2012 7 June Development Conference Readout
0 likes29 views
This document summarizes discussions from a conference on enhancing development potential in artisanal and small-scale mining (ASM). Key points discussed include: partnerships are needed to address ASM challenges; clarifying property rights and addressing issues like overlapping claims are important for strengthening ASM; while ASM brings poverty, proper investments could make it a viable economic activity; and technical assistance is needed to help miners reduce environmental damage and adopt safer techniques. Panel discussions covered topics like opportunities and constraints facing ASM in different countries, best practices for preventing environmental harm and facilitating site rehabilitation, and examples of projects providing alternative livelihoods to miners through activities like fish farming and market gardening to rehabilitate mined land.
2012 7 June Development Conference Readout
- 1. 1 Notes on the Proceedings of the Development Conference “Enhancing the Developmental Potential of Artisanal and Small Scale Mining” June 7-8, 2012 World Bank – Washington, DC Thursday June 7 Setting the Scene Chair: Gavin Hilson Panelists: Paulo de Sa, Tim Fella, Dorothée Gizenga, Discussant: Ian Smillie Summary Paulo de Sa describes in his presentation how partnerships may be the key to overcoming existing ASM challenges. Tim Fella highlights innovative methods that PRADD is using to strengthen ASM property rights. Dorothée Gizenga notes that in addition to collaboration among governments, the private sector, and civil society, there must also be strengthen partnership between large scale mining and small scale mining to promote safer and more efficient mining techniques. Paulo de Sa After 15 years of efforts to promote developmental improvements in artisanal mining in 50 countries, the results have been ineffective piecemeal pilots. ASM rights are often trumped by mechanized companies wanting large scale mining concessions from governments, which often take half-measures to support the communities that earn their livelihoods from ASM. Conflict is a potential consequence. This is not fundamentally a mining problem. Certified supply chains have been a helpful innovation, but partnerships are needed in addressing existing challenges. Lessons learned to date include: • One size does not fit all. • ASMs need recognition and protection of their rights. • Don’t try to organize what is already organized – work with existing ASM systems; cooperatives could be a fruitful approach. • Extension services are required to help ASMs mine more responsibly and effectively. • Approaches must be anchored in proven methods that deliver financial benefits. • Partnerships are needed to provide lasting solutions: multistakeholder partnerships are most effective. • Tripartite platforms (government, private sector, and civil society) seem to provide an adequate approach to the issue. Tim Fella PRADD is the first and largest project of its kind. Its approach to enhancing development in ADM is to clarify and strengthen rights. There are five challenges in strengthening property rights: • Competing tenure systems between customary and statutory systems. • Poor legal protection for ADM mining under customary tenure systems. • Lack of clarity in surface and sub-surface rights. • Poor documentation and mapping. • Overlapping boundaries between adjoining claims.
- 2. 2 The result is conflict, low investment, environmental damage and lack of traceability of diamonds. In short, the result is the open access problem. PRADD promotes alternative land use, is working to develop microfinance options, and it promotes mine reclamation, improved resource governance, and conflict resolution. Dorothée Gizenga Artisinal mining is a poverty-driven activity with inherent ills, but with potential to be a viable economic activity when proper investments are made. There are a number of actors that must get involved if ASM is to transform into a positive global sector that contributes to economic growth around the world. Actors include: governments, the development community, diamond and jewelry industry, financial institutions, and other industries outside of diamonds and jewelry (such as construction companies). The point was made during the KP intersessional that governments require resources to improve ASM. Governments as well as the development community can take similar actions to partner with one another to provide direct support to mining communities. Furthermore, large mining companies should partner with ASM to contribute safer and more productive mining techniques. Friday June 8 Remarks by Ambassador Gillian Milovanovic The effort that this conference is supporting has added impetus to a critical element in the Kimberley Process (KP). The appropriate organizations and countries are needed to step forward to relate the improved development of ASM to the KP. Rule of law and human rights are critical issues at the ground level where the poor earn their living. Panel 1: Opportunities and constraints for enhancing the development potential from ASM: Views from Diamond Producing Countries Chair: Paulo de Sa Panelists: Fatou Gaye (Guinea), Angola, and DRC Summary While ASM is increasing in many African nations, there are still many constraints in the industry involving technical capacity, land availabilities, and budget limitations. ASM is a very mobile industry. Steps are being taken to formalize the industry, but most countries still have a long ways to go. Guinea Africa produces 60% of the world’s diamonds. In Guinea, 99% of its diamonds are artisanal. Labor is very mobile and unskilled, but exploitation of the sector should be regularized and reserved for Guinean nationals. Much more work remains to be done to achieve these objectives. Angola The government of Angola passed a new Mining Code in 2009 that has created the conditions for a new juridical framework to eliminate illicit production. Topographic research is being carried out to identify rich areas in the municipalities. This includes surveying of the terrain and preparation for licensing. Production will be 630,000 carats per year. Constraints include a lack of open areas, budget limitations, a lack of buying houses and collectors. Technical assistance is needed to help find ways to allocate deposits between commercial and artisanal producers.
- 3. 3 Democratic Republic of the Congo The government of the DRC liberalized ASM in 1981. This is how the majority of DRC’s production is realized. Diggers are very mobile and are expected to have a card giving them the right to mine in a specified zone. Buyers are also to be licensed. DDI has been active in providing assistance. Miners are encouraged to join cooperatives that are expected to function as enterprises. Child labor must be ended. Panel 2A: Best practices and lessons learned in preventing environmental damage to, and facilitating rehabilitation of, artisanal mining sites Chair: Mariella Canter Weikel Panelists: Jane Dennison, Cristina Vellegas, Terah De Jong Discussant: Gary McMahon Summary This panel discussed the opportunities that are available to help benefit mining communities. Mining is often detrimental to the national environment, particularly causing land degradation, reduced water quality, and biodiversity loss. Additionally, some mining is spilling over into protected conservation areas, including World Heritage Sites. On the ground technical assistance is the first step actors must take to educate local miners on how to reduce environmental impacts of mining. Such projects to assist miners must identify complementary livelihood activities that are beneficial environmentally and economically. They must have community-driven partnerships and capitalize on individual entrepreneurship. Jane Dennison: US Department of State Mercury is a popular tool for artisanal and small scale miners (ASM) because it is a cheap way to extract gold from its ore. However, mercury used in this way has serious environmental impacts. United Nations Environmental Program (UNEP) is leading the negotiations on mercury and negotiations are progressing rapidly. Solutions must be anchored in financial benefits. Miners will give up mercury only for a better extraction method that provides higher gold yields. They are not motivated by health or environmental concerns. Technical assistance is one important aspect of a solution and the US is working to establish several training facilities worldwide. Sustainable compensation is the key to changing behavior: • Showing miners through demonstration that there are alternatives that are better than mercury at recovering gold. • Where miners bring their ore to processing plants, trust issues are important regarding allocation of shares. • Creating the right incentives requires stakeholder participation. Cristina Villegas: Estelle Levin Ltd. (UK Consulting Firm on Natural Resources) The project called Artisanal Small-Scale Mining in Protected Areas and Critical Ecosystems (ASM-PACE) has found that ASM is taking place many protected areas such as national parks and World Heritage Sites. Protected areas are vulnerable to ASM due to the fact that they are seen as virgin territory and because there is a lack of awareness on where the exact boundaries of the protected areas lie. Furthermore, ASM rates are high in restricted areas because their previous locations become overcrowded by increased industrial, large-scale mining (LSM). Often times these boundaries are not viewed as legitimate. This is the open access problem. A final factor is the dislodgment of miners by industrial mining operations as well as the difficulty for fragile states to implement enforcement strategies. The question for the future debate of “protected land vs. ASM” can only be answered once we define where we have our priorities. Possible solutions to ASM-PACE include mobile technology training centers, incentivizing mercury-free gold processes, and educating young miners not to use mercury. Terah De Jong: TetraTech Consulting
- 4. 4 ADM has numerous environmental impacts to land degradation, water quality, and biodiversity. To aid in community development in the CAR, the post mining income-generating environmental rehabilitation (POMIGER) approach of PRADD has focused on converting old mining pits to fish farms, market gardening and tree farming. Between 2010 and 2011, fish farming projects has grown from 18 to 580 sites. The total amount of degraded land that has been rehabilitated is 5%. This success can be accredited to the region’s social willingness, overall food insecurity, and the diamond crisis of 2008. This project complemented current livelihoods and gave incentives for increased communication and individual entrepreneurship. However, POMIGER as a response to environmental degradation is a complex approach. Gary McMahon: World Bank, Expert on Mining Conflict and environmental consequences are a key reason why we are here. Some of the bad environmental practices of ASM are amenable to change. Restoration of mined out pits is an even bigger problem. PRADD is unique in this regard. Sometimes a transition to safe and sustainable mining is hindered by lack of money, but other times it is primarily enforcement. Miners typically don’t cooperate. Panel 2B: Knowledge-building and financing for efficient ASM Chair: Paulo Mvika Panelists: Sebastien Pennes, Pete Chirico, Gavin Hilson Discussant: Chris Sheldon Summary This panel highlighted ASM case studies, particularly in CAR and Ghana, for how financing and knowledge capacity can be increased in order to ensure more effective ASM techniques. Some efforts such as PRADD have increased legal sales in ASM areas. Satellite image analysis such as Google Earth is an effective tool to monitor mining areas. In terms of financing, microcredit and microfinance projects in Ghana were met with several challenges, but there are possible microfinance options that could be an effective way to assist small scale miners. Sébastien Pennes The study of ASM activity in CAR has shown a lack in quality tools available to improve ASM. Because banks don’t fund mining extraction and the system of insurance has proven inefficient, PRADD aims to provide legal chain of custody, decrease land chief tax, and create a market for claims. As a result, legal sales have increased by 4.5 times through PRADD’s project. Other programs, including an equipment rental pool and a microfinance program, are still in the making. Pete Chirico Very little is known about small scale deposits as there is a lack of reliable census/geographical data in ASM areas. Making available geographic information is key to understanding ASM environments because it is helpful to show map of thickness of overburden as this will improve mining efficiency. In fact, Google Earth is a cost-effective way to monitor mining areas and can provoke in-depth field investigations. Gavin Hilson Hilson researched microcredit and microfinance in ASM in northern Ghana and found that legalization and formalization has significant challenges due to poverty traps. Microcredit challenges exisit in that banks are reluctant to finance loans for quality equipment. The Grameen bank model is a possible option in the way that it would be useful for designing
- 5. 5 collateralized group accountability through borrower participation, absence of subsidies, and substitutes for adequate collateral. Panel 3A: Best practices and lessons learned in regards to ASM formalization Chair: Simon Gilbert Panelists: Steven Van Bockstael, Bocar Thiam, and Felicien Mbikayi Discussant: Dorothée Gizenga Summary This panel focused on the process of trying to formalize ASM miners. Steven Van Bockstael stated that the formalization process must be driven by incentives rather than enforcement. Bocar Thiam presented the idea of a mobile licensing system, as a way to facilitate easier registration access for miners. Felicien Mbikayi described a successful registration project in the DRC. The overall theme of this panel was that miners want to become formalized, but that they need to be presented with more resources to achieve this end. Steven Van Bockstael It is now a legal requirement to formalize ASM, but the challenge is that formalization carries a small return for small operators. Licenses are expensive and there is little chance of being caught as an informal miner. Current laws are out of sync with the reality of ASM. The laws are predicated on the closed access model whereas the reality of ASM is open access. Change must be bottom up through existing organizations. Mining Codes treat ASM miners as entrepreneurs, but for the smallest scale operators the miner is really an employee of the supplier (the middleman). ASM is driven by poverty, de- agrarianization and multiplex livelihoods. To increase the registration amount of formalized miners, there needs to be a switch from an enforcement-based approach to an incentive-based approach. Structures for ASM legislation should be modeled off of already existing, unofficial management structures within the ASM community. Bocar Thiam Diamond smuggling is a serious problem in Liberia. Of 100 entry points on the border, only 6 are manned. There should be an amplified effort to increase the amount of formalized ASMs. This can only happen if the licensing system is decentralized through a mobile licensing system. The current process requires long commute and high registration fees. To encourage artisanal miners to formalize, the registration costs should be lowered and the amount of benefits increased. Felicien Mbikayi There was mining registration project organized by Diamond Development Initiative (DDI), the DRC government, and the private sector that allowed miners to register on-site; this project took place when the DRC chaired the Kimberley Process (KP). At registration, miners were sold mining ID cards at a reduced price (from $25 to $5) and promised some type of social security benefits. This registration process resulted in over 100,000 newly registered diggers, miners, and negotiators. The project was limited by the countries lack of qualified registering personnel and by the public’s unwillingness to show registers their personal identification cards (the only ID cards in the DRC are voter ID cards and the public was suspicious). To counter the suspicion, the project launched awareness campaigns. Dorothée Gizenga (discussant)
- 6. 6 Formalization is too costly, but informality costs miners even more money than formality because of harassment and informal taxation. Everyone wants to become legal but they are restricted by their resources. Every approach to increase formality will need to be country specific, but it would be interesting to see if the PRADD and DDI approaches could be combined. Miners want to be formalized, and governments must recognize that illegality is not criminality. It is important to provide government services of value to miners, and a mobile licensing scheme could be one. Panel 3B: Standards and safeguards for the sourcing of ASM minerals Chair: Ngomesia Mayer-Kechom Panelists: Lahra Liberti, Mark Van Bockstael, Shawn Blore Discussant: Marie Muller Summary Lahra Liberti described in her presentation how international organizations such as the World Bank and OECD may be able to assist with LSM-ASM cooperation. The other panelists argued that while the KPCS has add value to diamond revenues since it was established, the KPCS must be updated to reflect the changing times that ensures traceability and monitoring. Lahra Liberti OECD is providing guidance designed to help companies follow good governance when operating in the mineral sector with a “process oriented” approach with LSM-ASM cooperation. The OECD Roadmap envisions cooperation with the World Bank and goes hand in hand with certification schemes. Mark Van Bockstael The development of the KPCS followed the creation of the certification of minerals from Sierra Leone. The Sierra Leone certification scheme included 17 levels of security on the document, each costing £65 with an electronic version, which was encrypted. Due to political change in Sierra Leone, the certification scheme stopped; KPCS is now in its place. The KPCS has added value to revenues by 1.5-1.7%. But, there is a stronger need than ever to footprint rough and feed information into a real-time system. There needs to be a system in which the importer is willing and capable to perform due diligence; there cannot be any trade mis-pricing. If so, the certification system will prove to be a “dead duck.” Shawn Blore The International Conference on the Great Lakes Region (ICGLR) is a certification scheme aimed to stem the illicit trading of the 3 T’s and gold in the Great Lakes Region and is learning from the positives and negatives of the KPCS. A certification system cannot be based on a system of internal controls alone; there must be real traceability. Criticism of the KPCS includes oversight, transparency, penalties, traceability. A possible solution includes a consumer-driven approach that must be reconciled with benefits brought to ASM communities. ICGLR is donor-supported in the short term (by BGR, PAC, and USAID) and down the road will be funded by a user pay system by the private sector. Panel 4A: Diamond revenue transparency and accountability mechanisms for mining communities’ beneficiation from revenues Chair: Catherine Picard Panelists: Alfred Brownell and Javier Aguilar Discussant: Michael Jarvis
- 7. 7 Summary This panel focused on how to make ASM more accountable in the future. Javier Aguilar discussed how difficult it would be to add ASM to the EITI. Alfred Brownell questioned the fairness of the current value chain and presented an idea for a Kimberley Process Transparency Index. Overall, this panel was concerned about establishing a way to ensure fair compensation for mining communities. Javier Aguilar, World Bank The Extractive Industries Transparency Initiative (EITI) is a global standard for extractive resources. Adding ASM to the EITI may be difficult because the EITI has a very narrow focus. To date, no producer countries have put ASM in their EITI frameworks. What can EITI contribute to ASM? • Help evaluate the value chain • Intervene where significant and concentrated financial flows occur and taxes are paid. • Focus on exporters and traders Alfred Brownell, President of Green Advocates The Kimberley Process (KP) can become more efficient by partnering with the World Bank, USAID, EITI, DFID, CIDA, the EC, SIDA, GIZ, AusAid, and public private partnerships. The KP should help track revenue and offer developmental support in effort to support transparency and accountability. There should be a Kimberley Process Transparency Index where nations could receive a AAA rating through a Cleaner Diamond Initiative (CDI). This would be a pilot program where countries would opt into being a part of the CDI, to receive a high diamond rating. There needs to be a study of the value chain (from pit to jewelry) to see who is making the most money, because the diamond miners deserve to be paid fairly. We must consider value versus royalty. The KP could be the appropriate forum to start a value chain analysis and to insist that producer countries transfer a part of the revenue to the communities. Michael Jarvis (Discussant) It is important to understand who represents the community and how they are allowed to spend the money for the community. There are times when governments look accountable on paper, but in reality the money meant for communities are being kept solely by chiefs. Panel 4B: Best practices and lessons learned in building collaborative relationships between artisanal miners and commercial-scale mining enterprises Chair: Krista Hendry Panelists: Saleem Ali, Andrew Bone, Genevieve Hume Discussant: Chris Sheldon Summary Saleem Ali suggests that some low hanging fruit for improving ASM practices is for LSM to provide ASM with technical assistance. Andrew Bone describes how the private sector can encourage these partnerships between LSM and ASM. Women may play a key role in initiating and maintaining partnership, yet as Genevieve Hume acknowledged in her presentation, financial incentives for all actors must be present in order for the partnerships to get off the ground.
- 8. 8 Saleem Ali Common interests between LSM and ASM lead to competition of the same product. It is possible that companies can benefit from ASM collaboration through closure planning and exploration (i.e. West Africa). There is a 90 times higher rate of accidents among ASM vs. LSM/developed country operations. One solution that would be low hanging fruit is for LSM to provide ASM with technical assistance to reduce the number of accidents and improve environmental and health conditions. Andrew Bone Diamonds are an emotional product. De Beers is almost exclusively engaged in LSM, but believes in delivering benefits back to diamond-producing communities. The kind of collaboration between LSM and ASM should be seen as a hand up rather than as a hand out – expertise is out there and the key to collaboration is engaging governments and their local communities. The private sector can encourage partnerships through mentorships, and there is a need for a sort of “mentoring clearinghouse.” There is a universal perception that women are better with money and there is a great entrepreneurial spirit among women – this must be leverage. The biggest challenge of all remains the access to market. The biggest losers are the owners of capital, but these people must be part of the solution. There could be a managed partnership between the WB and De Beers just like there was between the WHO and De Beers some time ago. Genevieve Hume Hume Atelier launched a project in CAR, built upon Global Development Alliance and Private-Public Partnership. It is necessary to look at financial incentives for collaboration; consumers are interested in the country of origin and provenance of their product, yet there is also a growing market for artisanal goods. Challenges include logistics, system instability, child labor, lack of trust, conflict between stakeholders, difficult to enforce country of origin programs, the question of an export tax and who funds the system (exporter vs. importer). Going into Action Chair: Gregory Myers Panelists: Bernard Taylor, Andrew Bone, Ian Smillie Summary It is important to not place any further burden on the KP, because the KP has always focused solely on conflict eradication. To add a focus of development, the KP will need to collaborate with other organizations like DDI. We must expand our current pilot projects if we want to see any substantial change within our development discussions. There should be the creation of the Mining Action Forum, to serve as a place where civil society, NGOs, banks and the private sector can collaborate and discuss the future of development for KP countries. Gregory Myers Economic development is important for the KP, for industry, for the communities, and for the KP itself. Communities have low incentives to formalize or mine responsibly. Technical assistance to the communities can increase rates of formalization, reduce conflict, increase the amount of diamonds entering the formal chain of custody, and improve livelihoods. Ian Smillie
- 9. 9 Lots of good work is being done but it still amounts only to “dabbling”. DDI shares some of the good work that is ready to go to scale. Governments are still not innovating although Angola’s new legislation seems promising. Dennis Rondinelli’s book on development projects as experiments is a valuable contribution. We have to learn from experiments, and learn from failures and successes alike. The KP is a regulatory system; it doesn’t know about development. This is why we created DDI. There are funding issues. There is only a small, patchy fabric of funds available, and we need more funders. Andrew Bone It is time for going beyond pilots. In 30 years the known deposits of diamonds will dwindle. The supply of diamonds from formal, regulated deposits will drop. There is pressure now to move beyond pilots. We must be cautious about putting yet another burden on the KP – it is 75 countries, and not all of them care about development. We could have a forum, a clearing house of expertise, and equipment. It could be mobile and go where critical meetings are taking place or wherever the expertise and good will is. Bernard Taylor The KP has a sufficient amount of work on its plate. What we are contemplating shouldn’t be done in isolation. We have indeed been dabbling over the years. The response of the producer governments has been disappointing. They seem more interested in industrial mining. Could the UN Economic Commission for Africa’s Mining Unit be the vehicle for what we are discussing? Could there be an International Year of Artisanal Mining? Banks aren’t interested in this sector. Yet there are actors who finance other artisanal industries, such as fishing. The gold companies are further along than the diamond industry. Equipment, knowledge, formalization are important resources needed for improving the developmental potential of ASM. As far as key organizations, CASM has been working on ASM for years and is ready to become more operational. We need renewed international efforts. The KP and EITI need more synergy and more shared understanding. We need an active, action-oriented forum. We need to listen to communities, and not just the miners – the women too. Discussion of Going into Action The KP was established with a narrow focus that excludes development. This was the only way member countries could reach concensus and establish the KP. But now the development question must be addressed. The KP should be strengthened through developmental fairness, to ensure clean diamonds. The KP could take steps in the right direction by focusing on development in addition to just vetting, and by establishing a technical assistance working group. Some discussants suggested a new forum outside the KP where we can talk about development alone. We ought to have an “associate organization” status for development organizations. We should consider a Mining Action Forum. This could be populated by the tripartite alliance and hosted by the KP, by the Indaba, by CASM…. Wherever there are equipment suppliers, bankers, all the different expertise. We need a clearing house. Mobile financing is something that can be done. The smart card system they’re using in South Africa for pension payments is an example. There is a lot of funding that is disappearing into smuggling. If all the initiatives could monitor how much could be generated by diverting funds from fraud into the formal chain of custody, governments could be expected to contribute more. More resources are needed to achieve the developmental potential of ADM. We need to think how to scale up the pilot projects that are working. We need to decide if these initiatives should be under the KP or in conjunction with the KP. A KP secretariat could make significant progress on this issue.