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Ethics: the new gold standard

Gold is a dirty business.Tons of mud, rock and soil must be messily shifted aside to reveal the glittering gold flakes and gold nuggets held within.

Gold is a dirty business.

Tons of mud, rock and soil must be messily shifted aside to reveal the glittering gold flakes and gold nuggets held within. Often, a single ring will require the movement of more than 20 tonnes of soil.

Gold is also often muddied in a moral sense.

It has been pried off the fingers of kidnapped Mayan kings, hauled on the backs of slaves and used as finance for some of the world’s most devastating conflicts.

Can gold continue to glitter for those with a global conscience?

Yes, says Yukon entrepreneur Jon Rudolph and his growing coalition of “ethical” Yukon gold miners.

The idea all began with a simple coin.

Two jewellers from the Lasqueti coin mint on Lasqueti Island, British Columbia, first approached Rudolph with a plan to create a pure gold coin stamped with an image of a mammoth and a placer miner — two prime symbols of the Klondike.

Simple enough, but the jewellers wanted 100 per cent of the gold in the coin to originate from Rudolph’s mine — the Ross Mine, the Yukon’s largest placer mine located just outside of Dawson City.

“It hadn’t been done in Canada — that you could actually trace where the gold came from,” said Shaun Rudolph, Jon’s son and the manager of the Ross Mine.

“We put it together, and thought we might put together a couple of batches of gold coins as a side project — but as we got into it we realized, as we started diving into it, that there’s a whole market out there that’s not being filled,” said Shaun.

It was soon clear that coin sales would rapidly lead to jewelry sales and, finally, to sales of gold bullion.

The gold market had changed. Buyers liked the idea of an all-Canadian gold coin, but more than anything, they responded well to a product where every molecule of gold came from a recognized and ethical source such as a Yukon placer mine.

In 2000, the World Diamond Congress passed a resolution seeking to prevent the international sale of blood diamonds — diamonds mined in a war zone and used to finance an ongoing conflict.

Drafting a set of certification standards known as the Kimberley Process, the congress soon shook the global blood diamond trade, and raised the awareness of consumers in order to shift their diamond-buying to more ethical sources.

These same consumers soon focused their attention on gold.

“The consumers that demanded to know where diamonds came from … are those same consumers that have come out said, ‘Well, it’s really nice that we know where the diamonds come from, but this gold ring that the diamond is embedded in — where does it come from?” said Jon.

“If it comes from cutting down the Brazilian rainforest and using child labour in Sierra Leone, then we’re hypocrites, what are we doing?” he said.

“So much of jewelry is about emotion — it’s not a commodity. So they’re particularly vulnerable to increased consumer awareness,” said Stephen D’Esposito, president of Earthworks, a Washington, DC-based non-profit that looks to protect communities and the environment from destructive impacts of mineral development.

“They want to tell a story to their customers about where this came from — to differentiate them from other jewellers,” he said.

In 2004, Earthworks began the No Dirty Gold campaign, calling on gold producers worldwide to campaign to “end destructive gold mining practices.”

The Yukon is saturated with sources of ethical gold. In the Yukon, gold is mined from the earth using only gravity and water. And Yukon mines are compelled by government regulation to “reclaim” all mined land — contour and topsoil the land, returning it to a natural state. No conflict, no child labour and no irreparable destruction.

But nobody ever thought to call it ethical.

“If there’s a demand out there for it, and there’s no supply yet, obviously you’re going to receive a premium for your good,” said Shaun.

Yukon placer miners, quite literally, were sitting on a gold mine of “ethical” product.

If they could only prove to the world that they held the ethical alternative to the world’s “dirty gold,” they could corner the market on a new avenue of gold sales.

The result was  Mammoth Tusk Gold, a company formed by Jon to become the world’s first-ever supplier of ethical gold.

“By creating Mammoth Gold, that creates a gateway to getting the product onto the market,” said Shaun.

If the company could install an internationally renowned set of certification standards for ethical gold, it could transform the Yukon into ethical gold’s world capital.

They called up Stephen D’Esposito with Earthwatch.

“I never thought a mining company would call me — instead of the other way around,” he said.

“Nobody came to this company, rapped them on the knuckles and said, ‘You’ve gotta do something different’ — they did this on their own,” said D’Esposito.

The two formed a close partnership, and meticulously assembled a set of ethical gold standards modelled off the tenets of the No Dirty Gold campaign.

“(Mammoth Tusk) shows we’re not crazy for asking this,” said D’Esposito.

The Yukon’s placer mining tradition was a huge asset. Unlike many other mines worldwide, Yukon mines extract their gold using only gravity and water.

Cyanide-leach gold mining has risen to prominence as the world’s foremost method of gold extraction — however, concerns are often raised that the copious amounts of cyanide used can have adverse effects on local water supplies.

“It’s not to say that you can’t use cyanide responsibly. But if you take cyanide out of the equation, it changes the risk factor, whether it’s real or perceived,” said D’Esposito.

Jon’s Ross Mine became Mammoth Tusk’s pilot project, and smaller placer miners were approached throughout the Yukon with a simple proposition: meet the criteria of Mammoth Tusk and we’ll buy your product at a premium.

It’s definitely not a rubber stamp.

“There’s already one mining operation that has applied and has failed the certification,” said Albert.

Faced with patronage from Mammoth Tusk, the mine has worked hard to “clean up their act.”

“They’re working very, very hard to correct the situation — already, they’ve asked for another inspection,” said Albert.

Applicants must prove that their mines do not force communities off their lands, do not dump mine waste into nearby water systems and that respect for workers, ecosystems and First Nations groups are maintained.

“They’ve done a lot with us, looking at the placer authorization, ensuring that fish habitats are protected. Looking at local employment, training opportunities. I know the KPMA (Klondike Placer Miner’s Association) and our First Nation was looking at training initiatives for local people and members,” said Darren Taylor, chief of the Trondek Gwich’in.

All Mammoth Tusk documentation is open to inspection by a third party, and all suppliers must recertify after 12 months.

In February 2007, Canadian jeweller Birks and Mayors was named the official jeweller for the Vancouver 2010 Olympic games. In keeping with the “sustainable” premise of the games, the company was asked to pursue a socially and/or environmentally conscious angle to their business.

For Birks, the suggestion came as an opportunity to re-examine the company’s supply lines.

“One hundred per cent of our product is precious metal, so it really pays to say ‘we have sustainable metal,’” said Keith Spodek, group director of quality and sustainability at Birks and Mayors.

“All of the sudden, Jon (Rudolph) came forward with everything we need,” he said.

“The original negotiation was just for the Olympic jewelry line … when they took a look at the level of standard, they were quite taken,” said Maurice Albert, a consultant with Mammoth Tusk.

“They expanded at that point to say, ‘How about taking all of our gold from ethical sources?’” he said.

The real hurdle of ethical gold is keeping it separate from the non-ethical gold — Mammoth Tusk gold may be clean, but the certification means nothing if it unwittingly becomes mixed in with gold fresh from the hands of a Ghanaian child labourer. 

When drafting the No Dirty Gold campaign, D’Esposito was consistently told by gold producers that it would be next to impossible to maintain a “clean” chain of custody.

“Traditionally gold is thrown into a pot, it’s melted down, it’s recycled — there’s no chain of custody, who knows where it comes from?” said Rudolph.

To maintain a final product that was 100 per cent certified ethical gold, Mammoth Tusk had to find a gold refiner willing to stop its regular production, scrub its machinery clean of potential impurities and run the Mammoth Tusk gold through as a separate batch. 

For refiners that deal in tons of gold, making an exception for a few ounces was laughable.

“Not many refiners were willing to even talk to us,” said Rudolph.

“You explain to them that you want batch processing, and after a loud giggle of laughter they tell you, ‘No, we’re not going to do that,’” he said.

After “quite a few” rejections, Johnson Matthey of Salt Lake City finally stepped forward.

“There has been a huge uproar throughout the supply chain for gold and jewelry about the inability to account for supply,” said Albert.

Albert referenced a recent Associated Press report that traced gold from a five-year-old labourer in Ghana to finished products at Wal-Mart and Tiffany’s.

“That was a huge wake-up call for the industry, but it was particularly a huge wake-up call for the refiners,” said Albert.

“Johnson Matthey, thinking in the longer term, wants to be able to say that they’re working with a program such as Mammoth Tusk Gold,” he said.

“The notion that you can’t track diamonds, metals or gemstones is proving to be flawed,” said D’Esposito.

Last Friday, a group toured the Ross Mine to see Mammoth Tusk’s ethical gold production firsthand. It included D’Esposito, Spodek and Grace Reagh, from the Vancouver branch of Birks and Mayors. A contingent of Whitehorse reporters also tagged along for the ride.

Mammoth Tusk is an “ice-breaker” in the field of ethical precious materials. But it’s ultimately a new direction for the industry as a whole.

“It’s not about profit, it’s just a business necessity … our clients expect that,” said Spodek.

“I think this is the early stages of a trend where it’s not ‘nice to have’ but it’s a requirement,” he said.

Resource companies can no longer afford to operate in an unsustainable manner.

“You look at projects like the tar sands — they’re being injured all the time for trashing the environment,” said Shaun.

“New mines that are being established have very sophisticated reclamation plants built into them, very environmentally conscious. That’s just the way the mining industry is hopefully going, and the price of the metals will end up having to reflect that,” said Shaun.

“I don’t buy even milk unless I know that the cows aren’t mistreated,” said Reagh.

“It was not even considered (10 years ago), what was more top of mind back then was ‘it is 18-karat isn’t it?’” said Reagh.