Comment: Rosia Montana – between gold, and fools' gold: just where is the common sense in it all?
Guest writer Stuart Meikle looks at the Rosia Montana gold mining issue from a different angle: what to do with all the gold, and why move mountains to fill a small room with the projected 300 tonnes of the shiny metal? And why not focus instead on Romania's real gold, its farmland?
The other day I found myself asking whether we, as a human race, really need another 300 tonnes or so of gold. After all, gold is so useful that a third of what we have managed to extract from this Planet of ours is still stashed away, sight unseen, in various storerooms around the world.
To add some context, since sometime before the Romans started digging for gold in the Apuseni Mountains, we, the human race that is, have accumulated a little over 170,000 tonnes of gold. Of this, nearly 90,000 tonnes have been utilised solely for decorative purpose. To what extent mankind has benefited from this use of gold is debatable, but I guess without it we would have found something else to tickle our collective fancy. Another third (nearly 60,000 tonnes) of our extracted gold is held in public and private ‘reserves’. I am not exactly sure what we are keeping it in ‘reserve’ for; maybe it will someday become really useful but until then it will just lie idly around doing absolutely naff all.
So please, can someone tell me why we really need another 300 tonnes or so of this yellow stuff?
It appears that one part of the human race can see the sense in deploying vast amounts of our collective tangible resources in moving a near full handful of mountains so as to extract some more shiny metal that, let us face it, will be just parked, sight unseen in various dark underground vaults. Hence, Rosia Montana is about consuming vast amounts of non-renewable fossil fuels and, if I am to believe the ‘no’ campaigners, playing around with the environmental welfare of the immediate location and, potentially, a significantly wider region. And all this will be for 300 tonnes of gold (although let us not forget the silver).
Or if one wishes to put it another way, we, the human race that is, will use a substantial part of our very finite resources to extract 300 tonnes of gold by creating one gargantuan hole in the ground only to place it in another very much smaller one. Is this an illustration of how much the human race has progressed?
Certainly some will argue that gold has a real value; as a store of wealth. It is a store that is based on the confidence of a significant part of the human race that it does have a value (mainly when worn or otherwise used for adornment) and some of that value relates to its scarcity. Extracting another 300 tonnes or so will be an extremely expensive operation and this can be ‘justified’ by the current price (I use the term ‘price’ and not ‘value’) of gold. But who is to say that the price will not fall as the global economic situation improves; and it has fallen nearly 25 percent in the last 12 months alone. Will the economics (using its old-fashioned, externality-ignoring definition) really add up over the mine's projected lifespan? Will it, if we return to the gold prices that were around at the turn of the Millennium (only about 20 percent of their 2012 peak)?
The proponents of the Rosia Montana project will state something like; “since 2000 gold prices have risen by 12 percent per year and the price will to continue to rise over the long-term.” But this sounds remarkably like the straight-line price projections that we were seeing for the property market in the mid-noughties: “the only way is up.” But who is not to say that prices may not fall back towards where they were a dozen years ago? It is a possibility. Hence, is now even the right time to start mining? Even the economic rational appears tenuous as economic “success” does appear to be rather too dependent on the timing of the mining operations coinciding with a continuation of the current global economic crisis or the emergence of yet further troubles that send investors scurrying for the perceived safe haven that is gold? It is thought-provoking to suggest that a positive investment outcome for Rosia Montana relies on the negative.
An interesting footnote to this issue is created by asking just how big a hole (sorry, I mean vault) are we going to need to store this extracted gold. Now, as we all know, gold is pretty heavy matter so 300 tonnes only takes up a little over 15 cubic metres of space. I guess we should be grateful for small mercies; having moved a near full handful of mountains to get at the shiny stuff we will only need to dig another very little hole to put it in. To visual just how big this new hole has to be just take an average room 2.5 metres tall with a footprint of six square metres and fill it with gold. Still struggling? Well, that is the average bathroom.
So to finish on a positive note, I will add that for all the negatives highlighted by the ‘no’ campaign, it will be possible to reduce the project’s environmental impact in one way. It is because any one single local village family should be able to offer sufficient (fifteen cubic metres) cellar space for storing the extracted gold. And if they do, one would anticipate that they would be more than adequately compensated for giving up their pickle-storage. But then again, you cannot eat the gold (well, a rational person would not).
And the thought of food does remind me to mention a phrase that I so often hear these days, “farmland is the new gold”; it is to the extent that it is a scarce resource but there the similarity largely ends. Farmland is a productive asset and its real, long-term value is within the food it can produce for a globally-expanding population. And farmland is something that Romania does have in abundance relative to its population size; if only it could improve the governance of agriculture and the management of its farming so as to properly utilise its land in a productive and sustainable manner. Food, not gold, is where Romania’s future lies.
But ultimately, in all of this, the one term that one is left to ponder is ‘fools' gold’ and whether, as real as the mined metal may be, is ‘fools' gold’ not the most apt way to describe the gold within Rosia Montana?
By Stuart Meikle, Guest Writer