From the Editor - The Benefits of Gold Mining Should Not Be Taken for Granted
Gold prices are high and gold miners are looking to increase production. While researching the Gold Miners Roundup, one fact became increasingly apparent: gold miners seem to face opposition of one sort or another in almost every region where they operate. A classic example is Barrick’s new Cortez Hills mine near Elko, Nevada, USA. The company has invested more than $500 million in the project and spent years and countless hours permitting the project. They break ground this year and now face a lawsuit from a non-governmental organization (NGO) that threatens to delay the project. In fact, according to the Elko Free Press, the University of Nevada- Reno has estimated that a 6-month delay in production will amount to a loss of $20.7 million in compensation, $6.8 million in taxes and $29.5 million in goods and services. Basically, Lander County loses $57 million. One would think a figure that large would even register with Senator Harry Reid (D-NV).
Contrary to the nonsense that anti-mining NGOs espouse, large-scale gold production also bolsters the economies of developing countries. A new report, “The Golden Building Block: gold mining and the transformation of developing economies,” authored by Maureen Upton, Sustainability Advisor to the World Gold Council (www.gold.org), demonstrates the macroeconomic benefits of gold production in developing countries. The report takes into account the vastly-debated resource curse theories, and examines evidence of actual contributions through an in-depth case study of Tanzania and the effects of gold mining on its economy over a 40-year period.
Tanzania provides an ideal test case to conduct such a comprehensive assessment of both gold mining’s contribution to date and its potential future contributions to the economy over the life cycle to mine closure. The findings of the study uncovered the most significant contribution that gold mining provides to Tanzania’s economy is its effect on foreign direct investment (FDI) which has been enabled by the mining law reforms introduced over the past 12 years.
The Tanzania case study employs a life-cycle assessment (LCA) of gold mines over their entire lifespan. Undertaken in the spring of 2009 collaboratively by WGC and Oxford Policy Management for the International Council on Mining and Metals, this study is the first of its kind, as the approach ensures that long-term benefits are captured, by way of both historical data and projections through to mine closure in a key producing country.
In the early 1990s, prior to large-scale gold mining, Tanzania would have appeared near the bottom of rankings of African countries as a destination for FDI. Today however, the country is now in the upper-middle rankings, with more than $2 billion (nearly two thirds) of the surge in FDI after 1998 shown to have come from the five gold mines surveyed in the LCA alone. Contrary to critics’ views that the gold mining industry in Tanzania provides relatively low tax receipts, the study showed the two producers surveyed, Barrick and AngloGold Ashanti, are currently among the highest single taxpayers in the country. In addition, export earnings from gold mining are already $770 million, but are estimated to more than double by 2016.
Steve Fiscor, Editor-in-Chief, E&MJ