A new international campaign seeks to clean up gold mining, one of the most wasteful and polluting industries on earth. But it’ll have to act fast if it wants to stop Robert Friedland, who plans to open the world’s biggest new copper and gold mine in Mongolia.

By Gwen Kinkead

Gold mining is the most polluting industry in the world,” says Payal Sampat, co-director of the No Dirty Gold initiative at the Washington, DC, watchdog group Earthworks. “The production of a single gold ring generates more than 20 tons of mine waste” — 20 tons of crushed rock that’s been soaked in toxic chemicals such as cyanide to fashion a single simple wedding band. By one estimate 40 percent of headwaters in the western half of the U.S. have been contaminated by runoff from gold and other mining operations. The EPA has put the cost of cleaning up after metal mines at $54 billion, and that’s just in the U.S. Ninety percent of gold is mined overseas.

Now an international movement has sprung up to challenge the destructive mining practices of gold diggers. It’s similar to the widespread effort, from human rights advocates, U.N. investigators, presidents Bill Clinton and George W. Bush, and, most recently, Hollywood, to persuade the diamond industry to avoid gems from war-torn locales.

The clean gold campaign is still embryonic, but NGOs such as Earthworks and Oxfam America have teamed up to pressure retailers to buy gold only from miners that are cleaning up their acts. To date 23 fine jewelry merchants, including Tiffany, Wal-Mart, Zale Corp., Piaget, and Fortunoff, have pledged to move toward more responsibly sourced gold — gold produced in a way “that respects environmental, social, and human rights standards.” In practical terms miners would agree to get informed consent from local communities, refrain from dumping waste in waterways, cover the cost of cleaning up old mines when they’re done, and submit to independent verification of these and other “golden rules.”

Still, if the No Dirty Gold movement is ever to claim victory, it will have to reckon with the likes of “Toxic Bob” Friedland, an American billionaire who proves just how hard it can be to implement environmental regulations in an age of hyper-globalization. One of the world’s most flamboyant prospectors, Friedland says he’s on the verge of opening “the biggest new mine in the world,” excavating copper and gold, in Oyu Tolgoi, Mongolia. If his firm’s estimates are correct, the Mongolian strikes could yield more than $20 billion in gold and $280 billion — billion — in copper.

“The nice thing about [Mongolia],” Friedland told potential investors in Florida, in 2005, is that “there are no people around, the land is flat, there’s no tropical jungle, there’s no NGOs, we’re only 70 kilometers from the Chinese border. It does not snow here. You’ve got lots of room for waste dumps without disrupting the populations.”

A modern-day buccaneer, Robert Friedland, 58, founded his current multinational company, Ivanhoe Mines Ltd., of Vancouver, BC, in 1994. Ivanhoe holds an interest in various Asian mining operations and trades publicly on the New York, NASDAQ, and Toronto stock exchanges. Best known for the sale of a $2.8 billion nickel deposit in 1996, Friedland looks as if he’ll be the rare mining entrepreneur who has two colossal finds in one lifetime. Ivanhoe discovered the huge seams of gold and copper in the Gobi Desert in southern Mongolia in 2001 and is awaiting approval on an investment agreement for the 92 square miles under its license. (Ivanhoe sustained a net loss of nearly $200 million during 2006 as it pursued the R&D phase of the new mines.)

In a relatively staid industry Friedland is larger than life. “This is great shit,” he told Fortune in a rare interview in 2003. “We go to strange places and meet interesting people. We’re in Zambia one day and then in Angola or Russia the next. We’ve seen civil wars and anacondas in Guyana.… We’ve been all over the planet.” About his Mongolian operation he boasted, “We’ve got hot showers in the Gobi Desert. Hot showers in the Gobi Desert! You think that’s easy? I mean, who the fuck has a camel polo championship at their company? Nobody!”

It may be great shit to Friedland, but metals mining is rarely free of legal hassles. For example, global giant Rio Tinto (which has a strategic partnership with Ivanhoe to operate in Mongolia) faces a multimillion-dollar environmental suit that alleges destruction of rain forests and rivers in Papua New Guinea, as well as crimes against humanity committed by the Papuan military, which protected its mine. Rio Tinto contends the allegations are false.

Smart and highly mobile (he lives in Singapore), Friedland parries fast and pugnaciously and has stayed out of legal trouble since the debacle that earned him his nickname. Born in Chicago, he attended Oregon’s Reed College and later took to the Hippie Highway, chilling in India with his classmate and future Apple magnate Steve Jobs in the late ’70s. Not long after he returned to the states, Friedland finished up school and operated an orchard in Oregon, then got into mining seriously in the mid-1980s. A newsletter editor dubbed him “Toxic Bob” after the Summitville gold mine in the Colorado Rockies, owned by Galactic Resources, a company Friedland ran, allegedly leaked cyanide and other pollutants into groundwater and surface waters at the mining site, which is flanked by two tributaries of the Alamosa River. Summitville’s leach pad (where sodium cyanide was used to separate gold from ore rock) failed, beginning in 1986 — a spectacular mess compared by environmentalists to the Exxon Valdez oil spill. In addition, Colorado Department of Health inspector Jim Horn said that there were “1,000 to 2,000 pounds of heavy metals…leaving the site [daily] in dissolved form.… There was no life in the river for 17 miles.”

Galactic went bankrupt and abandoned the mine altogether in 1992. The EPA declared the mine a Superfund site in ’94, and in 1996 it sued Friedland for remediation expenses. It also went after his assets in Canadian courts after he received some $300 million from his share of a multibillion-dollar nickel deposit in Newfoundland. Friedland, who served as Galactic’s CEO from 1984 to 1990, denied responsibility for the disaster and attributed the river’s contamination to acid and metal runoff from preexisting mines and natural acidic runoff. An Ivanhoe rep has called assertions about the dead river an “enviro myth.”

The U.S. Justice Department was unsuccessful in freezing Friedland’s assets, and Friedland countersued for damages and libel. Ultimately, to settle the matter, without admitting any personal liability, he paid $20.7 million toward the cleanup in 2000 (he has since recovered about $17 million from others involved in the site). Cleaning up the site has so far cost Colorado and feds $200 million.

More recently, companies in his portfolio have prospected in Africa for platinum and nickel. Through another subsidiary Ivanhoe was a part-owner with Myanmar’s military dictatorship in 1998 in the Monywa copper mine. NGOs accused the mine of using forced labor and polluting groundwater to the point that one activist reported locals were boiling the copper out of river water and selling it back to the government. Ivanhoe denies those charges and counters that the mine earned ISO 14001 environmental certification from a Geneva-based standards body. Because Ivanhoe partnered on the mine some 10 years ago it was exempted from Canada’s subsequent sanctions against doing business in Myanmar. The Monywa mine, from which Ivanhoe divested its interests earlier this year, remains an important source of income for that country’s repressive regime.

As Ivanhoe closes in on its Mongolia agreement, mining is becoming increasingly controversial there. Foreign-owned mines have desiccated rivers and led the government to impose a 68 percent tax on mining profits. (The taxes kick in when copper rises above $1.18 per pound, and gold $500 per ounce.) In April 2006, one NGO, Resolute Reform, turned out thousands in a demonstration asking the government not to sign a contract with Ivanhoe, because, said Resolute Reform founder Ganbaatar, “it would be very harsh and hard on the Mongolian people.” Ganbaatar went so far as to burn Friedland in effigy.

Next january the Council for Responsible Jewellery Practices (CRJP), in London, plans to release interim responsible mining standards for gold and metal mines, considered a crucial next step for “ethical gold.” Eventually NGOs hope miners will submit to independent audits to get certified. Most immediately, the interim standards place World Heritage sites off-limits for mining. Will there be enough pressure to make companies voluntarily comply with such audits? Yes, say advocates, if retailers stand by their vow not to buy from polluters.

When controversy over diamonds first came to light, “many in the industry accused NGOs of creating issues for hype,” says Brian Leber, president and owner of Leber Jeweler in Western Springs, IL, one of the first retailers to offer recycled gold. “They don’t want to make the same mistake twice.”

Already the movement has signed up some heavyweights. Zale Corp., the second largest specialty jewelry retailer in the U.S., signed on in 2006. Tiffany now gets gold from one Utah mine that doesn’t use cyanide and controls its own refinery. Even Wal-Mart, the world’s biggest jewelry retailer, is attempting to come up with a certification process, according to the CRJP. Even some parts of the mining industry agree.

“Mining undoubtedly has an impact on the environment and the community where it operates,” says Ben Peachey, communications director for the London-based International Council on Mining and Metals. The ICMM also wants to establish new standards. “Our 15 members have made a commitment to improving their own practices around responsible mining.” Does he foresee his members responding to NGO and retailer requests for certification? “It’s too early to say where that will lead,” he says.

Whether the No Dirty Gold campaign will slow Friedland’s march into the Gobi is even more of an open question. For its part, Ivanhoe insists it is a leader in ethical mining, though it hasn’t joined the ICMM or the No Dirty Gold campaign. It received an environmental award, spokesman Bob Williamson points out, for restoring fish habitats near its Savage River iron ore mine in Tasmania. Earthworks’ Sampat doesn’t hold much hope. In her view, “Friedland isn’t sufficiently interested in being a responsible operator. I don’t even know if it’s on his radar screen…,” she says. “He’s gone where no large-scale mining operators would want to go, or touch with a barge pole, like Burma. He’s in a league of his own.”

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This article originally appeared in the September 2007 issue of Men’s Journal.