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Enterprise risk management

Mercury rising. The heavy social and environmental costs of illegal mining

Jesse Spiro  Head of specialized research for Thomson Reuters World-Check

Jesse Spiro  Head of specialized research for Thomson Reuters World-Check

Illegal mining not only represents real regulatory and reputational risk to companies and entities operating in the global gold market, it also inflicts a terrible human and environmental cost wherever it is practiced.

As many of these illegal mines are typically located in very remote and hard-to-access areas, often on indigenous or protected lands, it is difficult for local and national authorities to exercise control over how these mines operate, or ensure the adequate enforcement of national and international labor and environmental laws.

Consequently, massive environmental damage has occurred from mining-related activities, including large-scale deforestation, dredging, digging and excavation, and the ubiquitous and heavy use of toxic chemicals and heavy metals such as mercury.

Large-scale efforts to try and regulate mercury use more effectively have been initiated by national governments and international organizations.

Illegal gold production in South America

Map shows illegal gold production in South America, ranking Venezuela, Colombia and Ecuador with more than 75% illegal gold production, followed by bolivia, Guyana and Brazil with less than 33%.
Source: Global Initiative against Transnational Organized Crime (data based on 2013 figures)
Data visualization by Thomson Reuters Labs

 

Human trafficking and forced labor

Organized criminal groups take advantage of the large number of displaced and vulnerable persons in South America for their own benefit and are known to be heavily involved in human trafficking, forced prostitution and slave labor for mining related activities. Slave tattoos with numbers have even been found on forced laborers in the region and tens of thousands of children work in mines, often in dangerous unregulated conditions.

Mercury use in artisanal mining operations in the Amazon.

Mercury use in artisanal mining operations in the Amazon encompasses 30 tons of material, accounts for 70% of all mercury emissions, resulting in 90% of the indigenous population contracting mercury poisoning.

What can organizations do?

Businesses need to shield themselves from the myriad forms of risk prevalent in the global mining industry, and ensure compliance with all pertinent national and international mining laws and norms, including environmental, social, labor and financial.

The global regulatory landscape has changed drastically over the past decade. Fines and enforcement actions for non-compliance have grown enormously and the amount of enforcement actions has mushroomed in tandem with the fines. More frequent and larger fines are costing businesses across many industries, especially those in industries where thirdparty risk is prevalent, e.g., commodities, manufacturing, finance, etc.

Changes in information and communication technologies, especially in mobile phones and Internet services, have made information acquisition and sharing achievable by an ever larger portion of humanity, which in turn has brought the issue of transparency to the forefront and catalyzed initiatives aimed at holding the actions of public and private institutions more accountable.

The mantra “business as usual” is changing, as regulations continue to expand, fines continue to grow, and demands for greater transparency and corporate responsibility increase.

As a result, it is paramount for companies to ensure regulatory compliance and good corporate standards. This can be achieved through the implementation of a strong enterprise-wide compliance system, from the boardroom down.


Learn more

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