Nor do refiners differentiate between suppliers: gold from multiple sources is melted down into ingots, rendering traceability effectively impossible. “There are many impermeable membranes in the supply chain for gold jewellery. You don’t know if your gold comes from a responsible company like Rio Tinto or Newmont, or from a child labourer in Sierra Leone,” says Assheton Carter, an industry expert at Conservation International who advises Wal-Mart.
Wal-Mart and Tiffany lead the way
Now some companies have decided to try and make sense of this can of worms. Wal-Mart, the world’s biggest retailer, has chosen Kennecott and Newmont Mining Corp., both of which respect the environment and have unionised workers, to supply its gold and silver. Because Wal-Mart doesn’t make its own jewellery, it has brought onboard Richline Group, a unit of Warren Buffett’s Berkshire Hathaway investment company. Richline turned to a British start-up called Historic Futures, which specialises in supply-chain traceability. As a result, customers of Wal-Mart’s “Love, Earth” jewellery range can trace the origins of the gold they wear.
Another pioneer is Tiffany, which started asking questions about the origins of its gold in the 1990s. “Almost everyone in the mining industry considered our degree of engagement suspect, stupid, or insane,” comments Michael J. Kowalski, chief executive of Tiffany & Co. It all began with conflict or blood diamonds: “Shame on us and the entire jewellery industry,” Kowalski exclaims. “It was a wake-up call.” Tiffany has solved its traceability problem by sourcing its gold exclusively from Bingham Canyon in Utah, the world’s largest man-made excavation which yields 1,400 ounces (43.4 kg) of gold a day. Bingham is managed by Kennecott Copper, which applies strict environmental criteria. “Putting our Tiffany house in order is nice,” Kowalski continues, “but it doesn’t address the issue of responsible sourcing in the jewellery industry.”
Only the beginning
Much remains to be done. Wal-Mart has set a target of buying 10% of its gold, silver and diamonds from responsible sources by end 2010. Oro Verde, a Colombian cooperative, is committed to not using mercury in the mining process and to rehabilitating mine sites. However, customers who are willing to pay the 15% premium, compared with London Metal Exchange prices, for Oro Verde refined gold and platinum, essentially to finance welfare programmes, only have six kilos of precious metal a year to share between them. Cartier also supports ethical gold and now buys from the Eurocantera mine in Honduras which promotes social and environmental values… to cover 5% of its needs. The road will be long with many pitfalls along the way, but on reaching the summit, the view will be all the more beautiful.