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Tackling the Challenges of the Interface Between Large-Scale and Artisanal and Small-Scale Mining

20 October 2020

 

Over twenty million people are directly engaged in artisanal and small-scale gold mining (ASGM). That is over three times more than twenty years ago. ASGM accounts for approaching 600 tonnes of gold, or around 15 to 20% of annual newly mined gold production. That gold is worth billions of dollars and yet most artisanal mining is, unfortunately, often associated with hazardous working conditions and poor environmental and social practices. Artisanal mining as a whole is, however, an important source of livelihoods – second only to agriculture in many developing countries.

 

ASGM’s growth has been driven by high gold prices, by pressure on land from population growth and climate change and by poverty and the lack of alternatives in many rural locations.  However, even as the phenomenon has grown, it has been challenging for regulatory structures to keep pace. Thus, initiatives like planetGOLD and its championing of mercury-free processing and formalization are important and welcome.

The Challenges of Informality in ASGM

 

As much as 75% of ASGM activity occurs outside formal legal structures. Informality is endemic in many developing countries and goes well beyond mining. ‘Outside formal legal structures’ covers a multitude of situations from being a traditional community activity through to “casual informality”, illegality and, ultimately, hard-core criminality. In many contexts, this lack of integration with legal systems can be profoundly damaging to the miners themselves and for many of those with whom they interact. Of particular note, it is very difficult for formal participants in the supply chain to accept gold from outside formal legal structures, meaning these miners have to trade with actors of less good standing.  Unfortunately, there are too many predatory actors who use gold mined from outside the formal economy for wider criminal benefit including smuggling and money laundering. ASGM can also lead to: conflict with large-scale mining companies; a lack of accountability for environmental legacies; and no royalties or other direct tax revenues for the public purse. In summary, the present situation represents a significant failure of public policy.

 

The Importance of Formalization

Formalization is widely supported by stakeholders, but many governments struggle to find administrative capacity or approaches that make this attractive to the miners themselves. Existing in the formal sector, with better safety and environmental practices, permitting requirements and – likely – liability to taxes involves higher costs. Well-designed schemes should balance these costs by providing ASM groups with technical support and enabling them to access capital through providing security of tenure. Formalization should also make miners less vulnerable to extortion by criminal groups. In some cases, in replacing mercury – as planetGOLD has shown – they can often achieve higher gold recovery rates.  

 

The World Gold Council and the Responsible Gold Mining Principles

The World Gold Council (WGC) is proud to be an association of the most forward-thinking large-scale gold mining companies. They recognize the need to demonstrate the ways in which gold contributes to society. Our Position Statement on ASM can be found here. We support the responsible mining and trading of gold from all legitimate sources, including ASGM. We support initiatives to reduce mercury use, to ensure that ASGM is not used to fund conflict and to ensure that legitimate ASM is not marginalized out of mainstream markets. We welcome the work of international donors and civil society groups to create certification processes that support ASGM in providing confidence that the gold they mine is untainted by human rights abuses or conflict.

 

In 2019, the WGC launched a new framework – the Responsible Gold Mining Principles – which is being implemented by the world’s leading large-scale gold miners, not just WGC member companies. The Principles set out 51 detailed criteria which provide an organizing framework for assessing companies’ environmental, social and governance performance. Their implementation will be subject to independent assurance. Embedded in this framework are provisions that large-scale gold miners should help facilitate access to formal markets for ASGM miners, where those miners act responsibly and in good faith, seek formalization. Provisions on mercury, understanding communities and resettlement are also relevant.

 

Examples of LSM and ASM Co-Existence

 

A growing number of large-scale mining companies are exploring models through which they can achieve co-existence with local ASM groups, but this always requires the active involvement of government. There are a range of approaches which may facilitate this – formalization; sub-contracting; co-existence; shared processing plants for ASM groups and Central Bank buying-in programmes.

 

Near its Merian gold mine in Suriname, in 2016 Newmont signed a Cooperation Agreement with the Pamaka community focussed on achieving legitimate ASM. The company supports the local miners’ co-operative to build its management capacity so as to enable it to establish formal legal status. The Company is also working with UNDP, the US Embassy and NGOs to promote mercury-free processing technologies and to support legitimate ASM livelihoods in Suriname. In Ghana, Newmont is also working with the government on its’ community mining initiative, aimed at formalizing small-scale mining in selected communities external to current mining lease areas

 

In Colombia, at the Gramalote project, AngloGold Ashanti and its joint venture partner B2Gold, are seeking harmonious co-existence with legal ASGM through a two-pronged approach: providing direct support for formalization; and helping to create alternative livelihoods through the development of local businesses. The area around the Gramalote project has a long tradition of artisanal mining and the joint venture is contributing land to support formalization. Gramalote started the initiative with 18 traditional miners from the municipality of San Roque in 2018. A formal subcontract was granted and 16 production units were legalised in a 15 hectare area. Since then, the company has supported seven new sub-contracts with 40 miners in another section of San Roque. In parallel, in the La Maria area of the municipality, another group of miners signed a contract to establish a formalized entity.  Inspections by the provincial Mining Secretariat declared nine of the units (employing around 60 people) to be viable. Material extracted from the formalized entities will be processed in a plant part-funded by the Company. The state training agency, SENA, is also providing a safe mining programme for the formalised entities.

 

The good news is that there are a growing number of successful formalizations.  But there is much work still to do. Success will depend on governments, IGOs, formal sector miners, refiners, responsible ASGM actors and civil society groups working together to implement solutions.  

 

Source https://www.planetgold.org/tackling-challeng