The price of gold

Jane Danowitz directs the Pew Charitable Trusts' Campaign for Responsible Mining.

Gifts of jewelry -- particularly gold -- are a perennial favorite on Santa’s list. And with the metal’s price hovering near $800 an ounce, the tiniest golden bauble, bangle or bead will be a coveted commodity. But even if you don’t elect to splurge on this luxury, it will still cost you plenty because mining companies from around the world can take gold from U.S. lands basically for free, leaving taxpayers with nothing but the cost of cleaning up the damage that mining leaves behind.

Although the practice seems naughty, it’s all nice and legal because of an obsolete federal law. And although the U.S. House of Representatives recently passed legislation to close the loopholes, the metal mining industry’s allies in the Senate may block the long-overdue reforms.

The mining of gold and other hard-rock minerals on public lands is governed by the General Mining Law of 1872, which has remained virtually unchanged since it was signed by President Grant to encourage settlement of the West. The statute was designed to reward pioneers who survived the trek across the frontier with the opportunity to mine gold and other metals freely and in unlimited amounts.

The prospectors are long gone, but the incentives remain. Today, the highly profitable hard-rock mining industry -- much of it foreign-owned -- continues to receive generous U.S. tax breaks. And it pays virtually nothing for gold and other precious metals it takes from public lands with few restraints. In sharp contrast, oil, gas and coal companies have been reimbursing taxpayers for decades with billions of dollars in royalties that were paid for resources removed from federal property.


Not surprisingly, such free and easy access has resulted in the United States joining the ranks of the world’s top producers of gold, most of which ends up as jewelry. And despite its escalating cost, world demand is soaring. The United States now imports less gold than it sends overseas, predominantly to eager consumers in India, China and the Middle East.

The gold may be exported, but the mess made stays behind. The production of just one gold ring generates about 20 tons of waste, according to one mining policy organization, much of it left to litter the landscape as well as polluting rivers and streams. Today, most gold is mined from open pits, which can run a mile long and equally as deep. Utah’s Bingham Canyon, which produces gold as well as copper, silver and molybdenum, forms a crater large enough to be visible from outer space.

Moreover, once the ore has been excavated, mining companies separate the gold from the rock with cyanide -- a substance so toxic that voters in Montana have outlawed its use in outdoor chemical processing. According to the Environmental Protection Agency, taxpayers face a bill of more than $50 billion to clean up the waste and water contamination that gold and other hard-rock mining has left behind.

It’s about to get worse. Driven by record demand and a weak U.S. dollar, investors and speculators are snatching up mining claims at an alarming rate. A recent analysis of government data by the nonpartisan Environmental Working Group found that, in the last five years, there has been an 80% increase in the number of new mining claims in 12 Western states, many within a stone’s throw of Grand Canyon, Yosemite and other national parks.

A solution may finally be at hand. The House recently passed bipartisan legislation that would establish royalty payments and set up long-overdue environmental standards for operations and cleanup, as well as provide special protection for parks, wild and scenic river corridors, and national forest roadless areas. The measure faces a tougher test in the Senate, where its important environmental and taxpayer protections could get watered down by mining industry allies.

Mining is an important part of the nation’s economy. But it must be regulated by modern law -- one that protects the environment and the taxpayers. Considering the billions of dollars of precious metals the hard-rock mining industry has been given without charge, it’s time for Congress to stop playing Santa for a few companies and start thinking about leaving a little something for the taxpayers who have been footing the bills.