A Gold Rush Fed by Technology
New mines open in America and elsewhere; demand driven by China, India
The American gold rush now extends from Alaska to Texas.
A year ago, a new gold mine opened northwest of Anchorage, Alaska. The Nixon Fork mine, owned by Consolidated Nevada Goldfields of Denver, is the first gold mine to operate in the state since World War II, and half a dozen more projects are either in planning or construction.
And Davis Mountains Mining Company of Houston recently announced plans to begin prospecting in Shafter, Texas, a ghost town a few miles north of the Texas-Mexico border. The last precious-metal mine here closed in 1942. Dozens of crumbling adobe and rock buildings and hundreds of ornate graves are all that remain of the town's mining legacy.
The return of gold prospecting to this parched land and to the cooler climes of Alaska is part of a surging domestic gold industry. Since 1980, gold production in the United States has increased more than tenfold. And while US output has leveled off in recent years, new discoveries in Alaska and elsewhere portend another jump in production. Some analysts even predict that over the next few years, the US could surpass South Africa to become the world's biggest gold producer.
The increase in gold production hasn't been fueled by a jump in prices. The price of gold has been relatively stable - at $380 to $400 per ounce - for the past decade. Instead, it's being driven by better mining technology and worldwide demand for the precious metal.
Computer-aided mapping has allowed geologists to more easily determine the size and value of a deposit. Processing ore with cyanide in a process called heap leaching has turned deposits once thought to be too small or too low in gold content into money-making ventures. Developed three decades ago by the US Bureau of Mines, heap leaching allows mining of ore bodies containing as little as half a gram of gold per ton.
The increase in American production parallels a worldwide trend. Global gold output has nearly doubled since 1980, from 41 million troy ounces to a projected 74.5 million ounces this year.
John Lutley, president of the Gold Institute, which represents more than 60 companies in the mining, banking, and refining industries, says emerging free-market economies like India and China are hungry for gold. "India is now the most important gold market in the world," he says. "There are 150 million middle-class people in India. They have some disposable income and they love precious metals."
Last year, according to figures published by Gold Fields Minerals Services Ltd., India used 303 tons of the precious metal for jewelry-making alone. China used 191 tons of gold for jewelry. The US used about 130 tons.
Gold production in the US is projected to rise from 10.8 million ounces this year to 13.9 million ounces by 1998. By comparison, South Africa this year will produce almost 16 million ounces. Other big producers, behind the US, include Australia, Russia, and Canada.
The surge in domestic mining has created thousands of new jobs, but it has also raised environmental concerns. In Montana, environmentalists are fighting a planned open-pit gold mine that could be built near the Blackfoot River.
John Miesner, a biologist at the US Fish and Wildlife Service in Reno, Nev., says giant open pits that will be left at Nevada mine sites could pose long-term threats to the state's wildlife, including migratory birds, and water quality.
After such mines close, the pits fill with groundwater. If the rock in the pit begins to generate sulfuric acid, which in turn liberates heavy metals in the rock, Mr. Miesner says, "There's nothing you can do. It's just too big."
Philip Hocker, the president of the Washington-based Mineral Policy Center, contends that much of the domestic gold production has occurred at the expense of US taxpayers. Mr. Hocker has led the fight for reform of an 1872 mining law that permits companies to mine on federal land without paying royalties to the US Treasury. "This is a giveaway of $2 [billion] to $4 billion ... every year," he says. "We believe the royalty should be 12.5 percent. That's the same royalty the government gets on oil and gas or coal that is on public lands."