, the mining operation still appears to be a somewhat ramshackle affair with workers using rudimentary tools and crude methods.

But just a short trek away is another mine, not affiliated with the Fairtrade programme, which serves as a wake-up call. There, the conditions are appalling even by Victorian standards. Chaos reigns throughout a camp of Dickensian squalor and destitute poverty typical of many small-scale mines throughout the developing world. Operating on the fringes of society and beyond the rule of the law, they attract bandits and outlaws who use violence to intercept shipments and entrap vulnerable workers.

At Nsangano, by contrast, the site may not be pleasant but it is manifestly better than its neighbours and it feels much safer. Crucially, there is a massive sign in Swahili at the entrance declaring, “No children under 18 can work here,” which is a rare prohibition against child labour in such an environment.

Tightening the Supply Chain

“Look, if you dig a hole, you’re going to make a mess,” says Lockwood. “It’s a rotten metaphor but even gardening makes a mess. If you come to any mine thinking you’re going to see something pretty, you’re sadly mistaken but, this way, we know exactly where the gold comes from, so it can and will be inspected.”

“There are no children down the mines here. They are isolating the cyanide and mercury the best they can, in terms of the local environment, and they are looking after the miners with the health and safety equipment,” she adds.

Although the miners continue to work exceptionally long shifts, the 70 men and 22 women are now guaranteed three breaks where meals are provided. Basic health care is also granted for the workers and their children.  Once the mines are  certified, community projects can then be funded by the Fairtrade premium which amounts to £2,000 ($3,100) per kilo of gold purchased.

Lockwood explains how the sums will add up for her business by citing an example of a wedding ring weighing 3.75 grams. “That could generate about £1.20 ($1.87) going back to the mines as a Fairtrade premium, but it would only inflate the price around 4 to 6 percent for the end consumer. So our feeling is that the Fairtrade premium is a negligible cost — for us, the retailer and the consumer.”

Nevertheless, for Renatus Nsangano, general manager of the Nsangano Gold Mine, it will take some time before he reaps all the potential benefits. The new safety equipment, connection to the national grid and other modest but meaningful upgrades, like using winches instead of ropes to lug up the excavated earth, do make him a more attractive employer but they are a gamble.

“Our miners work on a commission basis earning on average 300,000 shillings ($140) per month now. That’s around the same as the national (Tanzanian) minimum wage,” Nsangano says, implying that many of the other mines nearby pay the miners significantly less.

"They let their workers believe that the mzungu (white people) who come to visit are giving us money like charity when in fact they're just inspecting us. You know, there are so many middlemen [in our old supply chain] and they're always trying to cut our prices. They oppress miners like us so we're bonded to them," he adds.

Gold ore from the Nsangano mine, Tanzania | Photo: Andy Pilsbury/Rose Dunne

Because the gold changes hands so many times between the mine and the final buyer abroad, some small-scale miners only receive 65 percent of the international bullion market price. Cutting out all of the local, regional and border middlemen can mean recovering as much as 30 percent, something that can be felt more acutely since the gold price fell to a five-year low this summer.

“To finally get Fairtrade [accreditation] will mean we don’t have to deal with the middlemen anymore and can sell directly to people like Alan [Frampton],” says Nsangano.

Alan Frampton is the owner of Cred Jewellery, a British brand founded by Greg Valerio more than a decade ago. Cred Jewellery pioneered the payment of a premium to miners, who use ethical and ecological practices and follow a transparent supply chain for gold, silver and platinum from small-scale mines in Colombia, Peru and Bolivia.

“We pay the miners at least the Fairtrade Minimum Price, which is 95 percent of the international bullion market price. We don’t barter or argue about price, it’s set against the LBMA (London Bullion Market Association) on the morning that the gold leaves the airport,” Frampton explains.

Replicating this in East Africa will be a significant step up for many small-scale miners. For the poorest, for instance, it could mean eventually upgrading from a mud thatch hut to a brick bungalow.

An Industry Out of Step

“To me, it’s a failure of leadership of the jewellery industry, really, that they haven’t wanted to improve the professionalism of their supply chain management. Yes, it’s difficult but it’s not that difficult. A little brand like Cred did it as far back as 2004 and all on our own, not part of some huge luxury conglomerate with infinite resources. The jewellery industry is 25 years behind other industries in transparency and traceability,” Frampton adds.

According to Fairtrade International, there are 25 to 30 million artisanal and small-scale miners around the world who account for 25 percent of the global gold supply (200-300 tonnes) that make up 90 percent of the world’s labour force in gold extraction. Most barely eke out an existence while doing one of the most backbreaking and dangerous jobs to provide raw materials for luxury goods produced by fashion and jewellery brands.

“Lets not beat around the bush, it’s indentured slavery,” Frampton goes on. “Most of them earn around $1 to $2 a day. What really bothers me is that you see these fancy jewellery shops in Europe with fabulous pieces of jewellery, but actually, the stories behind them are not very nice. Sure, you’ve had a few campaigns like ‘No Dirty Gold’ and so on but it’s a drop in the ocean because they’re not sustainable.”

Hollywood’s fleeting obsession with so-called ‘blood diamonds’ after celebrities discovered the Kimberley Process Certification Scheme for conflict-free gems is another such example, he suggests.

“I’m not saying Fairtrade is the best, but it is the best practice currently out there, because it’s audited independently and it represents all the stakeholders. Most of the other campaigns you see are laughable — just marketing tools or agents of the jewellery industry itself.”

Added Value and Strategic Advantages

Frampton notes that sales at Cred Jewellery are up 46 percent on last year and he is not alone seeing Fairtrade metals translate to profits. Hockley Mint is a large Birmingham-based jewellery manufacturer acclaimed for its corporate social responsibility record.

“Ever since the [Fairtrade] gold has been available [from South America], we’ve stocked it,” says Hockley Mint’s managing director, Gary Wroe, who also serves as chairman of the British Jewellers Association. “There are a growing number of stockists working with Fairtrade gold, and I certainly see volumes increasing by more than 100 percent on last year,” he predicts.

Women removing soil from the Nsangano mine, Tanzania | Photo: Sarel du Plessis

Most market leaders agree that the demand for ethically sourced precious metals and gems will increase in line with the increased consumer demand for ethical jewellery products, but some insist that Fairtrade certification is just one of many ‘responsible’ frameworks.

“We anticipate [demand] will be highest in Western markets, not least because of regulatory developments that put an increased focus on responsible sourcing, including Section 1502 of the Dodd-Frank Act (in the US) and the European Union regulation on responsible sourcing of minerals from conflict-affected area,” says Terry Heymann, managing director of Gold for Development, the World Gold Council.

“Jewellers should take a pro-active stance in sourcing their gold from responsible suppliers, [but] there are a number of tools available that can help them to do this, including the OECD Due-Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk areas,” he adds.

For captains of industry like Corrado Facco, the moral imperative around responsibly sourced metals and conflict-free gems is as pressing as it is obvious. Indeed, he sees it as a “duty” in his role as general director of Fiera di Vicenza, an Italian organiser of one of the largest gold and jewellery trade shows in the world. But he also sees opportunities.

“From the point of view of Vicenzaoro, [our exhibition] which gathers exhibitors and buyers from all over the world, we’re seeing that the ethical market… will become a strategic business model, offering companies, supply chains and economic systems the possibility to increase competitiveness and reputation,” he says.

Adding value to a range of jewellery by gaining Fairtrade or other ethical endorsements is certainly a way for brands to get a leg-up on rivals or create a unique selling point in a product category. So why are so few of the major names making any meaningful headway?

Federica Frosini is the former editor of Condé Nast’s specialist jewellery magazine Vogue Gioiello, and founder of the online jewellery platform Amusingold.com. According to her, there are a few “pioneers” like Chopard’s Green Carpet Collection and Bulgari “since it gained the Chain of Custody certification from the Responsible Jewellery Council. Among the smaller brands I’d also mention the work of Stephen Webster, Pippa Small and Ute Decker,” she says.

“But to be honest, our industry has a lot of work to do in this area. What we need is to compel the main jewellery players to better understand how this movement works, which steps a brand needs to get advice [on best practice] and how the institutions can help them. We need a much stronger voice.”

Disclosure: Robb Young travelled to Tanzania as a guest of Facets, which represents Arctic Circle Diamonds.

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