The Gold Boom: A Double-Edged Sword

The gold boom, driven by surging prices and political support, has sparked a surge in illegal mining activities worldwide. While this trend offers economic opportunities, it also presents significant environmental and social consequences that cannot be overlooked.



The Gold Boom and Illegal Mining Surge

The primary factors driving the gold boom and illegal mining surge are:

1. Increased Gold Prices: The surge in global gold prices has incentivized illegal mining activities. In January 2024, spot gold rose to more than $2,600 an ounce, and U.S. gold futures have seen similar levels. This growth in gold prices has attracted more people to engage in illegal mining to profit from the high prices.
2. Political Support: In Brazil, the political support from the government of President Bolsonaro has contributed to the expansion of illegal gold mining. Since 2018, Bolsonaro's administration has been supportive of the mining sector, which has encouraged illegal mining activities.
3. Lack of Regulation and Enforcement: The absence of strict regulation and enforcement of mining activities has allowed illegal mining to flourish. In many countries, such as Ghana and Burkina Faso, the lack of effective law enforcement and monitoring has made it easier for illegal miners to operate without consequence.
4. Economic Incentives: The informal nature of illegal mining provides an economic incentive for people to engage in these activities. In Ghana, for example, small-scale mines produced 1.2 million ounces of gold in the first seven months of 2024, more than in the whole of 2023. This economic incentive has attracted many people to engage in illegal mining, despite the environmental and social costs.
5. Environmental Degradation and Health Risks: Despite the environmental degradation and health risks associated with illegal mining, such as pollution from heavy metals and the use of toxic chemicals like mercury and cyanide, the economic incentives and political support have outweighed these concerns for many people engaging in these activities.

The Impact of Increased Gold Prices on Illegal Mining Economics

The increase in gold prices has a significant impact on the economics of illegal mining, as it incentivizes more people to engage in this activity due to the potential for higher profits. This is evident in the following points:

1. Increased demand and higher prices: The surge in gold prices, such as the record high of $2,787 an ounce in October 2023, creates a higher demand for the precious metal, making it more profitable for illegal miners to sell their gold.
2. Illegal mining boom in Ghana: In Ghana, the increase in gold prices has led to a boom in illegal small-scale gold mining, known as "galamsey." This has resulted in a significant increase in production, with small-scale mines producing 1.2 million ounces of gold in the first seven months of 2023, more than in the whole of 2022.
3. Illegal gold smuggling in Africa: The high gold prices have also contributed to an increase in illegal gold smuggling in Africa. According to Marc Ummel, head of unit raw materials at Swissaid, more than 435 metric tons of gold was smuggled out of Africa in 2022, corresponding to a value of more than $36 billion at the current price of gold.
4. Illegal mining in the Amazon: In Brazil, the increase in gold prices has led to an expansion of illegal gold mining in the Amazon, with the rate of illegal mining deforestation increasing by more than 90% from 2017 to 2020.
5. Illegal sand mining in the Gambia: Although the central focus of Operation Sanu was illegal gold mining, it also targeted illegal sand mining in the Gambia. The operation led to seven arrests and the seizure of mining equipment and trucks loaded with sand and gravel, highlighting the economic incentives for this illegal activity.

Environmental and Social Consequences of the Illegal Mining Surge

Illegal mining, particularly gold mining, has significant environmental and social consequences. Here are some key points supported by data and examples from the provided materials:

1. Environmental degradation:
- Deforestation: Illegal mining deforestation in the Brazilian Amazon increased by more than 90% from 2017 to 2020, reaching 101.7 km2 annually in 2020 compared to 52.9 km2 in 2017.
- Water pollution: Illegal gold mining pollutes water with heavy metals, affecting aquatic and terrestrial ecosystems, and leading to negative impacts on human health.
- Soil erosion and landslides: Illegal mining activities can lead to soil erosion, landslides, and deviation of river flows, causing drought or flooding.
- Mercury and cyanide use: Small-scale or artisanal mining and especially illegal mining often use mercury and cyanide, which can have serious toxic effects on the human nervous system and the environment.

2. Social consequences:
- Health risks: Miners are exposed to hazardous chemicals like mercury and cyanide, which can cause serious health issues, including neurological problems and death.
- Human rights violations: Illegal mining can lead to human rights violations, such as forced labor, child labor, and human trafficking.
- Economic impact: Illegal mining can negatively impact local economies, as it often competes with legal mining operations and can lead to a decline in legitimate economic activities.
- Social unrest: The surge in illegal mining can lead to social unrest, as seen in Ghana, where protests against unlicensed gold mining have taken place, calling for authorities to act against the dangerous and environmentally damaging practice.

In conclusion, the gold boom has led to a surge in illegal mining activities worldwide, presenting both economic opportunities and significant environmental and social consequences. As the demand for gold continues to grow, it is crucial for governments and international organizations to address the root causes of illegal mining, strengthen regulation and enforcement, and promote sustainable and responsible mining practices to mitigate the negative impacts on the environment and society.