Britain | Gold mining

Precious but precarious

The high price of gold is encouraging miners to dream

There’s gold in them there Highlands
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There's gold in them there Highlands

OLD gold-mining shafts are being reopened around the world, as economic uncertainty and scepticism about other assets has sent the gold price soaring: the yellow metal hit a record high of over $1,400 an ounce in December, double its 2007 level (though it has since fallen a little). Abandoned veins in mineral-rich countries have become viable again—and despite the relatively steep extraction costs, a miniature gold rush might be under way in Britain, too.

The action and the deposits are concentrated on the Celtic fringe. Since 2007 Galantas Gold Corporation, a Canadian firm, has been working what is currently Britain's only gold-producing mine at Omagh, in Northern Ireland, shipping the ore to Canada and running a small gold-jewellery operation. Extensive electromagnetic prospecting has been carried out elsewhere in the province. There are proven though mostly unquantified deposits in Scotland. Only Wales, once the focus of British gold mining, seems destined to miss out.

Chris Sangster of Scotgold Resources, an Australian outfit that holds assorted exploration licences in the Scottish Highlands, is confident that his firm will be mining soon. He expects others to follow, and that Britain will have two more active mines within five years. Roland Phelps of Galantas thinks over 3m ounces of gold reserves could be discovered in that period: not much by the standards of big gold-producing nations, but enough for a tidy niche industry.

For all their enthusiasm, however, the prospectors face obstacles, among them regulation and environmental concerns. Scotgold Resources is struggling to get permission to reopen an old mine at Cononish, inside the Loch Lomond and the Trossachs National Park (above). The planning process for the Galantas mine in Omagh took 11 years.

The hope is that the strict regulatory regime will offer a commercial compensation, enabling Britain to specialise in “ethical gold”, as Mr Phelps puts it. But other problems might prove less pliable.

Gus Gunn of the British Geological Survey reckons that, apart from Omagh and Cononish, “nowhere is gold known to be present in quantities that would currently be economic to mine”; he also thinks it might take a decade to prove and develop other finds. The mining firms are more bullish—but even they can't confidently predict the future path of the gold price. Low mineral prices have wrecked British mining before; if the gold market drops, the country might once again see empty tunnels and broken dreams.

This article appeared in the Britain section of the print edition under the headline "Precious but precarious"

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