Due to the evolution of the mining industry and tightening government regulations, gold mining companies may need to re-evaluate their business practices. A series of movements, policy proposals, and approved pieces of legislation around the world are pushing “green new deals” designed to slash emissions and foster greater sustainability. These efforts seek to create opportunities to protect natural systems, and develop clean, sustainable technologies that cut down on greenhouse gas emissions.
The Green New Deal resolution declares that fighting climate change requires a new national, social, industrial, and economic mobilisation on a scale like no other. The architects of this ambitious initiative aim to completely transform the way in which we produce and consume. Regardless of one’s view of the wisdom, practicality, or effectiveness of such an effort — all dynamics worthy of robust debate — it is one thing to call for mobilisation but a far different task to understand the breadth of that historic mobilisation and engines that propelled it.
The traditional mining industry, which is absolutely essential to the green energy mobilisation, is now a shadow of the behemoth it once was. Though large-scale gold mining activities carry on, it has also become a victim of various adversarial policies that have diverted investment opportunities and production capacity elsewhere.
While complete self-sufficiency in this era of global interconnectedness is unnecessary, metals and minerals import reliance is spiralling out of control. The World Bank projects that demand for key minerals and metals needed for green technologies may jump 1,000 per cent or more under various scenarios as countries take aggressive action to accelerate green energy deployment. This kind of overnight growth in demand cannot be met by the world’s mines as it often takes years to bring a mine into production.
Gold mining companies need to mitigate the risks of negative externalities and lower the cost of gold mining. Global production has to shift to a war footing so mining corporates can build an arsenal to fight climate change, and there needs to be a concerted effort to develop an appropriate socio-industrial policy with sustainability at its core, that builds safe and economical extractive capacity from the ground-up. Ultimately, the ideal net-zero policies, whether implemented in the public or the private sector, will include interventions that incentivise collaboration across institutions, as well as measures for these institutions to hold both one another and governments accountable.
There are some that find it hard to make the case for digging up gold in places such as Africa and Latin America, only to bury them in bank vaults in Dubai, Singapore, London, New York, and Zurich. So why is gold dug out and then buried again? An argument for mining gold is based on reducing asymmetric information and uncertainty regarding the amount and quality of gold in the ground. If gold is mined, this uncertainty can be eliminated. The tangibility and physicality of gold is also important because to many, it is a fungible store of value and safe haven asset in regions where people may either have no access to financial markets or in periods when people do not trust capital markets.
But when gold is mined and refined, it is then often “buried” again in storage. Since the metal is valuable, with high density that makes it easy to store, it is rational to store it safely in a vault or safe. There are some who argue that positive social effects of gold mining may also be realised without actual mining activity as “in-ground securitisation” of gold can lead to increased investment and thus increased cash flows to the owners of the land.
So investors have a choice. They can invest in “buried” gold through ETFs or other financial claims in secure storage of gold, or invest in portfolios of exploration companies that provide a clean and “green” form of this gold. A major difference is in the tangibility and thus certainty of mined gold versus un-mined in-ground gold. Mined, and thus, tangible gold may be considered the ultimate proof of its existence and elimination of uncertainty and asymmetric information regarding the existence, amount, and quality of in-ground gold will boost investment performance.
Clean Earth Technologies has a non-toxic gold recovery reagent and de-watering process that enables gold mining companies to process gold without the use of dangerous cyanide and/or mercury. Gold extracted in this way is safe, sustainable, and does not harm mining communities and the environment. Find out more: https://www.cleanearth.tech/clean-mining/