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Gold Boom Spreads Mercury as 15M Miners Exposed

May 24, 2012

Women pan for gold along the Dagua River in Zaragoza, Colombia. Photographer: Christian Escobar Mora/AP Photo

Women pan for gold along the Dagua River in Zaragoza, Colombia. Photographer: Christian Escobar Mora/AP Photo

As he clambered out of bed and onto his feet one morning late last year, Miguel Angel Cardona, 62, felt his body betray him. His head grew so heavy it pulled him tumbling back down.

“You feel fuzzy, like you’re drunk,” recalls the grandfather of nine, who’s spent most of his life in Segovia, a gold-mining town in northwestern Colombia. In the days that followed he noticed numbness in his hands and fingertips. He lost 12 pounds, no longer able to stomach the meat, rice and fried plantains his wife sent with him to work each day at a single-shaft mine on the edge of town. He worked with drums filled with mercury, water and crushed stone to process gold. Cardona suspected his job was poisoning him, Bloomberg Businessweek reports in its May 28 issue.

In Segovia, almost 100 shops refine the gold that prospectors bring down from the foothills of the Andes Mountains. Juan Camilo Hoyos, 17, had no doubt his work at one of the shops was toxic. Hoyos operated a smelting oven, and after inhaling fumes each workday for about two months, he too lost the fine motor skills in his hands. “I couldn’t draw a straight line,” he says.

To escape the fumes, Hoyos took a job inside the cashier’s cage of a store that buys finished gold from the miners. He was a couple of feet away when a robber pumped nine bullets into a co-worker, who survived. Still, Hoyos believes his new job is better for his health than his last one.

Boomtown Poison

With the price of gold reaching a record last year, Segovia is a boomtown in the 19th century style, with casinos and brothels squeezed between mining businesses along its main streets. It’s also likely one of the most poisonous towns in the world. That’s because the cheapest, easiest way for miners to refine gold is to mix it with a potentially lethal agent: mercury, aka quicksilver.

The town is awash in mercury, which even in small doses can damage the central nervous system and the lungs or cause birth defects. Children are especially vulnerable. At least a dozen businesses along Segovia’s main drag sell mercury to prospectors, ladling it out a few ounces at a time into small plastic bottles with blue screw tops.

Mercury also comes in shiny, steel cylinders that hold 76.5 pounds of it, like those locked in a shed at Cardona’s mine. There, a few feet from a picnic table where workers gather for breaks, a dark and silvery slush of mercury, rock and water flows from processing barrels into a wide, cement gutter beside a mound of gray rock. Nearby, locals bathe their dogs in a creek, believing the mercury that fills it will cure mange.

Air Mercury Levels

During tests in April 2010, Canadian researchers working in Segovia with the United Nations Industrial Development Organization found air mercury levels inside gold shops like the one where Hoyos worked could be almost 1,000 times higher than public exposure limits set by the World Health Organization. Readings 10 times above the standard were common in nearby residential areas.

Last December in the journal Science of the Total Environment, researchers concluded these “insane” practices likely made Segovia the world’s most polluted urban area when it comes to mercury. Even though some shops have ovens with evaporation hoods meant to trap mercury, scientists and local health workers say they’re not enough.

Handling Quicksilver

In addition to the fumes, the watery mix of mud and mercury left over from processing, known as tailings, is spilled freely, accounting for a significant source of mercury in the environment. Most big industrial gold mines don’t use mercury. But because much of the quicksilver handled by small-scale miners is released into the ecosystem, their work is the world’s second-largest source of man-made mercury emissions, just behind burning fossil fuels, the UN Environment Programme estimated in 2008.

Kevin Telmer, a Canadian professor of geochemistry who heads the nonprofit Artisanal Gold Council, which advocates for small-scale miners, argues that a slightly different and more accurate calculation would show far more mercury is released by the miners. The metal is persistent in the environment, meaning it accumulates and circulates through evaporation into waterways and soils. In trace amounts it works its way into the food chain. Published scientific research over the past 20 years has tracked high levels of mercury from mining in everything from fish to breast milk.

‘Mad as a Hatter’

Mercury’s dangers were well-known before the invention of tests that could detect it in the bloodstream. The once-common English expression “mad as a hatter” described the psychotic symptoms displayed by European hatmakers of the 18th century who were poisoned using mercury to process fur pelts. Similar expressions can be heard in everyday conversation across Segovia.

Edgar Segura, who helps run a shop offering quicksilver, says some of his friends have gone mad inhaling fumes. Aceneth Castrillon, a local health worker, says town residents exposed to mercury display symptoms including depression, tremors, drooling and impotence. She even blames mercury for increased suicide rates. “Everyone who lives in Segovia is contaminated,” she says.

An estimated 15 million small-scale miners in Latin America, Africa and Asia use quicksilver to refine their gold. That makes selling mercury an increasingly lucrative business, and the global market is dominated by a handful of traders who buy it in bulk, store it and then sell to distributors in gold- rush nations across the developing world. Like the men who made fortunes selling pickaxes during the California Gold Rush, mercury traders today are cashing in on gold fever, but by selling a hazardous material. Perversely, international efforts to outlaw the trade are making it more profitable.

Obama-Sponsored Ban

The European Union banned mercury exports in March 2011, intending to prevent businesses in wealthier nations from contributing to contamination in places like Segovia. The U.S. is supposed to do the same next year under a 2008 law sponsored by then-Senator Barack Obama. The bans follow more than a decade of warnings from scientists and environmental groups.

But traders have sailed around international restrictions, raising prices and more than doubling revenues, according to Colombian customs records and the financial statements of one top company in the mercury trade obtained by Bloomberg Businessweek. That company, which has a staff of just two executives and four administrative employees at its London headquarters, dominates the trade to Colombia and beyond. Its mercury has flowed from sources in the U.S. and Kyrgyzstan to European and Asian ports, then by sea to Colombia and overland to distributors in and around Medellín, the capital of one of Colombia’s primary gold-producing regions. Those distributors sell to Segovia’s shops and the small mine where Cardona works.

Dusty Outpost

Segovia has about 40,000 residents. Its main streets are choked with dust kicked up by motor scooters and the occasional passing horse. The dust doesn’t appear to bother Edgar Segura, a tan 48-year-old with green eyes, his khaki pants riding below a small paunch. He spends much of the day leaning back in a plastic chair planted on the sidewalk outside a small shop called Almacen Servimineros. (Servimineros is a mash of Spanish words that roughly translates to Miners’ Supply Store.) The front door is open, beckoning miners inside. A placard advertises mercurio for sale at about $74 a pound. Segura knows mercury is dangerous, and says most customers exhibit a false bravado. “People think they won’t get sick,” he says.

Dip of a Ladle

Inside, clerks dip a plastic ladle into an open red pail of mercury kept on the floor of an office, doling out small batches to miners. The prospectors pay more than the advertised rate for anything less than a pound, and almost everyone leaves the shop with just a few ounces swishing at the bottom of a plastic bottle. Almacen Servimineros sells mercury in much larger quantities, too, including to at least one of the dozens of local gold processing centers. Segura’s competition is everywhere. There are mercury sellers on either side of his shop.

After miners leave Segura’s establishment, they bring their mercury to processing centers, known in Spanish as entables. They also bring bags of stones they’ve dug from the hills. The rocks contain tiny traces of gold and are crushed into grit at the entables. The pulverized ore is poured into mixing drums along with mercury and water. Mercury bonds with the gold, forming a viscous mixture that is pressed by hand into a silvery wad about the size of a golf ball. The resulting amalgam is roughly equal parts mercury and gold. The ball goes into an oven, either at the entable or a gold-buying shop such as one where Hoyos used to work, or it can be fired with a blowtorch in an open pan. Either way, the heat causes the mercury to evaporate, leaving behind the gold. The mercury vapor seeps into the lungs of workers such as Hoyos -- and into town.

Pliny the Elder

Mercury has been used to refine gold for thousands of years. During the height of the Roman Empire, in the first century AD, Pliny the Elder published a 37-volume encyclopedia, Natural History, which noted how all forms of matter float on quicksilver’s surface, “with the exception of gold, this being the only substance that [mercury] attracts to itself. Hence it is that [mercury] is such an excellent refiner of gold.”

Because mercury isn’t sold on a public exchange, there’s no spot price for it. An index compiled by the trade journal Metal Bulletin suggests the wholesale price charged by exporters is soaring. Since early 2003 the value of mercury has risen 1,100 percent, compared with a 376 percent rise for gold during the same period. The wholesale price for the industry-standard steel container holding 76.5 pounds of mercury was $1,250 a year ago; the same “flask” costs $2,100 today. By the time it reaches the streets of Segovia, it costs a lot more.

Exacting a Higher Price

The $74 per pound price advertised inside the doorway of Segura’s shop earlier this year is roughly three times the price cited by Metal Bulletin. Last December, says Segura, the store bought its mercury from a distributor in nearby Medellín. The Medellín distributor who supplied the Segovia shop is Insuminer, according to Segura and his sister Yomaira, who identifies herself as both the store’s owner and an Insuminer executive.

On the edge of town, Fernando Gomez, co-owner of a small gold mine called Segovia Minera Gold, unlocks a shed, unscrews the narrow top of a metal tube, and pours mercury onto his hand. “We’re used to it,” says Gomez, calling the liquid metal “a necessary evil.” Like Segura’s shop, the mine buys mercury in bulk, but it has used a different Medellín distributor. Last November, says Gomez, his mine bought mercury from Distribuidora de Químicos Industriales, or DQI for short. DQI confirmed it sold mercury to Gomez’s mine, which employs about 100 men.

Squishing Mercury

One of Gomez’s workers is Cardona, the 62-year-old who says he was so sickened from mercury exposure that he collapsed. Cardona slings a charcoal-colored baseball cap over his white hair as he heads for work. He tucks his pants into knee-high, black rubber boots, the kind English gentlemen wear on wet walks through the countryside. He used to squish mercury between his bare fingers and breathe the fumes daily from the processing drums at the mine. Cardona’s salary from the mine, about $850 per month, supports a household that includes his wife, a daughter, a son-in-law and four of his grandchildren. On the advice of a doctor in Medellín, he decided to forgo the pay for two months to escape mercury.

On a warm day earlier this year, young men working at Segovia Minera splashed toxic slush from the drums into buckets, leaving their cheeks, hands and boots coated with mercury-laden muck.

Impoverished Miners

Mercury isn’t produced in Colombia. So the Medellín distributors who sell it to Cardona’s mine and Segura’s shop -- DQI and Insuminer -- purchase it from overseas. DQI, which sold to Cardona’s mine in November, got its biggest shipment in the months leading up to that sale from a London-based trading company named Lambert Metals International, according to Colombian customs records. The almost four-ton shipment was logged by DQI on April 12, 2011.

During an interview last year, Ruben Escandon, chief executive officer of the family-run DQI in Medellín, confirmed he buys from Lambert. He said he started importing it for resale as the gold rush gathered steam about six years ago. Escandon knows the dangers of mercury but said he didn’t want to let down the country’s impoverished miners. For its customers, including Segura’s shop, the other Medellín distributor, Insuminer, imported more than nine tons of the toxic metal in the past year alone, customs data show. And 40 percent of Insuminer’s mercury came from Lambert Metals, according to an analysis of customs records and data.

Shipping Tons

The shipments from Lambert Metals were not exceptional. Since the start of April 2011, the first full month the European ban was in effect, Colombian importers logged more mercury from Lambert Metals than from any other company or broker in the world, according to customs records. Lambert’s six shipments in that period -- to three different Colombian companies -- totaled about 21 tons, more than 40 percent of all Colombian mercury imported then. (Colombian government officials have updated the data through February.) A third Lambert customer, a Medellín area distributor called Surtiminas, bought more than seven tons in the first two months of this year.

Victor Manuel Sosa, chief executive of Surtiminas, says he sells to mining-related businesses in Segovia and other towns in the region. He also said the ultimate buyers of his mercury are responsible for how it’s used. Under country-of-origin disclosures, Colombian records show Lambert’s mercury came from two nations: Kyrgyzstan and the U.S. But it took some significant detours along the way.

Hunting Light Bulbs

In 2006 a U.S. government commodities analyst named William “Earl” Brooks scoured shelves at home improvement stores near his home in the northern Virginia suburbs of Washington. He was looking for light bulb packages printed with the words, “Made in the Netherlands.”

Brooks, who covers mercury for the U.S. Geological Survey, had noticed that the Netherlands was becoming the top destination for American mercury exports, an important point included in his published reports. But Brooks was perplexed about why the Netherlands would need hundreds of tons of quicksilver, unless, he says, “it had become the mercury vapor lamp capital of the world.” Trace amounts of quicksilver are used to manufacture some light bulbs. Brooks couldn’t find any such packages.

Although the data can be unreliable, U.S. trade figures showed 3 million pounds of mercury shipped to the Netherlands from 2006 through 2010, accounting for about 56 percent of U.S. mercury exports in those five years. That’s about 300 tons a year. The U.S. was a leading global source of mercury in those years, thanks largely to the decommissioning of plants that used it in the production of chlorine and caustic soda, Brooks says.

Perplexing Ledger

What he didn’t know was even more perplexing: The Dutch side of the international trade ledger showed almost no mercury coming ashore from the U.S. during that same period. Somewhere in the Atlantic Ocean, between American export logs and the Netherlands import records, millions of pounds of toxic metal were simply lost -- at least on paper.

Much of the answer to the missing mercury riddle lies behind a red door at the end of a brick road in a gated office park in northwest London. Inside is the headquarters of Lambert Metals, the company dominating trade to Colombia.

For years, Lambert personnel bought mercury, primarily from the U.S. and Kyrgyzstan, then had it shipped to the Netherlands’ Port of Rotterdam, where it was stored in warehouses before being redistributed in smaller batches to Colombia and other countries around the world, according to Dutch government records and a series of e-mails written by Lambert executives, including to its Dutch shipping agent. The records and e-mails were obtained by Bloomberg Businessweek under the Netherlands’ freedom of information law and from a consultant who investigated the trade for the European Union.

Port of Rotterdam

The Port of Rotterdam is unlike anything else in western Europe, a vast and grim industrial complex snaking 25 miles from the heart of the city, where the World Port Center rises above the water, through a series of channels leading into the North Sea. More than 434.5 million metric tons of goods moved through Rotterdam, Europe’s busiest port, last year. Mercury shipments from the U.S. to Rotterdam were never counted in Dutch trade data because the toxic metal never technically touched Dutch soil, meaning it was “in transit,” according to the records and Dutch officials.

Avoiding the Ban

The man who controls Lambert, 62-year-old British businessman Howard Barrymore Masters, explained the transit principle in an e-mail dated Nov. 19, 2010, to his Dutch handling and warehousing company, C. Steinweg-Handelsveem. Masters wanted his shipper to recognize his belief that the transit status of his firm’s mercury offered a potential loophole they could use to get around the export ban.

If Steinweg didn’t agree, Masters wrote, it would be “regrettable that after many, many years Lambert Metals will no longer be able to handle their mercury business through Steinweg, Rotterdam.” (During discussions with Dutch regulators, Masters or Steinweg forwarded the e-mail to the government, which released it to Bloomberg Businessweek.)

Steinweg dominates the independent metals trade in the port, “but nobody really knows who the owners are,” says Minco van Heezen, a spokesman for the port authority. In a 15th-floor conference room at the World Port Center, where floor-to-ceiling windows provide a view to the sea on a clear day, van Heezen says Steinweg is famously tight-lipped. “The metals business, you know, it’s very secretive,” he says.

Discreet Locale

The location of Steinweg’s global headquarters in Rotterdam is shown on a map sold at the port, but there is no sign or logo of any kind marking the entrance to its office, which is in a low and long brick building that could just as easily be a middle school. The entrance is adorned only with a security camera and a stone statue of a port worker carrying a bulging sack. The plinth below his feet carries no inscription. Contacted for this article, Steinweg said it abides by the law, adding it “doesn’t provide information about customers.”

Dutch regulators ultimately rejected Masters’s argument that transiting Rotterdam’s channels excused shipments from the EU export ban, and Steinweg dropped Lambert’s business, at least in Rotterdam, according to regulators. Yet Lambert’s business hasn’t suffered. To the contrary, it has flourished.

After the ban took effect last year, the company sent mercury shipments to Colombia via Singapore and Hong Kong, Colombian customs records show, indicating that Asia has replaced Rotterdam as a global hub, at least for some of the company’s trading. (In one e-mail obtained by Bloomberg Businessweek, Masters had speculated he would move his business to Singapore.)

Soaring Revenue

Lambert’s revenue dramatically increased last year despite the ban, reaching $73.16 million for the fiscal year ended Sept. 30, 2011. That’s up from $29.66 million the previous year, or a 147 percent rise. The ban was in effect for more than half the fiscal year.

Mercury sales, which have “for some time been a major part of the company’s trading,” were responsible for last year’s “increased turnover,” the term British accountants use for revenue, Lambert’s directors’ report said. Based on the average price of mercury for the fiscal year, the revenue increase would translate into sales of about 1,137 tons. Exporting mercury from Europe may now be prohibited, but it’s perfectly legal for Masters and his company to use e-mail and telephones to direct global trade from European soil.

‘Demand Remains Strong’

Masters explained in the company’s most recent annual report how the international regulatory squeeze and global gold rush were boosting Lambert’s fortunes. Mercury is “a hazardous material that is subject to ever-increasing environmental controls and regulations reducing its availability worldwide, but due to its unique properties, demand remains strong, particularly from the gold mining industry,” the report said. He predicted prices could go even higher, “with gold itself being at record high levels.”

His insights come with experience. Masters is the former chairman of the London-based Minor Metals Trade Association. The group’s members include those who produce, trade, and buy metals not sold on exchanges, such as mercury and so-called rare earth metals. It named the Howard’s Way cup, the prize awarded in its yacht race, in his honor. The sailing enthusiast owns a small estate, High Trees, in the English countryside about 30 miles northwest of central London, on the edge of the 12th and 18th greens of a golf club.

Missing Tons

Previously unpublished data from Dutch customs officials show almost 1,000 tons of “transit” mercury leaving Dutch warehouses and heading for Colombia and about 20 other countries on five continents from 2006 to 2010. Masters himself speculated in an e-mail last year that global trade data missed tons of mercury that traders sent sailing around the world. In the same e-mail, he also wrote that the European ban’s only achievement “is killing the market in Europe and moving the business elsewhere, but that’s what we pay our taxes for -- to ruin the EU economy.”

The e-mail was sent to an EU consultant who investigated traders ahead of the ban. “We are now concentrating all of our efforts on developing business anywhere but within the EU,” Masters wrote, “or should we say the future Third World!”

It’s unclear whether the U.S. ban next year will dent the trade, raise revenue even further for Lambert, or some mixture of the two. Trade records and e-mails show Lambert has been buying mercury from Kyrgyzstan, where the government runs the last primary mercury mine known to be exporting to the global market. A binding UN agreement on mercury is under negotiation, but its potential reach is unclear.

Colombia’s Concern

An unsigned e-mail to Bloomberg Businessweek from Lambert said that focusing on the company’s profits from “a few sales of mercury to Colombia” amounted to sensationalism, adding that if mercury legally imported into Colombia “is not being correctly handled, it should indeed be a concern for the Colombian authorities who permit its importation.”

Hoyos, the 17-year-old who worked a Segovia oven but now buys gold from a bullet-riddled chair, says he’s learning to repair motorbikes. He wants to become a mechanic so he can get out of Segovia and away from gold and mercury for good.

Cardona, the mineworker who took about two months unpaid leave to escape mercury, now supervises others on the drums, trying to stay as far away as he can. The owners of the mine plan to switch to a cyanide-based processing system, but Cardona knows it will be difficult for his family and community to get away from quicksilver; his two sons and his son-in-law also work with Segovia’s gold, as does most of the local working population. “Everything is mining here,” Cardona says. “You could get a company job, but the companies here in Segovia are all mining.”

To contact the reporters on this story: Cam Simpson in London at csimpson13@bloomberg.net; Heather Walsh in Bogota at hlwalsh@bloomberg.net

To contact the editor responsible for this story: Bryant Urstadt at burstadt@bloomberg.net


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