What will Fairtrade gold mean for the industry?

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Will the mature brand make ethical gold a must for consumers?

The Valentine’s launch of Fairtrade gold was a step in the right direction to transform a luxury industry with more than a few skeletons in the closet into a responsible business. Rachael Taylor investigates what it means for the trade. 

Valentine’s Day 2011 was a special for the industry; one that will go down in history as the beginning of a revolution. It was the day that the world was introduced to Fairtrade gold.

The official certification is the culmination of years of campaigning, protesting and fighting for the rights of workers who bring to the surface something that is often a romantic gesture and something to treasure, but it is something that is often produced in ugly circumstances where human rights are neglected and the environment is mistreated.

At the London press launch of Fairtrade gold a few days before its official launch on February 14, Fairtrade Foundation executive director Harriet Lamb begins her speech by highlighting the link between human emotions and gold. “Giving gold jewellery is so much about love and romance but how gold is mined is not pretty,” she says, paying homage to the 15 million people who work in small-scale artisanal mining. “Too often they face serious injury and risks and are taken advantage of by middle men.”

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To hammer home the human element of gold mining, the Fairtrade Foundation has brought some gold miners to the UK. Juana Pena Endova is a mother of four and gold miner in Bolivia. The co-operative mine she works at is situated in Cotapata, a national park area, and so has been running more ethically than most, and had filled 40 percent of the Fairtrade requirements before even entering the certification process. But at 3,100ft above sea level the freezing conditions are harsh. Now the mine has achieved certification, Endova says her working life will improve. She addss: “Now that we’re in Fairtrade, we’re receiving a premium and we’d like to increase our productivity with investment in machinery.”

Such investment at grass roots level is vital as it is not usually the mining communities that prosper from gold. Manuel Renisso Rivas, a miner and vice-president of the Association for Responsible Mining, says: “Gold prices rise internationally but the percentage of what miners get is very small.” He speaks of Peru as the only country in the world with laws in place to protect artisanal miners but he is hopeful that others will follow suit.

The fight to clean up this trade has had to get rough, and Greg Valerio, founder of ethical jeweller Cred and a long-time activist, has been one of the leading forces in pushing for an officially recognised Fairtrade standard. In recent years he has become more akin to speaking negatively about problems in the industry and highlighting bad situations in order to promote positive change, but now he doesn’t dwell on the bad and says he only wants to focus on the positives of the project. “This is the start of a revolution,” says Valerio. “We’re going to put the soul back into gold.”

Fairtrade is now a well-known brand, endorsing everyday products from cotton to bananas to coffee, and what it will mean for gold mining communities is a fair price for the product they produce.

Fairtrade goldmines will receive a minimum price for the gold they produce that is set at 95 percent of the London Bullion Market Association’s (LBMA) fixing at the FOB export point. They will also receive a Fairtrade premium, set at 10 percent of the LBMA fixing, that can be used to reinvest in the mine, but if the mine passes standards for Fairtrade Ecological gold by extracting the precious metal without the use of chemicals the premium will be increased to 15 percent of the LBMA fixing.

The Cotapata Mining Co-operative in Bolivia was the first Fairtrade and Fairmined conventional mining organisation to be certified, and Condoto Iró Community Council from the Oro Verde initiative in Colombia was the first group certified to produce ecological gold. The Fairtrade Foundation says it expects to announce more in the coming months. Lamb adds: “We will be starting pilots in Africa later this year, then Asia. The mining communities are queuing up.”

Adding a Fairtrade premium will increase the price of gold by between 10 percent to 15 percent, but the first wave of jewellers working with Fairtrade gold seem undaunted by the prospect of upselling their customers.

“For the price of a meal out, you can have an Fairtrade ring instead of one made with standard gold and feel happy in the knowledge that the people who mined the very same gold that is on your finger were paid fairly,” sums up Harriet Kelsall, a Hertfordshie-based jewellery designer and one of the first jewellers to work with Fairtrade gold. “When we are talking about the important life moments, such as a ring as a symbol of engagement or to mark the birth of a child, this seems especially worthwhile.”

Stephen Webster, creative director of Garrard and his eponymous brand, says that the price won’t be an issue for his customers as he is planning to swallow the excess. “Even though the cost to us for such gold is over 10 percent higher we will be absorbing this premium,” he says. “We don’t want price to be the reason not to choose a more responsible product.”

Unlike Lamb and Valerio, Webster was not an ethical crusader. While he has undertaken charity projects in the past, he admits that when first approached about ethical gold, he was sceptical.

Eight years ago I was just starting to hear about ethically sourced gold and we wanted to work with it,” he remembers. “We pursued it for about a year but it became very obvious very quickly that our supply chain was an out-of-work actor and a knapsack, and it was just not going to work as he would come up every now and then with a little nugget.”

Webster dropped the project but three years ago he was approached by Solidaridad, a company that does pre-work for the Fairtrade Foundation, with an assurance that they could create a viable supply chain. “I was cynical about it, but I wasn’t that cynical that I was going to say no,” says Webster. “[Solidaridad] said that with groups like theirs that are properly funded they could create the supply chain, and that was key for us.”

The issue of the supply is the most difficult aspect of Fairtrade gold. While many jewellers would like to switch over completely, the small amount available makes this impossible for most without drastically reducing output.

At present there is only 400 kilos of gold available that has been made available to the limited group of 20 designers that have been chosen to work with the metal in 2011. Outside this initial group, the only way to get involved with Fairtrade gold is to buy a wholesale piece from one of the designers you will find listed on the following pages, but to sell Fairtrade gold as a retailer you must pay a license to use the Fairtrade mark, which works out at about 1.7 percent of the wholesale price of the jewellery.

For jewellers outside of the initial 20, they will be able to get access to the metal in the future – although there are strict rules about not mixing it with other metals and the Fairtrade Foundation says it is not yet willing for it to be used for gold plating – and should sign up on the Fairtrade website to register interest. However, jewellers should note that they will need to be pre-audited by the Fairtrade Foundation before being allowed to work with the metal, which will vary in cost depending on the size of the business, starting at about £400.

Lamb says that investing in Fairtrade through a license fee or an audit will deliver commercial rewards. “Nine out of 10 people in the UK know about Fairtrade and it has a high level of trust,” she says. Lamb adds that the Fairtrade marketing materials have been altered for the jewellery sector, with the yellow and blues recognizable in products such as coffee swapped for black, white and gold for more of a luxe feel.

While it is estimated that small-scale artisanal miners account for 90 percent of the work in gold mining, their output is only 10 percent of the world’s gold supply. To drive the project forward, Fairtrade needs to open up a dialogue with the large mines. Alliance of responsible mining director Cristina Echavarria sums up the current attitude of most large-scale mines with a tale of a flat tire. She recalls: “We got a puncture outside a large-scale mine, took off the wheel and our driver went inside to the mine for help and found out he was on a black list because he works alongside small-scale miners.”

But Lamb says that there are some mainstream mines that are making changes by working with organisations such as the Responsible Jewellery Council, but she adds that more need to come on board to make a real change in the industry and to help its reach its target of 5 percent of all jewellery sold in the UK being Fairtrade or Fairmined gold.

The road towards wholly ethical trading in the gold market will be a long one, if it is ever achievable at all, but the important thing is that it has started and everyone can get involved. From designing or stocking a piece of Fairtrade gold to helping promote the work of others, everyone in the industry can do their bit to help promote change and create a world where the process of extracting precious metals is not sullied by abuse of people and the planet. As Valerio aptly puts it: “Welcome to the adventure, it’s going to be one hell of a ride.”

 

This article was taken from the March 2011 issue of Professional Jeweller magazine. See the whole edition by clicking here.

 

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