Rio Grande was founded more than 60 years ago by my father, Saul Bell. A jeweler for more than 80 years, Saul was involved in every imaginable aspect of the jewelry industry, including manufacturing, diamond-setting, watch-making, wholesaling and retailing. He loved to share his vast knowledge of the jewelry-making process. My brothers, sisters and I still benefit daily from his knowledge and wisdom, and I hope to pass on some of what I have learned from him and from other master jewelers through this series of blog posts.
Our customers ask us pretty regularly about the origin of our silver products and are interested in knowing how much of our silver material is recycled and how much comes directly from a mine. Here’s the straightest, most direct answer: We use as much recycled material as possible, whenever possible, but we are not able to certify that all of the silver used in the products we sell is exclusively from recycled sources. Read on for more of the details.
As you know, all precious metals must be refined before they can be turned into products, whether the source material is scrap (recycled) or mined. Actually, all silver was mined at some point so, to be more precise, we’ll refer to silver that comes directly from the mine as “first generation metal,” or FGM.
We source our metal from secondary refiners. Secondary refiners do not buy directly from mining companies, but to be perfectly honest, that doesn’t guarantee that there is no FGM silver in the refining lots they buy. The truth is that scrap is coming from thousands of sources. For example, Rio buys scrap from our customers and consolidates the scrap from between 250 and 300 customers into a single refining lot. Some of the silver we buy comes to us as ingots, and it isn’t possible for us to determine the source of the silver in them. Some customers prefer to melt their scrap and pour an ingot for valuation purposes and for simpler, safer shipping. Sometimes they send us ingots that were traded to them for jewelry, and they have no way of knowing if these ingots contain FGM or recycled silver. There is no test that can prove the metal was recycled from scrap.
We can make assumptions, based on economics, that very little FGM silver reaches the public in the United States because the vast majority of the silver produced here is a byproduct of mining for some other metal such as copper, and the companies involved don’t deal on a small scale (which is where the needs of our jewelry industry would be).
We can say that the precious metals in the vast majority of all the products we sell passed through a secondary refiner and that none of those metals was purchased directly or knowingly from a mine. That isn’t, however, the same as saying that there is zero FGM in our products. In addition, if we look at the record of supply and demand, it wouldn’t be logical to think that no newly mined FGM is getting into the supply chain.
In fact, using only recycled silver is not in itself sustainable because the supply does not meet the demand. If you look at the latest supply and demand figures from The Silver Institute, you will see that in 2011 the total supply of silver from scrap (recycled silver) was roughly one-quarter of the demand, and we can presume some of that scrap is from first uses of newly mined silver.
From the point of view of sustainability, if no newly mined silver were allowed into the marketplace, you and I would be out of business very soon. Just imagine, if the demand were four times higher than the supply, there would be a bidding war. The price would go sky-high and the industrial companies that use most of the silver would get it all because the cost of silver in their products is a very small percentage of their overall cost and they can pass the increased cost through to the consumer. If the low supply level were to become critical, the governments of the world would have to take control of it (just as they did during WWII) and ration it on a strategic need basis. I remember stories my father and Rio’s founder, Saul Bell, told me about the difficulty he had buying silver during WWII. Jewelry, it seemed, was on the bottom of the priority list.
In the United States, the jewelry industry has primarily used recycled precious metals for the past 60 years and perhaps longer. Here in the U.S., recycled raw materials best fit the cost structure of our jewelry industry.
Rio shares and appreciates our customers’ concern for the environment, and we support your efforts to do what you believe is right. My family started working to make our business a sustainable and environmentally sensitive workplace decades before it became popular, and we will continue to do so. All of us at Rio Grande believe we should do everything we can to be environmentally good citizens and that, as a business, we have an obligation to all our stakeholders (customers, employees, and suppliers) to be as sustainable as we can possibly be. That means we work to have the supplies you need, when you need them and at a reasonable price while continuing to do everything and anything we can to leave a better place for our grandchildren and yours.
Let us know where you stand and how your business is handling these issues. We’d love to hear your stories and share your experiences!
In Part 2 of this series, Eddie continues to explore some of the ethical dilemmas faced by mining companies and consumers of precious metals.