Commodities, Features, Gold

The social and economic importance of gold mining

gold mining

Andrew Naylor, World Gold Council regional chief executive officer APAC (ex China), examines the positive effects of gold mining.

Responsible investing is growing. Investors and consumers increasingly care about the impact of their investments and consumption. 

According to the Responsible Investment Association Australasia, more than $2.8 trillion in assets is managed with a least one responsible investing approach. 

With greater importance attached to sustainability, it is vital our industry works to not just ensure the highest environmental, social and governance (ESG) standards are met, but that the economic and societal contributions are fully understood.

Gold mining occurs on every continent except Antarctica, often in remote and impoverished areas. What is clear from World Gold Council research is that a gold mine, when operated responsibly and in the context of a well-governed regulatory regime, can deliver significant and lasting benefits to host countries and communities. 

There are a number of key areas where gold mining makes a very significant contribution to social and economic development. In a recent report, we analysed the impact of our members’ operations globally.

Andrew joined the World Gold Council in 2016 and since 2020 has led the regional office in Singapore.

Well paid local jobs in the countries of operation

This includes direct and indirect employment. The number of jobs varies depending on the phase of the mine and production levels, as well as the size and type of mine, but the employment impact can be significant. 

Responsible gold miners recognise the mutual benefits of integrating as much as possible into the local economy, using local people and local supply chains. 

This supports their “licence to operate” and enables the host community to benefit from both direct and indirect employment associated with the mine. In 2020, local employees made up 95 per cent of WGC members’ in-country workforce, halving the average percentage of expats in the workforce (from 10 per cent to five per cent) over the past seven years.

Valuable tax revenues in the countries of operation 

Gold mining companies make significant contributions to host government revenues, and in many low-income countries these taxes and royalties constitute a significant proportion of the national tax base. 

Major gold mining companies have been at the forefront of the implementation of the Extractives Industries Transparency Initiative (EITI), a global standard promoting revenue transparency and accountability.

Sustained benefits for local communities

In addition to the benefits associated with employment and tax revenues, many gold mining companies act as partners for development. This includes community investment initiatives, helping to improve public services, local education, healthcare and infrastructure.

Highly regulated and within strict government controls 

Large-scale gold mining takes place with the approval of a host government. In most places a multi-year environment and social impact assessment is undertaken before a mine can be constructed. 

These are rightly thorough and demanding, and include a broad range of considerations such as water management, biodiversity, tailings, and Indigenous rights. They are reviewed by regulators and subject to government approval. 

Countries and communities benefit more now than in the past

Companies are now acutely aware that operating responsibly is synonymous with good business. The expectations are that the benefits of the industry are shared equitably among different stakeholders.

Companies operate to high ESG standards

This is not just the right thing to do in an ethical sense, but also a critical business practice underpinning long-term operational and financial performance. 

The World Gold Council, working with its members, launched the Responsible Gold Mining Principles (RGMPs), a framework of 51 principles speaking to all material ESG issues for the gold mining sector. Conformance with the RGMPs is obligatory for World Gold Council members, and a number of other gold mining companies have decided to implement the RGMPs to demonstrate to their stakeholders that they are mining responsibly. 

A credible pathway to net-zero emissions

Estimates from 2019 suggest that large-scale gold mining’s share of total global carbon emissions was 0.2%. Virtually all emissions occur within the mining process itself, and the majority of these are associated with the generation or purchase of power. 

If the gold mining sector decarbonises, the entirety of the gold supply chain will be almost fully decarbonised. There are plenty of opportunities to use energy more efficiently and from renewable sources, and gold miners have a credible and cost-effective plan to reach net-zero by 2050, in alignment with the Paris Agreement.

Gold mining companies make significant contributions to host government revenues.

A unique and valued metal 

While gold mining is a major driver for socioeconomic development, it contributes positively as an asset class. 

Gold is also a source of global financial stability as a reserve asset. It enhances institutional and household financial portfolios – it can be a source of returns, is highly liquid, and when owned outright is without credit risk. 

Although gold has financial utility, about seven per cent of annual demand comes from the technology sector – it is used in high-end electronics and medical devises, for example. 

It is clear that gold has huge importance to society, both in terms of the economic and social development as a result of its production. But it is also as an asset class in itself. As long as gold is in the ground and it is so highly valued, it will be mined. 

What is critical is that the way it is mined is a “driver for development”. Responsible gold miners create jobs, help build infrastructure, and support local communities in Australia and around the world.  

Contribution of World Gold Council members in Australia in 2020

Salaries and benefits – $724m

Taxes and royalties – $1.115b

Number of employees – 6038

Indirect labour multiplier – 3x

In-country payments to suppliers – $3003 (96% of total payments to suppliers)

The World Gold Council’s report on the social and economic contribution of gold mining can be found at 

This feature appeared in the June issue of Australian Resources & Investment

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