THE BLOG
01/23/2014 04:59 pm ET | Updated Mar 25, 2014

An Ounce of Gold for a Pound of Cure

It's around our necks and on our fingers, traded by our banks and used to make our electronics. Yet for a huge swath of people around the globe, gold's impact is felt in the lungs.

2014-01-21-goldlungs.jpgAs I prepare to attend the world's largest mining investment conference, Mining Indaba 2014, I've been thinking about the role of gold in our society and how it is intertwined with tuberculosis, a disease that has plagued humanity for centuries. But to understand gold in the modern world, we need to look back through thousands of years of history. Gold: The Race for the World's Most Seductive Metal, the latest novel by journalist Matthew Hart, takes us on a riveting journey from ancient burial sites through the Spanish Inquisition to the trading positions of today's bullion banks, offering a page turning read about this coveted and mythic symbol of wealth.

But more than being a precious metal and a hedge against financial apocalypse, the world's gold binge is fueling one of the world's most deadly epidemics -- tuberculosis (TB). The disease was imported to the mines of Africa in the lungs of British coal miners, more than one hundred years ago. Now, in open pits and mine shafts around the continent, this insidious, deadly pathogen is wreaking havoc on the profitability and sustainability of an entire industry and the workers who pull the ore from the earth.

South Africa is one of the world's biggest producers of gold. It also has the world's highest rate of TB infections -- more than 7,000 times that of the U.S.. TB and gold are interconnected: mining in Southern Africa accounts for more than 760,000 new cases of TB each year -- about one-third of the continent's total cases. And the problem crosses borders: workers migrate and shuttle TB right along with them. In a globalized industry where an expert workforce can easily move half a world away, no gold mining region is safe from this disease.

What makes TB such a problem in gold mines? The silica dust that comes from drilling rock that holds gold makes our lungs particularly susceptible to TB infection. And HIV, which is highly prevalent among Africa's miners, damages the immune system and amplifies the risk of infection and death. In the world's deepest mines -- more than two miles below the surface -- where temperatures can reach 145 degrees Fahrenheit, it's like working in a bacterial soup. Nearly 90 percent of South African miners are carrying TB, with levels of active cases and deaths that are ten times higher than non-miners.

2014-01-21-SouthAfricaAnnualMiningCoststuberculosis.jpgWhile mining companies and their host governments are engaging in strategies to combat TB, the disease continues to be a major driver of costs, as well as the source of a great deal of hardship for those affected.

The economic toll is significant, equal to more than $1.2 billion dollars in South Africa alone. The explosive growth of these expenditures has created uncertainty around the economic viability of the industry and its potential to generate revenue for both the companies that mine for gold and for national economies dependent on this limited resource. Now, the industry is being trapped between rising costs and falling commodity prices. From its top position just a decade ago, South Africa has slipped to the world's number five producer of gold, with further declines anticipated ahead. Could South Africa's industry be on the verge of implosion? And does the rampant disease foretell a bacteria-laden future for rising producers like China, Indonesia and Peru?

With limited options to prevent the spread of disease, there is an urgent need for new tools to fight the epidemic. While drugs are available and effective at curing the infection, a miner can be out of the workforce for months, only to face almost certain recurrence once the medicine stops and he reenters the mines. When experts modeled TB epidemics like those associated with the mines, it was shown that even high rates of case detection and treatment were still insufficient to counteract the high rate of infection. In addition, drug-resistant TB, which requires two years of treatment and is up to 1,000 times more expensive, is on the rise wreaking havoc on the mining companies, national health budgets and the affected miner's families

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It will be virtually impossible to treat our way out of this epidemic. New preventative vaccines could accelerate progress toward TB elimination from a disease that has been the biggest infectious killer over the past 200 years. Aeras' modeling data reveals that in the 15 Southern African (SADC) nations, a 60 percent effective vaccine could prevent 3.7 million new TB over a 20-year period. That's a lot of people and a lot of savings. With 12 vaccine candidates in various stages of clinical trials, progress is being made. But until a successful vaccine becomes available, research and development efforts must continue. From polio to measles to pneumonia, vaccines have become the "gold standard" of disease prevention. Tuberculosis can be next.

How do we work on collaborative solutions to address TB and the mining sector? This is not industry's problem to solve alone. Governments, who need robust economies and health systems, have a role to play. Public-Private partnerships are the key to tackling this epidemic. Aeras' partnership with global mining company Anglo American is one way we're collaborating on innovation. And we're just getting started.

Let's explore how the economics of gold can work toward a solution. Gold is much more than what is dug out of the earth. According to Hart, in just one three-month period in 2012, 11 billion ounces of gold -- worth US$15 trillion -- changed hands in London. That's 125 times what the world produced in a year, or twice as much gold as has been mined in all human history. The market for gold is enormous. But how can this market help ensure that there is a sufficient supply of profitable gold coming out of the mines? And how can this profit benefit the entire value chain of gold production?

Along with ramping up existing treatment efforts, we must directly invest in the solutions that would drive operating costs down, protect the industry's workforce and strengthen national economies dependent on mining: tuberculosis vaccines. This seems like a no brainer for the mining industry, but what's in it for the traders?

JP Morgan is the largest bullion trading bank in the U.S., and an institution whose history is deeply linked with gold. A minute levy on their bullion transactions would generate funds to be invested directly back in to the mining industry to eliminate TB. This support would help governments and industry pay for treatment costs today, as well as drive innovation for new tools such as vaccines. Protecting the workforce and reducing costs makes an industry more sustainable and pulls more gold into the market, strengthening investments and supporting trade. Innovation becomes a virtuous circle.

Throughout history, both gold and TB have shaped our world. But can we unlink these two forces of nature and use gold to vanquish this insidious disease? Through innovative thinking and financing, this commodity has driven investor profits and national economies. Now it must drive solutions. The TB epidemic won't be halted in our lifetimes without accelerated efforts, multi-sector collaboration and innovation. Political will, adequate investment and a focus on innovation can save a struggling gold mining industry in South Africa -- and beyond. The failure to act now would reduce this precious metal to foolish gold.