Financial Crisis Worldwide (4): No crisis for gold miners

 
brazilian-miners-shows-gold-in-the-pan-near-benzdorp-2007
Brazilian miner shows gold in the pan

By Marjo de Theije

At the end of the summer of 2009 the price of gold passed the barrier of 1000 US$ an ounce for the second time since the financial crisis started. Early November it passed the 1100 US$ barrier and outlooks say the limit is not in view. I immediately think: “Good News,” when I hear such information. Rising gold prices make me happy because this will eventually result in a higher income for the people I work with in Suriname – the maroon and Brazilian gold miners in the southeast of the country.

 Suriname is one of these countries in the developing world, where natural resources are the main source of income. The small scale gold miners (or artisanal miners) who I work with are responsible for 17 % of the exports of the country. In social terms estimates are that a considerable part of the population (almost 13%) is economically dependent on small scale gold mining. This concerns mainly – but not exclusively – Maroons, the people who live in the interior of the country, in and near to the gold fields. They may feel little negative effects of the current financial crisis in the rest of the world.

Maroon miners at work, near Benzdorp (2007)

Maroon miners, near Benzdorp (by Marjo de Theije)

This is not to say that the crisis does not reach Suriname or the gold sector. Some of the effects were that international investors in the local gold business run into shortage of financial resources and had to stop their exploration activities by the end of last year. Others however, profit from the rising gold prices. The only large scale mine in Suriname is the Rosebel mine, owned by a Canadian company called Iamgold. This company opened the operation a few years ago, when the gold prices were only starting to rise and is now fully in production, reporting high profits again and again. Many Surinamese complain about the fact that the government has no large share in the company, nor made an interesting tax agreement when it gave the concession to exploit the gold in Rosebel. However, with the high prices for the gold, the whole country will profit even when the percentage of taxes paid is low.

Brazilian miners shows gold in the pan, near Benzdorp (2007)
Brazilian miner shows gold, near Benzdorp (by Marjo de Theije)

The many small scale miners in Suriname also profit considerably from the financial crisis. Not only because the gold price increased, but also because the price of fuel (oil) went down. Gold miners main operational costs are in the oil they use to operate their machines, and they typically calculate the profitability of their mining enterprise in the grams of gold they produce burning one barrel of diesel. With low gold prices and expensive oil you may need to produce 200 grams a barrel to make it worthwhile to run an operation. In the current situation 80 grams may be sufficient for example. And of course, if you continue to produce the 200 grams a barrel, the profits are very good. Notwithstanding the fact that these miners may live in precarious conditions in the forest, at the margin of so-called development, they may fare quite well under such favorable circumstances.

Paying the bill in grams of gold, Antino (2006)
Paying the bill in grams of gold, Antino (by Marjo de Theije)

In fact, these small scale miners do not only “think” their investments to produce gold in terms of gold. Everything they buy is paid with gold. This case of the small scale miners in Suriname shows how global processes may lead to very specific local constellations. The miners live in a kind of alternative economy, which makes them relatively less vulnerable for the effects of the financial crisis as they do not use much of the financial system. They produce gold and they pay their purchases in gold.

Marjo de Theije is Associate Professor at the Department of Social and Cultural Anthropology at the VU University in Amsterdam.

For more stories in this weblog series Financial Crisis Worldwide see for instance Ton Salman’s story on Bolivia.

Advertenties

4 thoughts on “Financial Crisis Worldwide (4): No crisis for gold miners

  1. anonymous 17/12/2012 / 10:01

    They should pay in paper if they can!

Geef een reactie

Vul je gegevens in of klik op een icoon om in te loggen.

WordPress.com logo

Je reageert onder je WordPress.com account. Log uit / Bijwerken )

Twitter-afbeelding

Je reageert onder je Twitter account. Log uit / Bijwerken )

Facebook foto

Je reageert onder je Facebook account. Log uit / Bijwerken )

Google+ photo

Je reageert onder je Google+ account. Log uit / Bijwerken )

Verbinden met %s