Campaign issues

Campaign issues

Should central banks and the IMF be urged to increase their sales of gold, so that the price will fall further and exploration expenditures be cut back even more than of late, and some mines will have to close?

The relationship between previous central bank sales and the "behaviour" of the market price has been helpful from the point of view of concerned communities. But, as with any commodity, as the price falls, so it becomes more attractive for some people to buy - and the market moves towards "balance". As you will see from this information pack, there was even a recent serious proposal by one gold industry enthusiast to hasten central bank sales, so that short-term vagaries in the price would be ruled out, once and for all.

High cost producers have had to abandon expansion of some existing mines, and cut back exploration expenditure in some areas (notably North America, where not only economic but also environmental costs have been rising). The total amount of gold exploration (measured both in terms of expenditure and area) has dropped since 1996. Many miners have changed their practices as a result. They have cut costs by sacking workers, adopting more mechanised methods of extraction (including the consolidation of mines and open-pit and bulk mining techniques) and moving to higher grade deposits, rather than moving out of gold mining itself. And - importantly - the bigger companies have been able to purchase new prospects from junior exploration companies at a cheaper rate than before, as the juniors’ shares and fortunes fall.

Indeed, it could be (and the industry clearly hopes) that, as mining gold in the older zones of exploitation becomes less economic, so exploration will actually increase in new areas, where labour, environmental, and "access" costs are significantly lower. This is clearly already happening, as smaller ("junior") companies - but also larger ones such as Ashanti Gold - advance into new mining areas in Tanzania and in the Guiana Shield.