Goldcorp founder Rob McEwen has called them "the payday loans of the mining industry" and they're introducing a new, intense pressure on an industry already reviled for Indigenous land theft, dangerous working conditions and environmental infractions.
"Streaming" is a form of speculative futures in the gold mining industry where instead of charging interest, financiers provide loans secured by a mine's assets in exchange for a future cut of production. As gold has become more difficult to find and access, higher production costs have left many mines unable to finance production through debt and equity. Since 2004, streaming has emerged to fill this void.
Mining companies agree to sell a percentage of their future gold to the streaming company at a deep discount. When the gold has been mined, streaming companies sell their cut at the spot price, collecting the difference as profit.
Once a mine is producing gold, the streaming deal becomes active with the mine first repaying its debt to the streaming financier. Yet since streaming deals promise a share of production over the life of the mine, even once this debt is paid off the mine must continue to pay. At one non-unionized mine in northern Ontario, the streaming deal in place will yield the streaming company a predicted $18 million in profit from the mine over its estimated life of six years; more than a 50 per cent return on their original loan to the mine.
Streaming represents a new emergent layer in capitalism that is more acutely derivative and parasitic. This layer overlies the productive economy and its workers in technically creative ways, expropriating maximum surplus value while avoiding messy risks. Streaming takes a cut of production while leaving political and operations-related risks to be borne by mining companies.
This means that "risk minimization" for streaming company investors is really "risk displacement" onto people affected by mining operations. When profit margins are squeezed by streaming deals, other parts of the mining operation must compensate in order for it to be profitable. This could manifest in a myriad of ways, from union-busting to toxic waste dumping. It is becoming evident that part of this risk is shifted onto miners, whose work is intensified by the pressures from streaming's relentless skim.
Sources at one streamed Ontario mine say that management holds quarterly meetings with the miners, reporting figures that point out the relationship between costs, gold production and mine viability. How much rock has been removed from the mine, the gold recovery rate from it, total ounces of gold recovered, and its average selling price; these are aggregated along with life-of-mine costs into an important figure called the "all-in sustaining cost," or AISC.
The AISC represents the overall cost per ounce of producing gold at the mine at a particular moment in time. If the AISC is continually above the price of gold, the mine ceases to be profitable. Miners get a sense from these meetings how close to this point they are. Since streaming costs are factored into the AISC for each quarter, streaming agreements have a direct impact on the goals that are set for miners and the production pace to which they must aspire in order to be "profitable." Sources at the streamed Ontario mine say that towards the end of the quarter, miners are encouraged and incentivized to work faster, which puts their safety at risk.
At their most recent quarterly meeting in August 2016, mine management focused heavily on safety, since reportable injuries went up in 2015 and a miner was seriously injured by falling rocks in June. Yet miners were also told that they are "behind" in gold production for the year-to-date. When a crew recently identified a serious safety issue that resulted in part of the mine's permanent closure, management praised the team for identifying the issue, but also mentioned that it cost the company $1.2 million. These mixed messages essentially transfer corporate financial decisions onto miners as they consider matters of safety.
Streaming deals mean that part of the miners' future work is already promised away. This future loss weighs heavily upon the present, increasing a mine's AISC and therefore the urgency for present production while gold prices are high enough to support the costs. This directly pits the concept of being jobless against that of safety for miners, while streaming companies sit back and wait for their returns.
Streaming's exploitative terms mean that miners must work at maximal speed and efficiency in order for a mine to remain viable. With priorities shifted by this knowledge, streaming has the potential to influence miners' decisionmaking in ways that could well turn out to be deadly.
Sharry Taylor is a high school teacher in Toronto, Ontario and a PhD student in the adult education and community development program at the Ontario Institute for Studies in Education, University of Toronto.
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Image: Flickr/Gord McKenna
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