Sunday, August 2, 2009

Britain's dirty money: How the loose change in our pockets is costing the earth

The flatbed Iveco juggernauts streak relentlessly along the rain-soaked M4 in the late winter darkness. Speeding out across Ail Groesfan Hafren, the second Severn Bridge, the transporters cross the flat estuarial mud of the river in flashing red-light convoy and plough headlong into the Vale of Glamorgan.

Inside the cavernous trailers are giant loops of steel, copper and nickel folded like fragile origami paper into tight manageable bundles. Purchased to order from clients operating on the open market of the London Metal Exchange, the minerals have travelled thousands of miles from mines deep within Africa, South America and Australasia. The final destination for the cargo is a drab 30-acre industrial plot that few people outside South Wales even know exists.

Here, in the early hours of the morning, the metals will be unloaded. The giant coils of steel and copper are unrolled like a carpet and 'blanked', or punched, into tens of thousands of small discs. The blanks are then plated with thick layers of nickel, washed in acid solutions and scanned by sensors. Dye stamps squeeze 'effigies' - the head and tail images - into the blanks, turning them into coins.

Twenty-four tons of coins a year emerge from the heavily guarded coining press room of the Royal Mint, the world's oldest financial institution.

Here, an entire range of industrial skills are housed on one massive plot, from furnace workers to engravers touching up the Queen's portrait. And at the end of it all is a football-pitch-sized warehouse full of money piled as high as a five-storey house.

The Royal Mint is a multimillion-pound business that produces three billion coins a year for the world; its complex inner workings remain a mystery to most of us. The same can be said for the true origins of the coins they produce in the dead of night.




Live has travelled to opposite corners of the world in search of the copper and nickel that make up the largest part of our coins. What we have discovered is that while as consumers we are obsessed with recycling, ethically sourced products and organic food, the very cash with which we do our trade is itself most likely unethical. Dirty money, in fact.

We went to the world's largest copper mines in a remote part of Chile and to the heart of the rainforest in Madagascar to investigate the development of what is to be the world's largest nickel mine. Both these metals are vital for the production of coins. The devastation we discovered was shocking. Whole swathes of pristine Madagascan rainforest, home to some of the most endangered creatures in the world, have been felled.

And in Chile, a vast amount of water is being drained every day from what is already one of the driest places on Earth. These mines are causing significant damage to the planet and its people, yet the Government-owned Royal Mint continues to buy metal from them.
People still talk about the last day it rained in Quillagua, Chile. It was in 1983. Tiny droplets were glimpsed, falling from a single grey cloud above the foothills in the hazy distance. Water here has become as rare as Moon dust.

We are standing in a narrow gorge, its blasted walls a fresco of grotesque shapes, whittled by searing hot winds. In front of us are dry fields of cracked mud, long abandoned by local farmers. Behind us, back along the highway, is Calama, a small provincial capital in the Atacama desert.
Copper mining is invasive in the extreme. It destroys the water table and pollutes the earthThe air around Calama is choked and hazy. The main culprit is the world's second largest copper mining and milling operation at Chuquicamata, ten miles north of the town. Once run by the Anaconda Mining Company, it is now a state-owned operation. The pillars of smoke that rise from its stacks are now the most noticeable landmark in the bleak desert. Parked cars are covered with plastic to protect them from the pollution.
Further into the Atacama desert, cutting into the mountains 125 miles south, is Escondida, the El Dorado of the Chilean economy, although copper and not gold makes this mine the most famous and largest in the world. The only way to fully comprehend the destruction is to view it from space. It is so isolated that the damage this part-British-owned mine has inflicted is known only to a few.
Part of the reason for the devastation here is that just one per cent of the rock contains metal. As a result a huge amount is mined, creating a hole that is now 1.25 miles across - an impossibly vast chunk of the desert has disappeared in less than a decade. This is the biggest, dirtiest hole in the world and it is owned by two Anglo-Australian mining giants - BHP Billiton and Rio Tinto.

On the ground, the cracked brown earth around the site crumbles in your hands as you lift it. There is no sign of animal life anywhere. The scarcity of water and natural brush has forced nature to simply move on or, worse, wither and die. The mine sucks the land dry for miles and miles around. In the world's driest plateau, Escondida uses more water each year than the whole of the capital, Santiago.
As Escondida has expanded, Chilean copper output has increased by 24 per cent, or 604,000 tons, to top three million tons last year, about one-third of total Western-world production. The vast majority comes from these two sites. According to UK importing statistics, 20 per cent of the copper in this country comes from Chile. The mines churn out more and more copper to meet a surging demand, but with it has come an unforgiveable legacy of labour exploitation and environmental disregard.

In the neighbouring town of Quillagua, water is so scarce that long trailers now tear up the desert roads, bringing in water from 125 miles away. Quillagua is among many small towns being swallowed up in Chile's intensifying water wars. Nowhere is the system for buying and selling water more permissive than here, experts say, where water rights are private property, not a public resource, and can be traded like commodities with little government oversight or safeguards for the environment.




Agricultural producers are competing with mining companies to siphon off rivers and tap scarce water supplies.

'Everything is against us,' says Bartolome Vicentelo, 79, who once grew crops and fished for shrimp in the Loa River that fed Quillagua.
The town has become a ghost town after Codelco, the government company that runs Chuquicamata, used the land to dump waste material from the giant open-pit mine. The company was forced by environmental laws to move the population away from the hazardous emissions of arsenic and sulphur dioxide.

In its heyday in the Fifties, Chuquicamata's population numbered 24,000. Today, there are about 7,000 workers at the mine. Only a handful live in the camp nearby. But the smog spreads far afield, even to Santiago, where sometimes it's so bad that children are hospitalised with respiratory ailments.
According to trade union leader Guilen Mo Gonzalez, 'Here in Chile our land and our lives have been destroyed by copper mining. This is the driest region on Earth, where indigenous families struggle to get water from their wells. Water theft by big corporations is common in my country and we have no rights.
'Escondida, the biggest copper mine in the world, uses more water than the whole of Santiago and all of this in an area where you have to squeeze water out of the cracked earth.
'Copper mining, like all open-cast mining, can never be ethical,' says Gonzalez.
If this was somewhere more high-profile, people would be protesting'It's invasive in the extreme, it scars the landscape, it destroys the water table and it pollutes the earth and the local wells. It is destroying one of the most beautiful and unique places on Earth. Look at a photograph of the Atacama before the mines came here and then look at the area now.

'From the air the desert is unrecognisable - the oases are gone, the wildlife is gone, the wells are gone. This is too high a price to pay.'

Water has become such a problem in this part of the world that even Rio Tinto and BHP Billiton, with all their money and resources, can no longer squeeze enough from the ground to feed the demands of the mine. They have recently invested £150 million in a desalination plant at Escondida. The aim is to pump seawater from the Pacific Ocean over a distance of 125 miles and up 10,000ft to satisfy the mine's needs.
Miguel Stutzin, president of Code, Chile's oldest environmental group, says: 'This is the apparent solution to our water crisis and what damage will this do to the coast and to the foothills of the Andes where the pipeline will penetrate, and how will it replace all the regional water these mines have used? Will it replenish the desert towns? Of course not.'

The atmosphere inside 56 Leadenhall Street in central London is tense. Around red leather benches, arranged in a ring about 20ft across, market traders stand with phones pressed to their ears. At 11.45am every Monday all hell breaks loose as the London Metal Exchange's archaic trading system gets under way. According to centuries-old tradition, sales take place in five-minute slots.


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First is aluminium alloy, then tin, primary aluminium, copper, lead, zinc, nickel and finally plastic. Here is where the price of the copper and nickel in our coins is set. A staggering £25 billion changes hands here every day. Much of the copper mined in the Atacama desert is traded on this exchange.

According to the Royal Mint's 2008 report, all its copper and nickel sourcing is carried out on the open market of the LME, where materials from all over the world are brought together in anonymity. The Royal Mint is one of the UK's largest buyers of copper and nickel.
Every year it casts 20,000 tons of copper and nickel alloys, and produces three billion coins. British coins are made from about 75 per cent copper and 25 per cent nickel. With Chile accounting for 24 per cent of the world's supply of copper, at least some of the material in our coins must come from these mines.

We asked the Royal Mint if it had an ethical sourcing policy and if it could tell us from where it sourced materials.

A spokesperson said: 'The Royal Mint takes the sourcing of its raw materials very seriously. As part of our commitment the Royal Mint last year became a member of Sedex, the Supplier Ethical Data Exchange, which is an organisation for businesses committed to continuous improvement of the ethical performance of their supply chain.'

In fact Sedex is little more than a loose affiliation of companies that have expressed an intent to address the issue of ethical sourcing.

Greenpeace Africa Communications Director Fiona Musana says this is meaningless without appropriate action and that the Royal Mint should come clean on how dirty our money really is.

'Copper and nickel open-cast mining tear a horrific and unrecoverable swathe through some of the most pristine wildernesses on Earth. It is one of the most significant pieces of negligence in our society today that the Royal Mint does not ethically source its metals.

'That the very thing we handle every day, the money we use to shop ethically, to buy organically, is in all likelihood unethical, will come as an enormous jolt to consumers, and the Mint should be forced to publish where exactly they get their metals from, if they know at all. One thing is clear, looking at the Mint's performance reviews their main corporate focus seems to be profit.'

The key question is: do we need so many coins? Other nations are cutting down on the cost of loose change. In 2006, in an initiative called Change For The Better, New Zealand eliminated its five-cent coins and dramatically reduced the size and weight of its ten-, 20- and 50-cent coins.

One of the biggest challenges for the Royal Mint is sourcing not only copper but the nickel that gives coins their silvery sheen. Plagued by shortages in The Congo and Russia, the nickel industry is in turmoil, but the discovery of the metal in the rainforests of Madagascar has given hope that the gap can be plugged. But the new push for nickel from Madagascar has brought destruction with it.


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The hard rain is coming in from the Indian Ocean to the west as low, grey cloud covers the mountainside-in a thick freezing mist. My boots are sinking up to their rims into thick red earth, as congealed and sticky as lumps of dried blood.

There is water and mud everywhere; it's down my neck, along the thorny spines of the lethal-looking shrubs and trees that encircle us, around the axle of our trapped and abandoned Toyota Land Cruiser six miles back on the same ghastly and inhospitable trail we have followed to bypass the security teams prowling the rainforest.

Suddenly, from a distant ridge comes an unearthly sound, somewhere between hysterical laughter and a haunting, whale-like moan.

'The indris are singing,' says our guide. The sound is above us, coming down from the vast rainforest canopy 150ft up.

Once the keening song of the indri, the largest lemur, was heard from every mountain ridge in eastern Madagascar. Now, only about 1,000 indris remain. Our guide is grunting loudly as he walks along the rainforest trail. He is imitating the contact calls of lemurs and in a flash we see one, tail-less, black and white, with large fluffy ears. Lemurs are unique to Madagascar, an island that will be familiar to many from the animated film of the same name. It's remarkable that we saw a lone lemur at all.

We are standing in the Ambatovy rainforest, near the central Madagascan town of Andisabe. Before us an 80ft-wide scar has been carved right through the primary forest like a four-lane motorway. Beyond, long lines of bulldozers are busy establishing a £3 billion nickel mine - the world's largest - owned by the Canadian company Sherritt.

We are the first international journalists to make it through the hours of tortuous travel along dirt tracks to this part of the forest. We have had to hike for more than ten hours to get to see this destruction.

In order to supply water here Sherritt is building a vast and complex pipeline. We follow it and are horrified to see how it rips through the shrivelling natural habitat of the indri. When it reaches Madagascar's western wetlands, it will also devastate the home of rare poisonous frogs.

Madagascar is throwing its all into the mining sector. Its vast unexploited reserves have become attractive to many foreign companies: Rio Tinto and Sherritt are very active here. Modern-day Klondikes are sprouting up across the country, turning a very traditional society upside down and threatening to disfigure an island whose biodiversity earned it the name of the 'Noah's Ark of the Indian Ocean'




Local wildlife campaigner Rainer Dolch, from the Madagascan Environmental Group Mitsinjo, says: 'Let's put the location of this mine into perspective. Around 90 per cent of everything that lives here is endemic - it doesn't live anywhere else.

'Put into context, Britain has between 30 and 40 indigenous trees, none of them endemic; Madagascar has at least 4,200. There are almost 12,000 plant species. It's not just peculiar species, it's whole genera. There are 80 different chameleons, half the species in the world, and most of the planet's orchids.

'This flora in Ambatovy, where the mine is carving an enormous hole, was already among the most endangered in Madagascar's wet forests. The reality is Sherritt has been flying below the radar - in the beginning it was very open, calling in consultants and NGOs, but as soon as it got the permits everything went underground. It can now do anything it wants.'

Sherritt claims it is trying to make the construction of a 125-mile slurry pipeline - through the rainforest and some of Madagascar's prime wetland areas - as painless as possible for wildlife. The company says its goal is to produce 'no net harm' to the country's animal habitat and 'no species loss' to its forests. It is spending millions of dollars on extraordinary environmental measures, including 'lemur bridges' (wooden structures to allow lemurs to cross roads and pipelines safely) and 'replacement forests' to offset those destroyed by the mine.

Martine, 74, with her grandchild, stand near to where their house was destroyed to make way for the 200km long pipeline in central eastern Madagascar
But Dolch shrugs this off as 'green-wash'. He says the mining project has not received enough scrutiny from independent scientists. He claims instead that the government is relying on data from Sherritt itself. There is already evidence of heavy silting in a local river as a result of erosion caused by the new pipeline.

'One has to ask why the government issued the environmental permits,' he says.

But it's not just wildlife in the firing line. Far below us, on a ridge above the Ambatovy rainforest, the villagers of New Andasifahatelo huddle around campfires. Deeper into the valley, a dozen yellow JCBs line up in the gloom of dusk, their engines silent for now. Behind the metal beasts a vast swathe of red earth has been sliced through the rainforest. In their path was the village of Old Andasifahatelo.

'I lived here for 25 years,' says villager Martine in the Betsimisaraka language. 'We were in the way of the mine. They have moved us here, above the river, and built small wooden huts for us. '

The villagers claim that Sherritt promised to compensate them and relocate them but the money didn't materialise and they're still in the same place. The scene around their home is one of devastation. Their traditional hunting grounds are gone, their wells polluted with mud from the bulldozers. On the outskirts of the village the children dig their feet in the thick red earth; the quagmire of mud created by the excavation has become their playground.

'The Madagasay people were a pushover for the mine company, especially the tribals who do everything they can to avoid authority or confrontation,' says Narina Rabarison, president of an association of wildlife guides in nearby Andasibe. 'If this catastrophe was happening somewhere more high profile, people would be protesting and chaining themselves to bulldozers.'
Further north-west, towards the entrance to the mine site, villagers claim their wells have been poisoned by the excavation work. Dozens of locals have suffered from diarrhoea. Locals now walk an extra mile to get their water but are taking water from the same stream as before, the only one in the district.

At the well Marianne scoops water into her mouth and on to the face of her son. In the last month, four of her neighbours' children have been hospitalised for poisoning.

'I have no choice but to get my water here,' she says. As she speaks her youngest daughter slips into the water and scoops a handful into her mouth.

'My daughter is six,' says Marianne. 'Every day since she was born I have brought her here, but the very thing that is giving her life is poisoning her.'

From my wallet I remove a one-pound coin and look at the Latin inscription on the rim of the coin: Nemo Me Impune Lacessit. No one provokes me with impunity. As I look on the devastation meted out in this incredible country I think back to the damage I witnessed in Chile.

Tragically for the people in the way of nickel mining and those in Chile desperately searching for their stolen water, without companies like the Royal Mint taking an ethical approach to their sourcing of materials, their lives will continue to be blighted by these mines.

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