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Tuesday, December 01, 2009

60 Minutes' Congo report puts jewelers on hot seat


New York--A segment that aired Sunday night on CBS News' 60 Minutes reported that gold revenues are helping to fund a violent conflict in the Congo, and it put the jewelry industry on the hot seat for not having a universal system to track the source of gold used in manufacturing jewelry.

The segment, reported by correspondent Scott Pelley, opened the weekly news program and led off with statistics about millions of deaths in the African nation, saying the violence between rebel militias and government forces is being fueled by weapons that are purchased with revenues from the mining of gold as well as tin, copper, and "coltan," which is essential to the circuits in computers and cell phones.

"Gold and other minerals are funding the deadliest war since World War II," an online version of the 60 Minutes story said. "More than 5 million people have died in the Democratic Republic of Congo. Years ago, the jewelry industry banned the trafficking in so-called blood diamonds, but the same hasn't happened with gold."

On-site footage depicted the hardscrabble lives of the mine workers, including men and children who are so destitute that they reportedly work for only a dollar or two a day, digging in open pits and laying blankets in riverbeds to separate out small pieces of gold. Rebels seize the gold and use it to buy ammunition and medicine, according to the report.

Amid the chaos, the report said, some 200,000 women have been raped and some 1 million residents have been displaced to makeshift campsites after rebels burnt down their villages as part of their efforts to terrorize the population and strengthen their grip on the region's mineral riches.

The report did cite a statistic that only 1 percent of the world's gold comes from the Congo, but said "that still comes to more than $300 million a year-- enough to keep the war going forever."

United Nations efforts to crack down on gold from the region have failed, because the material is smuggled through Uganda, the report said.

While other Congo-mined minerals were mentioned as helping fund the wars, gold played the largest role in the report, and the jewelry industry, in particular, was put on the spot.

Jewelers of America (JA), which has offered jewelers advice on how to combat fallout from the 60 Minutes report, said that even less than 1 percent of the world's gold comes from the warring section of the Congo, noting that metals consultancy GFMS estimates that only 0.2 percent of annual global gold mine production comes from the eastern Democratic Republic of the Congo, where the conflict is centered.

Tiffany and Co. was given credit for distancing itself from any gold related to conflict: The report noted that of the unnamed "major jewelers" 60 Minutes talked to, only Tiffany said it does track "nearly all of its gold" directly to a mine in Utah. Wal-Mart told 60 minutes that it planned to be able to trace the source of 10 percent of its gold by next year.

Pelley interviewed JA Chief Executive Officer Matt Runci, citing his role with both JA and as chairman of the Responsible Jewellery Council (RJC). Runci condemned the use of gold from the warring area, but said that work still lies ahead in begin able to track the origin of gold used in jewelry manufacturing.

"There is absolutely no place and no need for debate around the question of whether any illegally sourced mineral ought to be part of the industry supply chain," Runci said, according to the online version of the story. "It should not be."

He acknowledged that source of origin is still not part of the RJC's framework.

Asked how Congo gold might be kept out of American jewelry stores, Runci brought up the point that it's not entirely clear which gold is related to the conflict.

"One needs to know where the sources of controversy are if one is to try to prevent those sources from getting into the legitimate supply train," he said.

"It's been pretty well known for a long time where the sources of controversy are in Congo," Pelley replied.

"Well, in the eastern province, yes, it has," Runci agreed.

Referencing the banning of blood diamonds from West Africa, Pelley asked why the same wasn't being done for gold.

"Banning the gold is a noble goal, but one that requires, I think, some thoughtful consideration and a positive engagement between stakeholders, governments and industry to bring to achievement," Runci said, according to the online report. "And the industry stands ready to work with stakeholders and with government to achieve that end."

Pelley asked Runci what the impact would be if Walmart, the largest gold retailer in the United States, simply declared that it would demand traceability all the way to the mine for all the gold that it sells.

"There's no question in my mind that commercial pressure can and should and must be brought to bear," Runci said. "I don't think the question's been put to them, frankly."

The report did not specifically mention the Kimberley Process, which was set up to stem the flow of conflict diamonds and was a joint effort between governments and the industry, though it did suggest that a similar effort should be made for gold.

Nor did it mention No Dirty Gold, an initiative aimed at ensuring that gold is mined responsibly, with respect for human rights and the environment. Sears, Ultra Stores and Blue Nile are the latest to sign on to the initiative, vowing to seek cleaner sources of gold and precious metals and to make sure that human rights are protected in the process of gold mining.

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