Monday, 27 January 2025

Does gold mining have a place in the green transition?

Way back in 1978 I descended 12,000 feet underground in the world's deepest mine, Western Deep Levels gold mine in Carletonville, South Africa. The miners toiled under arduous conditions, the temperature of the rock reaching 66°C at the greatest depths, slurry ice being pumped underground to cool the tunnel air to below 30°C. Due to the enormous pressures, rock bursts, the sudden and explosive failure of the rock mass near excavation boundaries, were a constant threat and the constant creaking of the rock was a little concerning.

Western Deeps 1978

Even then, in my early days in mining, I felt it bizarre that enormous efforts were being made to extract gold from the bowels of the earth in order to produce gold ingots which were stored underground again in vast vaults, such as those at Fort Knox, which I was very familiar with having seen Goldfinger several times.

Some thirty years later I voiced my concerns about gold mining in the first year of the blog (How do we argue the case for gold mining?). As everything we use is either mined or grown, it is easy to argue the case for mining most commodities, but I did not find it so easy for gold.

Until 2006 South Africa was the world's leading gold producer, in 2022 it languished in 10th place, China now leading the field, producing around 10% of global total gold production, which in 2023 was over 3000 tonnes. 

Source: World Gold Council

The vast majority of the gold mined today has relatively little practical use. Only about 10% of the world’s gold demand comes from industry, where it is used primarily as an efficient, corrosion-proof conductor of energy, mainly in electronic equipment such as computers and smart phones, and in dentistry. About half of the current gold in the world exists as jewellery, with the other roughly 40% hoarded in coins and bullion by investors and central banks. The US Geological Survey estimates that around 57,000 tonnes of gold are still waiting to be mined, but my question is why mine it?

At least 10% of global gold production comes as a by-product of base metal mining, mainly from copper and to a lesser extent from lead mining and this is sufficient for industrial use.   This implies that the output from gold-only mines produces metal only to satisfy the needs of the jewellery and investment businesses. 

Do we need more gold for storing in vaults? According to the World Gold Council 212,000 tonnes of gold have already been mined and 22% of this is is stored, so 47,000 tonnes is already stored in vaults. In the 2009 posting there was a report that Swiss banks were running out of secure storage space for gold bullion held by investors and institutions in their vaults. One Swiss bank reported that it was having to relocate some of its stored silver bullion to another site to make room for gold. 

Jewellery can be made more sustainable by alloying gold with other metals, as is the case with 18 karat gold, commonly used in jewellery, which is 18 parts gold and 6 parts other metals, commonly silver and copper.

The environmental impact of burning fossil fuels is well known, but fossil fuels are essential to the green transition. However the mining of gold ores also has a huge environmental footprint. Gold ores have the lowest grade of all mined metals, the average grade being between 5 and 8 grams of gold per tonne.  This is 0.0008% Au, so around half a billion tonnes of rock has to be mined annually. The energy required to mine, comminute and process this vast amount of rock is enormous. It has been estimated that gold mines emit more greenhouse gases than all passenger flights between European nations combined. 

Gold mining generates more waste than any other metal. If not properly managed, tailings can potentially affect soil, water, and air quality. They can leak toxic substances, including acid mine drainage, into the environment. Billions of cubic metres of contamination have been released since cyanide heap leaching emerged in the 1970s. 

There is much gold in waste electronic and electrical equipment (WEEE), which with more efficient recycling practices could contribute to the gold needed outside industrial use.  The recovery process can be challenging, as it often involves dismantling devices and carefully extracting precious metals from tiny components. Advances in WEEE recycling technologies are improving recovery rates, but there's still a lot of room for growth.

The minerals industry has a skills shortage and many talented mining and minerals engineers are involved with gold mining and processing, who might be better employed elsewhere, enhancing the recovery of truly critical metals and minerals and moving civilisation to the goal of a circular economy by seeking ways to facilitate recycling.

There is 100 times more gold in a tonne of smartphones than in a tonne of gold ore. It is estimated that there are around 7 billion smart phones in existence, and over 1.5 billion new ones are produced annually. Estimates suggest that over 150 million smartphones end up in landfills each year globally and many are stashed in desks and drawers, due to the high turnover rate of smartphones, with many devices discarded when users upgrade to newer models.

WEE contains critical and essential metals such as gallium, germanium and indium, which are all by-products of base metal mining, particularly zinc mining. Will we ever see a day when we say that gold, an essential metal in electronics, is also produced only as a by-product of the mining of base metals, particularly copper?

I doubt it! This is all very idealistic of course. I am sure that the allure and insatiable quest for gold, which has endured for millennia, will continue. There are very cogent arguments for gold mining, which contributes substantially to the socio-economic development of its host communities and countries. Value is created and distributed in many ways, including through employment, local procurement, tax revenues, enhanced infrastructure and better access to healthcare and education. With responsible management and investment, it can help drive growth and development while improving the lives of local communities. The lives of many artisanal miners in poorer countries are dependent on gold mining, although illegal artisanal gold mining is the biggest single source of mercury contamination in the environment.

But I will always feel uneasy when someone asks me to justify gold mining! It must rank as one of mankind’s more futile occupations, much of the gold that is dug up so expensively being destined to be buried somewhere else.

Barry Wills, MEI

2 comments:

  1. It's hard to argue with anything you have written Barry. Interestingly (or not) Chat GPT says amongst other things that 'gold plays an interesting and significant role in the Green transition' I have my doubts!
    However, the significance of gold in a vault as opposed to in the ground forms a large part of our human history: The first is available and theoretically 'in use' for whatever purposes have been prescribed. The second is unavailable and therefore redundant/irrelevant.

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