When buying a new piece of jewellery, consumers are often presented with a dilemma—how to ensure their purchase is contributing to a better planet. Are they making an ethical choice?
Recycled gold is often presented as the solution.
And it seems consumers and jewellery companies are jumping on board. As younger generations lean into sustainability trends, using recycled gold in fine jewellery has become not only popular but a way for many companies to emphasize how they are reducing their environmental footprint and ensuring responsible sourcing.
Boutique firms or smaller jewellers are launching collections and exclusive lines from recycled gold. Giants like Pandora—the world’s largest jewellery maker—have announced moves to use only recycled gold and silver.
But while well-intentioned, using recycled gold may not be as benecificial as consumers think.
A Move to Recycled Doesn’t Stop Mining
Many times, the argument for choosing recycled gold is that it’s greener. This argument assumes that choosing recycled gold will decrease the negative environmental impacts of mining by reducing the demand for newly mined gold.
There is no questioning the environmental impact of mining.
The negative environmental impacts of both artisanal and large-scale mining have been well documented over the years, including poor tailings management, water pollution and destruction of sensitive ecosystems.
But using recycled gold is unlikely to change the demand for mined gold.
Gold is unique in that its often used as currency in places around the world. In areas like Democratic Republic of Congo it can replace the need for cash, where payment for goods and services is made in gold. In Russia, we’re seeing gold used strategically to back the ruble so the currency maintains its strength in the face of international sanctions during the Ukraine invasion.
Therefore, the price of gold, availability of accessible deposits, and economic pressure on miners have a greater influence on whether or not mining continues. While demand for gold and jewellery are one of several factors that impact the price of gold—its fungibility, the value it holds, and its role in finance and economic security mean that many other factors continue to drive an upward trend in the value of gold, allowing it to maintain its attractiveness for miners.
More importantly, artisanal gold mining will continue.
As a poverty-driven and mostly informal sector, artisanal miners are less driven by fluctuations in gold demand and pricing than they are by the necessity to make a living, coupled with a lack of other alternative options for generating income. Even the steepest dip in gold price is unlikely to convince a large majority of artisanal gold miners to completely abandon the sector.
This means that while demand for recycled gold might increase, artisanally-sourced gold will continue to find its way onto the market.
Recycled Mixed With Conflict Gold
Not only does recycling not reduce the extraction of newly mined gold, but many companies don’t actually know what they are buying.
Recycled gold can include scraps, overstock, previous jewellery or electronics, and even dental fillings.
Ethical Metalsmiths has a great overview of the many different definitions of recycled gold.
More concerning, while traceability and due diligence of newly mined gold is scarce at best, it is almost non-exitsant when it comes to recycled gold.
There has been significant concern that the shift to recycled gold and lack of traceability is allowing gold smuggled from high-risk areas to enter the international supply chain.
According to the World Gold Council, there was a 1,149 ton supply of recycled gold in 2021.
LBMA accredited refiners self-declared significant purchases of recycled gold the same year. Swiss refiners sourced almost 290 tons of recycled gold from the United Arab Emirates (UAE). The UAE is a known gold transport hub that is often cited as the destination of choice by illicit actors given its lax import and due diligence practices. A recent report highlighted the practice of UAE refiners mixing artisanal mined gold with recycled sources, which are then sent on to Swiss authorities.
Meanwhile, Russian LBMA-accredited refiners declared they sourced 35,000 kg of recycled gold from within Russia in 2021, similar to Swiss refiners who sourced almost 300 tons from themselves.
China, which provided the most recycled gold to refiners globally in 2021—337 tons—is clearly open to gold sources shunned by others internationally, as it has welcomed Russian gold imports since the Ukrainian invasion.
The Finacial Action Task Force (FATF) has highlighted recycled gold as a risk for money laundering. The London Bullion Market Association (LBMA) has targeted trading centres that export large amounts of recycled gold, like the UAE, to secure improvements in their responsible sourcing measures.
The new India-UAE Comprehensive Partnership Agreement has further raised the alarm as it eliminated the taxes on waste and scrap gold—which is not defined in the agreement. Analsyts speculate that this will only increase the flow of illicit gold into the UAE, disguised as scrap.
Choosing Recycling Ignores ASM Communities
It’s clear that for many jewellers and precious metals refineries, recycled gold is simply an easier and cheaper option—especially in comparison to artisanally mined gold.
As such, the appetite of jewellers and especially refiners to source artisanally mined gold remains limited at best. Though a dedicated group of mostly smaller responsible jewellery companies have committed to sourcing artisanal gold, consistent sourcing on a larger-scale and beyond a handful of projects and programs has largely failed to take off.
Refiners continue to pursue a de-risking approach, preferring to not source from certain regions (especially Africa) or the artisanal sector writ large, citing cost, consistent supply, logistical difficulty, and reputational concerns.
Yet while recycled gold presents significant money laundering risks, acknowledged by the LBMA, these concerns are often obfuscated and less likely to garner attention from companies or consumers. Instead, recycled gold has been promoted to consumers as an ethical, environmental, and sustainable choice.
All the while, artisanal gold miners are held to what is essentially a higher standard than recycled gold—standards that are keeping most of them out of reach of formal markets. Ironically, many industry insiders suspect that much of illicit artisanal gold makes its way into legitimate markets disguised as recycled gold.
It’s clear that a simple reliance on recycled gold—with no questions asked—is far from responsible. It will only continue to enable an opaque and high-risk segment of the gold trade under the guise of a “green” option. Worse, it distracts from the real need for support to the women and men whose livelihood depends on artisanal gold mining. This investment could reap far greater rewards with respect to reducing harm to the environment and sustainability.
Interested in learning more?
How you can support artisanal miners and responsible sourcing, in our 2021-2022 Annual Report.
How gold is smuggled to the international market from Democratic Republic of Congo.