High price of gold is child slave labor

Award-winning broadcast journalist and author Jeanette Pavini writes the Buyer Beware column for MarketWatch and wants to hear your stories, questions, problems and complaints. Write to her at BuyerBewareMKTW@gmail.com.

SAN FRANCISCO (MarketWatch) � Gold has been one of the greatest investment stories of the past decade, and its safe-haven appeal is likely to continue, with demand remaining solid for physical gold and gold jewelry. But regardless of the price gyrations in gold futures and demand, do we really know what the cost of gold is in human terms?

The surge in demand for physical gold has not only polished the fortunes of large mining companies, but has also driven a modern-day gold rush: The United Nations estimates there are between 15 million and 20 million gold miners in more than 70 countries worldwide.

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What consumers need to be aware of is where the gold GLD � and gold jewelry they purchase originates from. For the most part, gold comes from large-scale industrial mining operations which require skilled labor. Large mining operations in developing country can spur economic growth for the region.

But some artisanal and small-scale mining operations, known as ASMs, operate in poorer regions and places where child exploitation and human trafficking is common.

Because these ASMs do not have the oversight and regulations that the industrial miners do, child labor and slavery make up a large part of their work force, experts say. The International Labor Organization, the labor agency of the United Nations, estimates that tens of thousands of children work in gold mining and considers any child labor in mining as a �worst form� of labor because of the dangerous conditions.

This sector of mining represents up to 20% of the gold mined each year, according to Solidaridad Network, a non-profit organization working to help end the practices of enslaved labor and child labor.

The number of artisanal and small mining operations has risen dramatically since 2007, said Jennifer Horning, a coordinator for the Solidaridad Network.

Human Rights Watch estimates more than 20,000 children work in gold mining in Mali. The ILO estimates as many as 50,000 in Peru. In one township alone in the Choc� region of Colombia, 776 child slaves were found working in ASM gold mines. Overall the ILO estimates an increase of child labor by 35% between 2007 and 2009.

�If children are trafficked, they can suffer terrible physical and mental abuse and are literally enslaved,� Horning said. �Boys frequently work under harsh conditions in the mines and girls are forced into prostitution or domestic service.�

Many of the children are forced into the mines after having been promised jobs in a tourism-related industry. Or, due to economic need, many work willingly alongside their parents despite the dangerous conditions.

Reuters Artisanal miners dig for gold in an open-pit concession near Dunkwa, in western Ghana.

�It�s important to understand the motivations of the children, but also for governments, civil society and companies to take responsibility for protecting them and ensuring they have viable alternatives,� said Karen Stauss, director of programs for Free the Slaves, a Washington, D.C.-based group dedicated to working with governments and businesses around the world at a grass-roots level to end slavery.

�It may feel like a necessity for the children under the present circumstances, but their willingness to literally risk their lives to do this work does not mean that we can accept it on their behalf as well. There is a duty of care,� Stauss said.

According to both Solidaridad Network and Free the Slaves, not enough is being done by the industry or governments to end this practice, but some small steps are being taken.

Beginning this year, under the California Transparency in Supply Chains Act, major companies � not only those based in the state, but also many that do business there � are required to post information on their websites regarding their policies and some of the steps they�re taking to address human trafficking within their supply chains. Currently some companies only monitor labor issues at their first- or second-tier suppliers.

The Dodd-Frank Act includes a provision that companies that have gold or one of three other minerals in their products are required to tell the Securities and Exchange Commission in their annual filings whether those minerals � known as �conflict minerals� � came from eastern Congo. If they did, the companies must explain the acquisition process to ensure there was no illegal or abusive armed groups profiting from the mining. This provision of the act will go into effect after the SEC issues clarification on the regulations, which have been delayed. Enforcement details are expected sometime in the coming weeks.

Jewelry buyers can seek out and support �fair trade� jewelers and encourage their government representatives to support legislation to help end and prevent slavery and abuse in gold mining.

Jeanette Pavini is a regular contributor to various publications and Better.TV. She also hosts the weekly TV series, �The Real Deal� on NBC Bay Area and is the national spokesperson for Coupons.com. Write to her at BuyerBewareMKTW@gmail.com.