There’s no doubt that recent economic instability has sent gold prices soaring. But gold doesn’t grow on trees–would that it did!—and higher prices for the yellow metal has encouraged companies to go to greater lengths to retrieve the precious element, setting up battles with conservationists.
Australian mining company Scotgold Resources recently put in an application to redevelop a mine in Scotland— the Cononish Mine—which was abandoned in 1997. The mining company hoped to dig out 1,500 lbs. of gold and 17 tons of silver a year over the next decade. But the Cononish Mine sits inside the picturesque Loch Lomond National Park. And while the local council supported the project–Scotgold had promised to create 52 jobs, and invest $75 million into the local economy—Gordon Watson, the director of planning at the Loch Lomond National Park released a report earlier this week saying that permission for the mine should be refused.
The park authority board will decide on Aug. 18 whether to follow Watson’s advice or take the unusual step of overruling him and approving the mine.
Scotgold Resources had planned for the mine to cover around 96 acres, with a 100 ft. high waste tailings dam and a 300 feet-long rock-crushing plant. Watson’s report said such development would cause “acute” and “significant” landscape and environmental damage.
According to the Guardian, “Watson said the act to set up the Loch Lomond and the Trossachs national park in 2000 made clear that conserving the environment and Scotland’s natural heritage outweighed any economic and social benefits the mine would bring.”
Scotland’s conservation body, Scottish Natural Heritage (SNH), had warned that the mine would threaten salmon stocks and water in the environmentally sensitive River Tay. But the Scottish Environment Protection Agency, which officially protects water quality, concluded there was no pollution risk.
In his rejection report, Watson also disputed how much prosperity the mine would actually bring to the local area, given what he sees as the volatility of gold prices.
“Any overall economic gain is extremely difficult to quantify, may be less than projected and is highly vulnerable to market conditions for the price of gold,” the report said.
Many analysts see only good things for gold prices in the near future. On Thursday, precious metal analysts from Goldman Sachs wrote a note claiming low real interest rates and a Fed considering more quantitative easing (i.e. money printing) could drive gold prices even higher through 2011 than their near record prices today of around $1200 a troy ounce.
Watson doesn’t buy into such optimism: “The longer-term economic legacy is likely to be marginal, while the long-term landscape impacts will certainly not be,” his report states.
Scotgold Resources chief executive Chris Sangster told the BBC he was “very disappointed” at the decision (Scotgold resources plunged 33 percent after the planning announcement, its biggest drop in two years, according to Bloomberg). Sangster added: “We disagree with their reasons for refusal and strongly refute them.”
If Watson is wrong and gold prices continue to glitter, Sangster is unlikely to be the only mining executive who butts heads with conservationists over gold mining in the coming years. Watch this space.