Gold Rush 2.0: A Case Study of the Goldcorp Challenge [Excerpt, first draft]
Crowdsourcing, a term coined by Wired magazine writer Jeff Howe in 2006 (Howe, 2008), is defined in two ways:
The White Paper Version: Crowdsourcing is the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call. [and] The Soundbyte Version: The application of Open Source principles to fields outside of software. (Howe, n.d.)
By ‘Open Source principles,’ Howe (n.d.) refers to the decentralized, modular, and participatory yet atomized production methods initiated by Linus Torvalds in the creation of the Linux operating system. Rather than forming or employing a team of software coders to produce an entire operating system, as was the method for producing Windows, the project was divided into small tasks that were parcelled out to an undefined group of volunteers. To address the complexity involved in writing the software, a certain transparency, or openness was indispensible to its production, hence ‘Open Source,’ in which the source code of the software could be seen and edited by any interested parties.
This production method then migrated to other fields, such as clothing or logo design, stock photography, or research and development, becoming known as ‘crowdsourcing.’ The result is an inexpensive workforce, performing relatively small tasks, usually via the internet. Because these products are transmitted digitally, they can be thought of as separate from manufactured goods, and thus the manufacturing process along with its workers and ecological effects. As with the rest of this project, this chapter is intended to reunite this false separation between digital, crowdsourced labour, and the physical labour and ecological effects involved in a more complete view of the production-distribution-consumption cycle. This chapter will provide an analysis of the Goldcorp Challenge case – an initiative of Goldcorp, a Canadian mining company – that includes not only the perspectives of Goldcorp executives and crowdsourcing proponents, but of the miners, their families, their unions, as well as watchdog groups and indigenous peoples affected by Goldcorp’s subsequent expansion to the Global South, the direct result of their successful use of crowdsourcing.
Perhaps the best example of crowdsourcing as an efficient tool for maximizing profit as well as industry’s effect on the environment, can be found in one of its earliest incarnations – the Goldcorp Challenge.
Toward the end of the 20th century, Goldcorp may have been facing its end: The small Toronto-based gold-mining firm was struggling, besieged by strikes, lingering debts, and an exceedingly high cost of production, which had caused them to cease mining operations. Conditions in the marketplace were hardly favourable [sic]. The gold market was contracting, and most analysts assumed that the company’s fifty-year-old mine in Red Lake, Ontario, was dying. Without evidence of substantial new gold deposits, the mine seemed destined for closure, and Goldcorp was likely to go down with it. (Tapscott & Williams, 2006, p. 7)
Before discussing the Goldcorp Challenge, I must take issue with this reductionist expression of Goldcorp’s struggle at Red Lake. Goldcorp’s supposed ‘fifty-year-old mine’ had been run by Dickenson Mines Ltd from 1948 to 1989. Indeed, the mine was fifty years old, but was Goldcorp’s only through a takeover battle between Goldcorp and Dundee Bancorp Inc, whose CEO Ned Goodman launched an unsuccessful court injunction against Robert McEwen, Goldcorp’s then-CEO and progenitor of the Goldcorp Challenge. By 1995, McEwen’s “chief of exploration, Dutch van Tessel, came back with nine drill samples averaging a grade 30 times what the company was then mining” (Macklem, 2003, para. 7) – this for a mine that was believed to have run dry. However, “workers, members of the United Steelworkers of America, walked off the job in June 1996. A bitter strike dragged on for 46 months. Against the advice of his production managers, McEwen refused to settle” (ibid.). In 1999, McEwen received a death threat, citing “an explosion that killed nine miners in 1992 at Royal Oak’s Giant mine” (para. 8), whose writer has yet to be found. Shortly afterward:
McEwen made an offer the strikers couldn’t refuse: he’d pay each employee a hefty severance, a signing bonus, and even stock options, if the union agreed to abandon its bargaining rights. He also agreed to hire 45 of the 180 striking workers. It was the first, and only, time the Steelworkers walked away from a unionized shop. (ibid.)
Roughly one-third of the workers would be reinstated on the condition that they abandon their bargaining rights. At the same time, McEwen fired the entire board of Dickenson Mines to “purge the system of all attitude and start fresh” (para. 7). It was only shortly thereafter, as the Wikinomics (2006) account notes, that McEwen attended an MIT conference for young company presidents, learning of Linux and thereby the potential of Open Source production, that he envisioned the Goldcorp Challenge.
The Goldcorp Challenge rescued the firm from its slump. By making its geological data available through a web-based contest, offering prizes to participants who could point Goldcorp toward the largest gold deposits on the 55,000 acre Red Lake mine, Goldcorp rose from potential bankruptcy to becoming one of the world’s leading gold companies:
in 2000, it abandoned the industry’s tradition of secrecy, making thousands of pages of complex geological data available online, and offering $575,000 in prize money to those who could successfully identify where on the Red Lake property the undiscovered veins of gold might lie. Retired geologists, graduate students and military officers around the world chipped in. They recommended 110 targets, half of which Goldcorp hadn’t previously identified. Four-fifths of them turned out to contain gold. Since then, the company’s value has rocketed from $100m to $9bn, and disaster has been averted. (Burkeman, 2007, para. 5)
In a word, through an experiment in crowdsourcing, Goldcorp went from acquiring a supposedly ‘worthless’ property to sitting upon Canada’s richest gold reserve; as Grandview Gold suggests, the area “is to Canada what the Carlin Gold Trend is to the United States, and what Witwatersrand District is to South Africa – the most prolific gold producing region in the entire country” (Grandview Gold, n.d., para. 1).
Since the Goldcorp Challenge, several of its winners have expanded their operations or individual careers as result. Of over 1400 entrants from fifty countries, twenty-five semi-finalists were awarded US$10,000 (Clayton, n.d.). Ten of these semi-finalists were subsequently hired by Goldcorp (Tapscott, 2005). The first-place prize went to Nick Archibald, Managing Director of Fractal-Graphics Ltd, and Vic Wall, Principal of Taylor Wall & Associates (Clayton, n.d.). Vic Wall is now employed as a Director with Colossus Minerals (Colossus Minerals, n.d.), while Fractal-Graphics was divided into FracSIS and Geoinformatics Exploration Ltd (FracSIS, n.d.) as result of an acquisition by St. Andrew Goldfields Ltd, which planned to use the Fractal-Graphics model for gold exploration in Timmins, Ontario (Huhtala, 2004). In addition, competing mining companies have gone on to emulate Goldcorp’s crowdsourcing strategy itself. Inspired by the Goldcorp Challenge, X-Cal Resources Ltd has initiated the Sleeper gold-exploration project in Nevada (MJ, 2002), while in 2007 Barrick Gold Corporation began their Unlock the Value program “for increasing silver recovery from the ore at Barrick’s Veladero mine in Argentina” (Barrick Gold Corporation, n.d., para. 2). Outside the mining industry, Procter and Gamble (P&G) initiated more than two-hundred Goldcorp Challenge inspired projects from 2000 to 2005; “These contests had yielded innovations with a success rate of over 80 percent, increased the company’s R&D productivity by 45 percent, and provided 35 percent of all P&G’s successful innovations in recent years” (Mitchell, 2007, p. iii).
McEwen has received several awards for innovation, leaving Goldcorp in 2005 to become “Chairman and CEO of US Gold and Lexam Explorations” (Rob McEwen Website, 2007, para. 1). In 2007, he was awarded the Order of Canada, for being:
a successful business leader and generous philanthropist. As chairman and CEO of Goldcorp, he developed the Red Lake Mine in Northwestern Ontario into one of the richest and most successful gold mines and raised his company to pre-eminence in the mining industry. Equally committed to the betterment of the community, he has been a benefactor to the Red Lake community, as well as to the Toronto General Hospital and York University, where he serves on the dean’s advisory board of the Schulich School of Business. (Governor General of Canada, 2009)
In spite of such glowing reviews from the Canadian government, McEwen has been less celebrated by miners in the Red Lake area. As reported in The Militant just prior to the Goldcorp Challenge: a millwright who has worked in the mine for 22 years and is also president of the local, said the strike was provoked by the attitude of Goldcorp’s chairman and majority shareholder, Robert McEwen. ‘We’ve had a union contract at the mine since the mid-1960s,’ said Globush, ‘but McEwen decided he wanted to rewrite our contract, saying he thought our standard of living was too high.’ (The Militant, 1999, para. 11)
The Goldcorp Challenge appears considerably less progressive when one considers it in relation to the mine’s workers. Similarly, particularly outside Canada, Goldcorp’s environmental and human rights record has been less progressive than Tapscott and Williams’ Wikinomics (2006) would suggest. This attitude is perhaps summarized best by McEwen’s statement to shareholders during the strike, speculating that in 2000, year of the Goldcorp Challenge, “production ‘could start without a settlement’ unless the ‘unionized work force will share our vision of the future’ (cited in The Militant, 1999, para. 19, emphasis added).
To further explore competing visions, I will here juxtapose Goldcorp’s statement of environmental responsibility with findings of Mining Watch Canada. It is outside my position to judge the veracity of either institution’s claims, therefore each will merely be summarized: As Goldcorp reports, its “goal is to be a low cost gold producer with geographic diversification and low political risk operating in a responsible manner with our neighbors [sic] and the environment” (Goldcorp, n.d., Corporate Profile, para. 5). Of environmental policy specifically:
Goldcorp is dedicated to conducting business in a socially responsible manner consistent with its corporate values. Responsible mining means being conscientious about the environmental impacts of our business and operating within a framework which includes our commitment to the protection of life, health and the environment for present and future generations. (Goldcorp, n.d., Environmental Policy, para. 1) Goldcorp’s position on sustainability and community responsibility is as follows: Sustainability at Goldcorp Inc. and its subsidiaries is an essential part of our daily activities with our employees and communities. It is important that all our employees and surrounding communities, where our operations are located, can benefit from mining. Goldcorp’s contributions to the community begins prior to the project development and beyond reclamation completion. Our goal is to offer the communities a better future. Our contributions include infrastructural developments, investment in education and various organizations, sponsorships, equipment, training programs and contributing towards a prosperous economic development of the various communities where Goldcorp Inc. and its subsidiaries are present. (Goldcorp, n.d., Sustainability Reports, para. 1-2, emphasis included)
By contrast, Mining Watch Canada (2007) reports concerns at fourteen mines owned in whole or in part by Goldcorp. Concerns include contamination of soil and drinking water, adverse health affects, spills, disproportionate energy-usage, desertification, deforestation, lawsuits pertaining to health and safety as well as environmental policy violations, late disclosure of potential health risks to local citizens, animals in tailing ponds, mercury-poisoning, leaching of cyanide and other chemicals including arsenic into soil and water, under-reporting of chemical releases, anti-union initiatives, disproportionate reliance on contract-workers, disregard for decisions made by indigenous populations, paying workers to participate in pro-mining actions, minimization of profit-sharing, and inadequate monetary compensation to local populations (Mining Watch Canada, 2007). The year after this report was released, unprecedented criminal charges were brought against the Vice-President of Bajo La Alumbrera for environmental contamination at the Alumbrera mining operation in Argentina, co-owned by Xstrata, Goldcorp, and Yamana Gold (Mining Watch Canada, 2008).
The Goldcorp case thus evidences three reportedly unprecedented events: the Goldcorp Challenge led Tapscott and Williams’ Wikinomics (2006) as an innovative example of what they claim will be the future of business; for the workers at Red Lake, Goldcorp evidenced the unprecedented moment that was “the first, and only, time the Steelworkers walked away from a unionized shop” (Macklem, 2003); and most recently, Goldcorp has faced the unprecedented charges in Argentina for ‘crimes against the environment’ (Mining Watch Canada, 2008). From this it is clear that the application of Open Source principles to mining through the Goldcorp Challenge was but one of many strategies employed by Goldcorp to minimize costs of production and maximize profit, to fulfill their primary objective – “delivering long-term value and superior returns to its shareholders” (Goldcorp, n.d., Corporate Profile, para. 5). By proxy, it becomes increasingly clear that crowdsourcing and moreover wikinomics are less revolutionary forces than attempts to tame and subjugate this force to capital. However, there exists also an opposing tendency using the same tools and tactics to combat the further environmental degradation seen plainly in gold-mining practices. What follows of this project will be devoted to this tendency and other emerging forms of resistance.
References
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