$6000 premium for Fairmined and ecological gold extraction

The dollar and gold are related. As the amount of gold citizens and enterprises submit grows, the exchange rate of the dollar drops, leading to lower prices on imported goods, which is a boon for people and companies with dollar loans. Following the successful implementation of the “Gold-1” program, decision-makers launched the “Gold-II” program.

Within this framework, commercial banks began offering soft loans to gold miners. The Bank of Mongolia plans to regularly increase the gold submission to 20 tonnes per year. In 2014 alone, gold extractors paid MNT 6 billion in mineral resources usage fees. This year, the figure increased to more than MNT 10 billion in the first six months.

While the focus in Mongolia is on the total amount of gold extracted, other western countries have begun supporting fairmined and ecological gold. This is aimed at improving the life quality of artisanal and small-scale miners and their contribution towards their own communities.

The SAM Project’s Mineral Trade expert N. Uranchimeg explained what Fairmined and ecological gold meant. In accordance with the Alliance for Responsible Mining - a special Fairmined label for gold produced without the use of mercury or cyanide - having fulfilled more than 200 standards affirming that the organisation’s operations were economically, technologically and environmentally responsible, ecological gold means:

  • No use of mercury during the extraction process
  • Respects and practices human rights
  • No child labour involved
  • No enrichment with cyanide
  • Processed in areas with no abuse, violence or human trafficking
  • No slavery involved
  • Extracted from areas with no disputes or disagreements

Fulfilling the criteria above initially requires a large investment for artisanal and small-scale miners. However, if miners can prove they have followed each of the mandates, they will be rewarded by the international organisation with USD $6000 per 1kg of gold extracted. For any gold that complies with fairmined extraction procedures, miners receive a premium of USD $4000 per kg. Fairmined extraction allows for the use of some chemicals.

These rewards are designed to support responsible mining. In Mongolia, the “XAMODX” NGO in Bayan-Ovoo soum, Bayankhongor aimag, has been mining gold in accordance with those standards since 2013. In 2015, they exported 1kg gold to the US for a trial, becoming the first Fairmined and ecological gold extractor registered in Asia. Each year, an independent audit organisation conducts an evaluation to determine whether the company has met the requirements.

Bank of Mongolia expert N. Uranchimeg said the bank could help reduce harm and negative environmental impacts by promoting Fairmined and ecological gold and its purchase via a price increase. However, due to a lack of proficiency in the English language, artisanal and small-scale miners are unable to receive the latest gold price in a timely manner, meaning only one artisanal and small-scale mine is at present qualified for Fairmined and ecological gold rewards.