Swiss Review 3/2019

Swiss Review / May 2019 / No.3 12 Economy THEODORA PETER “We cannot completely exclude the possibility of gold entering Switzer- land that has been produced in a way that violates human rights.” This was the bombshell that the Federal Coun- cil included in its report about the gold trade and human rights last Novem- ber. In response to amotion submitted by parliament, the government’s gold report shed a little light on an other- wise secretive industry. Gold is of key importance to Switzerland. Some 40 per cent of global gold refinery capacity is Swiss-based, while four of the nine industry world leaders have their headquarters in Switzerland. Gold refineries such as Argor-Heraeus, Metalor, Pamp and Valcambi process imported raw gold or remelt existing gold. In 2017, over 2,400 metric tons of gold worth almost 70 billion Swiss francs was imported into Switzer- land for further processing. This equates to around 70 per cent of global gold production. The raw gold is sourced from approximately 90 countries. These include develop- ing economies that are heavily de- pendent on gold exports – such as Burkina Faso, Ghana and Mali. Precarious conditions at small-scale mines Industrial mines account for about 80 per cent of global raw gold supplies, while 15 to 20 per cent is sourced from small-scale artisanal mines where the working and environmen- tal conditions are often precarious. Nevertheless, millions of families de- pend on small-scale mining for their livelihoods. More than 15 million people work in such mines around the world, of whom 4.5 million are women and 600,000 are children – groups particularly at risk from hu- man rights violations. Some coun- tries, including Peru and Ethiopia, are trying to regulate unofficial min- ing activities through the introduc- tion of prospecting licences, for ex- ample. Yet implementation is proving difficult, while on-site checks are few and far between. A suspected case of illegal gold trading recently hit the headlines in Peru, where customs authorities con- fiscated almost 100 kilograms of gold from exporters Minerales del Sur in March 2018. This raw material was bound for the Swiss refinery Metalor. The Peruvian judiciary is now inves- tigating thematter. Minerales del Sur, which had up to 900 subcontractors at one stage, may have sourced the gold from illegal mines, public pros- ecutors believe. Criminal proceed- ings have not yet begun. Metalor say that they have stopped importing gold from Peru since the seizure, in- sisting that they have always pro- cured gold from legal, registered mines. Of indeterminable origin According to the Federal Council’s gold report, industrial mines are the source of most of the rawgold refined in Switzerland. But that is as detailed as it gets. Import statistics are unable to provide a clear indication of where the rawmaterial was sourced or how it was produced. The Federal Council therefore recommends that the in- All that glitters is not gold: gold industry under scrutiny Switzerland is a leading global player in the gold trade. Yet some of the raw gold that ends up in Swiss refineries comes from dubious mines. There is now growing pressure on the entire raw materials sector to take greater ethical responsibility. The ‘Vreneli’ – a much-loved gold coin ‘Vreneli’ – Switzerland’s best-known piece of gold – is the name of a series of coins depicting Helvetia that were minted from 1887 to 1949. The gold used to produce them came from other European countries. A total of 58.6 million 20-franc ‘Vrenelis’ entered into circulation back then. A 10-franc denomination (2.6 million units) and a 100-franc denomination (5,000 units) were also released. The ‘Vreneli’ remains a popular gift coin – and a simple investment vehicle – to this day. Containing 5.8 grams of gold, the 20-franc coin has a current market value of around 270 francs and can be exchanged at any bank counter in Switzerland. The rare mintages can go for more, with coins from the 1926 release even known to change hands for sums of up to 400 francs. Coins from the 1904–06 mintages, worth around 300 francs each, are also collector’s items. The ‘Vreneli’ – a Swiss-German diminutive of Verena – probably owes its name to the coin’s youthful depiction of Helvetia, whose plaited hair makes her look more like a farmer’s girl than the mother of Switzerland. (TP)