Wal-Mart and Tiffany are trying to clean up the gold-mining industry. Not everyone is cheering them on.
The Bingham Canyon open-pit mine is the biggest hole dug by man anywhere in the world – about 2 1/2 miles long and nearly a mile deep, according to its owner, Kennecott Utah Copper. Miners have been digging copper, silver, and gold out of Bingham Canyon, just outside Salt Lake City, since 1906. These days huge trucks that cost up to $3 million each work around the clock, hauling about 450,000 tons of dirt out of the earth each day. More than 99% is waste. But by expending vast amounts of energy – the mine operates its own coal-fired power plant – Kennecott is able to extract an average of about 795 tons of copper, 12,000 troy ounces of silver, and 1,400 ounces of gold a day.
It’s the gold that Pam Mortensen has come here to see. Mortensen, 52, is in charge of buying fine jewelry for Wal-Mart (WMT, Fortune 500). And recently she has moved the world’s largest retailer to the forefront of a loose alliance of businesses and environmental groups that have set out to clean up gold mining, one of the world’s dirtiest industries.
No one is more surprised by this development than Mortensen, who grew up in Wal-Mart’s hometown, Bentonville, Ark. When I ask her what she knew about mining before the company got onto its much-publicized sustainability kick a few years ago, she holds up her thumb and her forefinger to make a zero. “We were just buying pretty stuff from our suppliers,” she says.
Now she has bigger things in mind. Wal-Mart is pushing miners to adopt strict environmental and social standards, verified by independent third parties. Its allies in this campaign include Tiffany & Co. (TIF) and the Richline Group, the world’s biggest manufacturer of gold jewelry and a unit of Warren Buffett’s Berkshire Hathaway (BRKA, Fortune 500). The retail giant is also working with a good-cop, bad-cop duo of environmental groups based in Washington, D.C. Business-friendly Conservation International consults, for a fee, with both Wal-Mart and mining companies. And Earthworks, a watchdog group, is behind a hard-hitting five-year-old media and Internet campaign called “No Dirty Gold.” “The more you know, the less gold glows,” its commercials say.
That kind of talk unnerves jewelers and upsets the mining industry. But facts are facts. Mining enough gold to make a typical 18-carat wedding ring leaves behind 20 tons of waste. In the U.S., metal mining creates nearly 30% of all the toxic releases measured annually by the EPA, more than any other single industry. And in poor countries, where regulation is lax, the picture gets really ugly. Gold mines and their waste have poisoned rivers in Guyana, destroyed rain-forest land in Papua New Guinea, and forced the evacuation of villages in the Philippines. In West Africa, thousands of children dig for gold under harsh conditions. According to the UN, a fifth of the world’s supply is scratched out of the ground by desperately poor miners working for subsistence-level wages…