Tag Archives: mercury

Is Artisanal Gold Mining Driving the Price of Mercury?

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This is the second in a multiple part series on mercury. In the last post, we explored global mercury prices and production over the last century. In this post, my aim is to answer the following questions: Is is possible to resolve a signal in the price of mercury that is attributable to its use in gold mining? Could the price of mercury be used as a predictor of the amount of gold produced using mercury?

First, some background.  Mercury has a very interesting property in that it forms amalgams with other metals.  A silver dental filling is an amalgam of mercury and silver. If you add mercury to ore or sediment containing gold, the mercury will suck up some of the gold into an amalgam. Then you can heat the amalgam to evaporate the mercury, leaving you with just gold.

This method was used for centuries to recover gold and silver. Today, large-scale industrial mines use other methods that are more efficient and do not release persistent, toxic, and bio-accumulative mercury into the environment. However, mercury is still widely used in artisanal and small-scale gold mining (ASGM). In fact, mercury use in this sector is probably increasing, and is now believed to be the largest source of mercury pollution in the world. The recent spike in gold prices is often cited as a cause of increased ASGM and associated mercury use.

Because ASGM activity is decentralized, often illegal, and commonly occurs in hard to reach parts of developing countries, it is very difficult to estimate the magnitude and trends of mercury use. But we do have data from the USGS on the prices of gold and mercury. In the last post we looked at the time series for mercury prices since 1900. Here, we are only going to look at the period from 1980-2011. (The modern ASGM period really started around 1980.) The chart below shows the inflation-indexed prices of mercury and gold. I’ve normalized them to an index where the 1980 price equals one so that I can show both series on one plot.hg.auMercury and gold prices appear to be closely correlated. The high correlation coefficient (0.89) confirms what we see in the plot. The series only diverge significantly after 2009, and we’ll look at that period more closely at the end of the post.

But the close correlation of mercury and gold prices is not enough to conclude there is a causal relationship. Perhaps there is a lurking variable that is correlated with the prices of both metals. Mercury and gold are certainly not substitutes for each other. No one buys mercury when they are worried about inflation, for example. But maybe mercury and gold prices are both are correlated to overall commodity prices. To find out I plotted an index of metals prices from the IMF (also normalized to one and corrected for inflation) together with the metals prices:hg.au.inThe correlation looks close, and indeed the the correlation coefficients of  the metals price index with the prices of  gold and mercury are both about 0.8. This is not quite as close as the correlation of gold and mercury prices to each other, but it’s too close to conclude that either time series is all that different from the overall trend in commodity metal prices.

Now is a good time to point out that mercury has other uses besides to gold mining, such as in certain products (like thermometers) and industrial processes (like making chlorine). Demand from these other uses is going to affect the price. Of course, the supply of mercury will also have an affect on price. In attempting to see a signal in the price of mercury caused by gold mining, the implicit assumption is that other factors affecting the price of mercury (the supply and demand) remain relatively constant with respect to each other over the time period. This is not a terrible assumption. In general both non-ASGM demand for mercury and mercury supply have been decreasing over the last 30 years. But the assumption does introduce some real uncertainly into the analysis. It is difficult to correct for because we don’t have good data on mercury use by sector over the time period.

There’s one more problem. Recall that the hypothesis is that mercury use in ASGM affects the price of mercury. We were using the price of gold as a proxy for mercury use in ASGM. That sounds like a reasonable assumption. High gold prices should mean more gold being extracted, and greater demand for mercury to extract the gold.  But what really determines mercury use is the amount of gold produced, not the price. And we actually have data on global gold production. It tells a different story:au.qIf anything, global gold production is negatively correlated with gold price over the last ~30 years! I don’t know why this is. One possible explanation has to do with the lag time of starting a mining operation. Perhaps the record high gold prices of the late 1970s and early 1980s caused a wave of exploration and new mines. Once those mines were developed, they could produce gold economically even at low prices. Perhaps technology improved so that it was cheaper to find and develop gold deposits.

This leads to one more complicating factor. Most gold is produced by large scale mines (which do not use mercury). Common estimates suggest that only about 12-20% of gold is produced by rough artisanal miners. Another implicit assumption in this analysis has been that the fraction of gold produced by ASGM has remained constant over time. But this may not be the case. Small-scale miners are likely to be able to take advantage of high gold prices more quickly than the majors, where exploration, permitting, and construction can mean many years before a mine becomes operational. Small-scale miners can often start mining almost immediately. This would mean than gold and mercury prices would be more closely correlated than one would expect when looking at global gold production. On the other hand, work by the Artisanal Gold Council has shown ASGM prevalence is “sticky” with respect to gold prices. That is, once they start mining, artisanal miners are likely to continue their operation even after the price of gold drops. 

Finally, let’s reexamine the period from 2009-2011, when the price of mercury rises much more rapidly that the price of gold. I don’t think there’s an obvious explanation for this. Perhaps mercury use in ASGM really takes off in this period. Another wrinkle is the establishment of bans on mercury export in the EU (took effect in 2011) and the U.S. (took effect in 2013). Maybe buyers were trying to purchase European and U.S. mercury ahead of the ban, driving up the price. We could look at export data to find out.

As you can see, this is an extremely complicated issue. Without better data, it is not possible to resolve a signal in mercury prices that can be attributed to gold prices or gold production. Even though this exercise did not yield a clear result, I think it is important to document the effort. In data analysis (and science in general), the lack of a clear conclusion is in itself  an important piece of information.

In the next mercury installment we’ll travel to Ukraine and Kyrgyzstan to learn how the elusive metal is wrested from the earth and what sorts of environmental, economic, and social impacts this mining brings.

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From Miracle Metal to Global Health Risk: A 100-Year History of Mercury Prices and Production

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I want to write a series of posts about mercury production, prices, and trade. Although this may seem like a rather esoteric subject, I hope to convince readers that it’s actually pretty interesting. I have a professional interest in mercury as a global pollutant, having worked on negotiations for the Minamata Convention. These posts will also be good opportunity to practice data manipulation, graphics, and analysis in R, a powerful programming language for statistical computing.

Mercury is a pretty amazing substance. It’s the only metal that is a liquid at room temperature, a property that has long been a source of fascination to people, and led to a wide range of applications in industry. Unfortunately, mercury is also a toxin that has harmful effects on both people and the environment.

In this post I’ll examine the price and global production of mercury over the last hundred years or so using data from the U.S. Geological Survey. First, let’s look at the price of mercury in constant 1998 dollars since 1900:

mercury price

You can see that prices have fluctuated quite a bit. Let’s examine the three prominent peaks in the time series and try to figure out what caused them. Now, high prices could mean increased demand, tight supply, or a combination of both. We need to look at global mercury production over the same time period to help shed light on the variations in mercury price:
global mercury production
The first price peak occurred in the late 19-teens, around the time of WWI. In fact, I would posit that it is a direct consequence of WWI. Mercury fulminate is an explosive compound that was commonly used in the last century as a primer for small arms ammunition. They probably used a lot of it during the First World War.

Incidentally, you may recognize mercury fulminate from the TV show Breaking Bad. Walt made some and used it to blow up a group of rival drug dealers. There’s even a MythBusters segment about it.

The second price spike occurred during WWII. This was likely a result of increased demand for use in fulminate explosives, and perhaps in switches and other such products for wartime equipment. Mercury production actually increased quite a bit during the war, but it was apparently not enough prevent high prices. In response to the German invasion, the Soviets moved their main center of mercury production from Nikitovka in Ukraine to Khaidarkan in Kyrgyzstan. I’ll talk about both of these places in a later post.

The last price peak occurred in the 1960s. The causes are a bit more complex. My guess is that a combination of industrial and military uses were driving up demand, and production, although increasing, could not keep up. During this time the United States was building up its national defense reserves of mercury, and other countries were probably doing the same. One defense-related use of mercury was to separate lithium isotopes for use in hydrogen bombs. Hundreds of tons of mercury were spilled at Oak Ridge National Laboratory during isotope separation, and environmental contamination remains to this day. Another use of mercury that never came to be was as a coolant (to replace water) for nuclear reactors.

These were heady days in the mercury business, before the human health and environmental impacts were widely know. This fascinating newsreel from 1955 gives you a flavor of what the times were like:

Mercury prices (and production) started dropping in the 1970s as alternatives to industrial uses were found and the health risks started to become clear. But prices have been growing rapidly in recent years. In the next post I’m going to examine this and look at the degree to which artisanal gold mining might be responsible.

Using Tableau Public to Make an Interactive Visualization

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Dashboard_1 For the last several weeks I’ve been experimenting with Tableau Public, a powerful, free software package for data analysis and visualization. I’m impressed by the software. It’s certainly the best free product I’ve worked with.

My big project on Tableau is an interactive graphic showing global mercury emissions by country and sector. I was able to get a nice dataset from the Arctic Monitoring and Assessment Program. These data were part of the 2013 UNEP Global Mercury Assessment. So they are very up-to-date, and with the adoption of the new Minamata Convention on Mercury, the topic is quite relevant. Good ingredients for an nice viz.

The graphic combines three elements: 1) a world map showing mercury emissions by country in a color gradient scale, 2) a tree map showing the mercury emissions of regions and their constituent countries as a part of total global emissions, and 3) a bar graph showing the makeup of emissions by industry sector for the world or selected countries. All the elements are linked so that selecting objects in one changes the other elements.

Check it out.

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Minamata Convention Word Cloud

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I’m not usually a fan of word clouds. They’re flashy but don’t really tell you much, and they seem like a pretty lazy analysis that you do if you don’t know what else to say about a text. Having said that…this word cloud is actually pretty cool. The text is the Minamata Convention on Mercury and it was produced on wordle.com. It’s a visually pleasing color scheme and layout, but of course the real reason I like it is because the text is very close to my heart, as I’ve spend the last several years negotiating it together with 140 other governments. I like the idea that a text that represents such a huge amount of collective effort on the part of hundreds of people around the world can be represented in a little graphic like this.

Wordle: Minamata Convention on Mercury