Gold (18 page)

Illegal miners scouted the geology of the deposit and infiltrated the recovery operations to see how Jiang treated the ore. They took this knowledge into the hills nearby and started the noxious digs and leach heaps that were dribbling cyanide into the watercourse.

Local government officials tried to enrich themselves from the mine by extortion. They trenched across the main road and demanded fees to fix it. “In China,” said Jiang, when I asked him what he did about it, “the first thing you must find out is who your enemy's boss is. Once you know that, the problem is not so hard, because then you know who
your
boss must call.” An icy phone call from Beijing straightened out the highway issue.

Many stories have documented Chinese corruption and the stupefying riches of the “princelings,” as descendants of China's revolutionary leaders are known. But when it comes to mining gold, the whole of China is a bandit circus.

C
HINA IS THE WORLD
'
S BIGGEST
gold producer not because it has large mines, but because it teems with small ones. According to Greg Hall, an Australian geologist and gold mining executive, and a director of the listed company through which China Gold runs Chang Shan Hao, China has some 11,000 registered gold mines. In 2011 the total annual production at the country's ten biggest mines was less than fifty tons. The remaining 270 tons, then, came from the other 10,950 mines. These thousands of mines are therefore mostly tiny. What's more, the number of such micro-mines might be even greater than the figure Hall reports. X. D. Jiang told me he saw a government document in 2004, when authorities were trying to eradicate illegal mining, that put the number of unlicensed gold miners then at work in China at 60,000. Such a number would beggar belief were it not that the government itself had created the boom.

In the 1980s, before China opened exploration to Western companies, the government tried to stimulate production by lifting state control of small mines. Many small miners were already placer mining in the country's goldfields, and the new policy sparked a gold rush.
Gold seekers ransacked prospective ground in every corner of China. They poured into such desolate immensities as Qinghai province in the Tibetan uplands, and the Xinjiang Uygur autonomous region, the largest administrative division of China: 641,000 square miles of deserts and mountains and gold-bearing streams. Not all of the new miners took to these distant wastes. Some descended on goldfields closer to home and started stealing ore from existing mines. And there were other problems.

Contemporary gold extraction uses complicated processes that consume energy, material, and demand specialized knowledge. But
people have been refining gold for centuries without the help of engineers or substantial capital. Probably the most common method is mercury amalgamation.

Mercury dissolves most metals, forming solutions called amalgams. One way to create a mercury-gold amalgam is to place mercury in the riffles of a sluice and wash the crushed ore down across the riffles in a stream of water. Riffles are grooves that run across the direction of flow, like the ridges in corduroy. As the ore flows over these, gold particles “amalgamate” with the mercury: they stick to it. Refiners can pick out the gold and reuse the mercury. The problem is that mercury poisons those who handle it, and ruins the environment. And mercury amalgamation is not the only toxic method that the Chinese used.

On a prospecting trip in mountainous Hunan province, on the Burma border, X. D. Jiang saw artisanal gold miners using sulfuric acid—an insanely hazardous technique. “We came across little valleys filled with the white smoke of acid fumes,” he said. The hill miners used cyanide too. Men on motorcycles carried drums of cyanide up mountain tracks. The miners built leach pits downstream from the digs and poured in cyanide. It leaked, poisoning people and causing widespread cattle death.

In 1988 the Chinese government reversed its liberalizing policy. Gold became a “special mineral” under government protection. Yet the genie would not return to the bottle. For many Chinese, the idea had taken root that gold alone could free them from penury.
In 1989 the
Christian Science Monitor
profiled the sad adventure of a farmer named Ma, who set out on a March day to seek his fortune in the goldfields of Qinghai province. “Ma hired a dozen men, spent his life savings on shovels, tents, food, and a truck, and left his ripening barley to the hoeing of his wife.” The men drove out of their village,
crossed the Sun and Moon Mountains, and struck out westward across the high plain of Qinghai.

Ma and his crew were following a stream of outlaw prospectors and gold diggers who were ignoring the prohibition on private mining. The lure of gold was too great to resist, and the get-rich-quick promise of the “Crazy Yellow Rush,” with its stories of instant millionaires, drew them to the remote quarters of the province. Local officials also defied the law, helping the miners and pocketing substantial bribes and “fees.” One group in the central Qinghai city of Golmud reportedly made $270,000 selling bogus mining licenses.

Ma and his team plunged doggedly across the steppe. They traveled nearly a thousand miles on the rough roads that led to the gold country. Rain fell and the snow blew in and the roadway turned to mud. They ran into other gold seekers mired in the sucking mess. More than 8,000 men and 1,000 trucks were tangled in hopeless disarray. They had reached an altitude of 16,500 feet, within sight of the famed “Gold Platform” at Hoh Xil Lake. And then the food ran out.

News of the calamity reached the authorities, and the army tried to make a food drop. But the pilots could not find the stranded miners, concealed from the air by thick cloud. More than seventy men died in the freezing pass. Finally the army reached them with helicopters, bringing food. Ma and the others were ordered to abandon their doomed convoy and leave the area on foot.

The disaster in Qinghai did not eliminate small-scale gold mining. The fever had taken root. Moreover, small mining was an immemorial tradition. In acknowledgment of this the government found a way to tolerate small workings, under an unwritten but well understood convention known as “localistic protection”—a Maoist concept that gave weight to the folkways of the people. The people knew an opportunity when they saw one.

In Henan province, 178 small-mining teams used the cover of localistic protection to seize ground adjacent to state-owned mines. Some brazenly entered mines and collected ore at the minehead.
In an incident at the Wenyu mine, the “carrying-ore-on-the-back people” had gathered so much ore they had to commandeer trucks to haul it away. The mine manager, desperate to conceal his helplessness from an impending state inspection, arranged with the looters for a three-day suspension in the plundering while he showed the government around.

Sometimes freelance miners organized into village cooperatives, a system known as
min cai
, or village mining.
Even large state companies used
min cai
to recover hard-to-get-at ore, in one case suspending miners on ropes and lowering them 120 feet down shafts. In Shandong province
min cai
provided important income.
But in 2001, in another shift of central government sentiment, the state abolished the system, declaring 295 mines and 138 refining operations illegal in Shandong alone. The government ordered more than 7,000 migrant workers from other parts of China to leave the province.

Officially, such micro-mining no longer exists, and gold recovery has passed to the industrial apparatus. This fiction does not withstand even the most cursory investigation. As we drove through the goldfields of Shandong, I badgered Feng Tao to prevail on Pang Min to show us one of the small operations. She finally threw up her hands, turned off the main highway, and took us down a little road through fields and orchards until we came to the quartz hills. The road ended at a midsize gold mine, and I thought that Feng Tao's efforts had foundered on his difficulties with Pang Min's Shandong accent. But then we saw it, in a field not a hundred yards from the gate of the modern mine. Steam poured up through the rusty, antiquated
superstructure of a hoist that rose above a corrugated fence erected to conceal it. The volume and density of the vapor plume testified to the depth of the mine. Rock temperature increases with depth, and torrents of water were needed to cool the rock face. The water changed to steam and billowed back along the mining gallery and up the shaft. About a mile away another column of white vapor billowed up through the rickety derrick that marked a second shaft.

Official hostility to small operations comes partly from the role they play in providing cover for the theft of ore from the surrounding mines. A truckload of ore in the possession of a gold miner, however small, is not evidence of theft, because such miners often transport their ore to refineries rather than refine it themselves. With the connivance of insiders, thieves steal from one mine and sell to another. They may even sell ore back to the mine they stole it from. If the price is right, a mine may prefer to buy back pilfered ore rather than lose it entirely. In Shandong, where there are so many buyers, selling such stolen ore would not be hard.

In Zhaoyuan city alone there are six large refiners, but Pang Min knew that I was interested in the smaller, freelance side of the action. After nosing around in the hills we returned to the city and stopped at one of the industrial refineries. Pang Min chatted to the guards until a young man emerged and climbed into the backseat beside Feng Tao. We pulled away and plunged into the busy streets in another of Pang Min's exuberant displays of navigation. Finally we sped across a bridge and into a suburb. Pang Min and our new companion kept up an animated dialogue. “What's up?” I asked Feng. “I don't know,” he replied, “I can't understand a word.” We turned off a wide street and drove up a muddy lane until we came to a crumbling ten-foot-high brick wall. On the other side, towering above the wall, was a grayish yellow mountain of tailings.

We turned in through rusty gates and stopped by a decrepit lodge. Some men came out in shorts and T-shirts and plastic sandals, and our new guide spoke to them. Feng and I got out and took a look around. It was a concentrating mill. Ore from small mines in the hills, or stolen ore from larger mines, came down by truck to be crushed with millstones and refined into concentrate in flotation ponds. In flotation, the refiner adds an oily dark brown liquid with a pungent smell to a slurry of crushed ore. The chemical attracts gold-bearing sulfides into a froth on the surface of the pond, where operators harvest it as concentrate and sell it to industrial smelters, where they burn off the dross in large furnaces.

C
HINA BECAME THE BIGGEST GOLD
producer in the world because the country, taken as a whole, is an effective machine for sucking gold out of the ground. Part of the machine is the industrial gold mining structure. The other part is the rapacious mass that the government let loose in 1978 when it encouraged them to look for gold, and has never been able to recall. When farmer Ma and 8,000 others trudged away from Qinghai's Gold Platform in defeat in 1989, there were thousands more to take their place.

In 1995 “gold lords” and their bands of peasant miners were still defying the government, and each other. “I've heard the bullets whizzing past my ears and seen people beside me dying,” a woman in her forties told a reporter. “Even if the government wanted to control us, we are stronger than they are right now, and our guns are normally much better than the ones carried by [police].”

Gold lords fought for the best ground. “The first thing we would do when we struck gold,” one said, “was set up a pillbox on the
mountaintop and train more of our workers how to use guns; then we would use our blankets to make a flag, which meant: this mountain belongs to us.”

Rival gangs fought pitched battles with pistols, automatic weapons, and even homemade cannon. They chewed up the landscape with their mining, sending soil from the digs into rivers, threatening the habitat of such rare animals as snow leopards and white-lipped deer.
In 2012, nomadic Tibetan shepherds in Qinghai fought with Chinese gold miners to keep them from digging a mountain that the Tibetans held sacred. Nothing, it seems, can stop the sack of China for its gold.

O
NE DAY
I
DROVE OUT
of Yantai through the orchards to look at a pit mine on a feature called the Jiao Lai basin. Overloaded trucks with squealing axles gasped up the ramp from the mining level. The pit was a shambles, the slopes scarred by gravel slides. The fence sagged along the ground. Illegal miners, the manager admitted, looted the property and the entire Jiao Lai basin more or less nonstop. In the cost conditions that prevailed, the low-grade mine and the plundering around it made a good contraption for extracting gold, as you could say for all of China. But it begs the question: with such intense mining, how much gold can be left?

In 2010 the World Gold Council warned that “China's future prospects for gold supply look to be limited.” The WGC is a research and marketing organization run by the gold mining industry. Using data from the United States Geological Survey, the WGC said that “China may exhaust existing gold mines in six years or less if Chinese demand continues to grow strongly.”

For anyone in the gold business, other than Chinese miners, this was great news. China running out of gold? Imagine what would happen to the price.

The China-running-out-of-gold scenario raises the specter of “peak gold,” the scary bedtime story that gold producers like to tell. Peak gold describes the theoretical point of maximum world extraction, after which it's downhill all the way as production fades until we've dug up every ounce and there's no gold left to mine. I don't know how much gold China has in the ground and neither does the WGC. Neither do the Chinese. But if they show signs of running out, the gold price will reach escape velocity. What it will escape is human reason.