Economic impact

The lion’s share of mining revenues goes to foreign multinationals; it is an illusion that gold mining provides a catalyzing economic function for underdeveloped regions.

Employment

The opening of a goldmine delivers immediate income differences to a region, while families are being expropriated. The few jobs which are created, only sporadically benefit the locals. In the search of specific labor qualities, a lot of migrant workings are attracted to the  gold mines. Next to jobless fortune seekers. The, mainly, male migrants, far away from their families and often not fitting in local communities, cause the typical problematic situation of alcoholism, drug abuse, domestic violence and prostitution.

Farmers find it often impossible to survive; the environmental impact of gold mining makes it impossible to sustain the way they used to. Infertile and polluted land is no guarantee anymore for their production. They see a decline in customers, who do not trust their possibly polluted agricultural products anymore.

Mining multinationals pretend to offer development within a context of poverty reduction and economic growth, in reality we see the dependency position increasing within traditional systems of self-sustainability, since they are now overthrown. In 2008, seventy-two percent of the Amazon area of Peru is under concession, while only 1 percent of the local population finds a job in the mining sector.

 

Curse of natural resources

Due to different economics it is a fact that dependency on mining is a terrible long-term strategy. The curse of natural resources points out that countries and regions with an abundance of natural resources, mainly non-renewables like minerals and fossil fuels, tend to have less economic growth and development compared to countries with less natural resources. Development countries with such natural resources like minerals and ores, have the slowest growth patterns worldwide. A lot of natural resources means a high dependency on export. The mining industry is not stimulating for other national sectors. Only the raw products is exported while the most economic value is added elsewhere with the actual processes of processing and realizing an end-product.

The so called Dutch Disease effect manifests itself on a national level. When raw material extraction causes and incoming stream of foreign valuta, the local valuta will increase. Causing a weakening competition position and decreasing export possibilities, because it will be less profitable. Mining projects are temporary, a national economy is not structurally built by mining. When a mining operation ends, a country will have a position based on an overvalued valuta compared to the strength of the economy.

 

What brings a goldmine?

As an industry, gold mining works with one of the highest thinkable profit margins. Unlike for example oil, lots of cases show that the benefit of gold mining is relatively low for a country. In Guatemala, Montana Exploradora –owner of the Marlin Mina- pays only 1 percent taxes on their profits, they are expecting a profit of two billion dollars in the next ten years. 70 percent of the 40.000 inhabitants of the community surrounding the mine are living under the poverty line. The mine delivers three hundred jobs due to Comissión de Paz y Ecologie (COPAE). A joint study of COPAE and Unitarian Universalist Service Committee (UUSC) calculated the costs of the sanitation when the mine will close. Taken into account the sanitation costs of the minesite and the groundwater, this would be 36 million euro. The mine paid a ‘bail’  of 740.000 euro to the state.

 

The costs of the environmental impact and social chaos is never calculated into the price of gold, which you can find in your local jewelers store…