“Recognition as a first step”Informality in artisanal mining

Editor's Notes

• #3: Script: Introduction Introduction ASM: A complex developmental challenge. Regularly cited issues include: Environmental degradation Social issues, such as child labour, hard labour for women, etc. Health and safety These very serious challenges are symptoms of a much larger problem: the sector’s informality Recognition is the crucial first step to mitigating the challenges of ASM and harnessing its developmental potential
• #4: Script: ASM is on the Rise We have seen those engaged in ASM grow from 13 million (ILO, 1999), the last official figure and largely considered to be conservative estimate, to more than 20-30 million (IIED, 2013) in artisanal and small-scale gold mining alone. Moreover, with an estimated 6 downstream jobs created per individual miner (Hilson & McQuilken, 2014), the number of dependents is staggering and continues to grow. Now, contrast this with large-scale mining. Large-scale mining employs roughly 2.5 million people worldwide, with an estimate 3-5 dependents per miner (ICMM, 2014). But since the commodities downturn and thanks to continuous advances in technology, costs have risen dramatically, lay-offs have been rampant and projects are beginning to mothball. Sources: (ILO, 1999), (Hilson & McQuilken, 2014), (IIED, 2013), (ICMM, 2014).
• #5: Script: ASM is on the Rise Whilst LSM remains a key economic driver to many national economies worldwide, ASM is beginning to be seen as a viable way to not only combat poverty (citation) but also drive national economies the world over. Here are a few examples of the economic contributions from ASM around the world: Central African Republic. Using conservative multiplier effects, as much as $144.7 million may be injected into the economy from informal artisanal diamond mining revenues Liberia. There are an estimated 50,000–75,000 artisanal diamond miners in Liberia, of whom about 10–20 percent are women, most of whom pan for gold at diamond sites. If half of their combined income is spent on local goods and services, more than $13.5 million Mongolia. Over 60,000 artisanal miners (about 30 percent of whom are women) of gold, coal, fluorspar, and other minerals are estimated to contribute over $811 million per year to the country’s GDP. An additional estimated $505 million is spent each year in local economies near mining activities. Uganda. Almost 200,000 women (45 percent) and men (55 percent) are engaged in artisanal mining of gold, tin, coltan, wolfram, and a range of industrial minerals. The average miner is estimated to contribute almost 20 times more to GDP than those employed in farming, fishing, and forestry Sources: (Eftimie et al., 2012), (
• #6: Script: ASM is on the Rise Growth of the informal ASM sector, in terms of people and outputs, represents statistically valid trends in both absolute and relative terms, for more people working in the informal mining sector. This is an opportunity for realizing more economic returns from ASM and, eventually, for the entire mining sector. An example from Mgusu, Tanzania demonstrates the dormant economic potential from ASM. The economic potential of ASM in the village of Mgusu, Tanzania: There is village in Tanzania called Mgusu. Mgusu is located on a mountainside. As such, mining is the only viable means of securing a livelihood; everything is imported. Gareth’s company studied the production rates of ASM in Mgusu, how many people were involved, their recovery rates, and so on. In that community, which grew from 3 – 5 thousand members depending on the season (i.e. seasonal labour), ASM produced ~13 oz. of gold per community member, per year. Even if you assume there are only 100,000 people, then the yearly production of gold from ASM would sit at 1.3 million oz./yr. Now compare this with the national production rates for Tanzania, which sit at ~1 million oz., with a capital investment from the mining sector sitting in the billions. So the potential is there and it is massive, and could be realised with, relatively speaking, very little effort and investment. The recovery data on ASM in this area sat at 10-30%, using traditional ASM recovery methods. With the introduction of proper metallurgical methods, one could double the efficiency of ASM to 50 – 60%. To do this, a capital investment into a reasonably costly mill that would last for years (~2 million USD), cooperatives within the area could use this processing plant. The point being, if you can create the environment, based on a sustainable business plan, this would relive some pressure from government b/c you create a functional sector that contributes to local and national development. There is lots of money to be made if you look at the potential of people
• #7: Script: Political will, state capacities and understanding the issues are the key hurdles There are several key barriers to realizing ASM’s economic and developmental potential, notably government willingess, which is often underpinned by inadequate understanding of the potential economic returns from targeted investment in the activity, the poverty-driven nature of the activity and its conflation of informal artisanal mining with illegality. It is much easier to dismiss, curtail or coerce those engaged in the activity informally (i.e. operating without a license) as “illegal”. In Ghana, for instance, the priority has been to focus on eradicating informal mining through an ‘Inter-ministerial Task Force on Illegal Mining’ (McQuilken & Hilson, 2016), rather than addressing the costly and bureaucratic licensing procedure (see table) Moreover, some governments may not buy-in to the idea that the economic potential of ASM could, eventually, be comparable to that of LSM, and continue to prefer and prioritise attracting investment from the bigger and more immediate return from larger extractive projects. Other governments may be aware of the economic potential of ASM, but lack the capacity, both in terms of financial resources and political buy-in, to develop and formalise the sector. In Madagascar, a study conducted by Ernest & Young on behalf of the EITI was able to demonstrate the financial losses from the illegal exportation of gold from ASM. Yet a lack of political will and resources to formalise, develop and regulate its ASM sector has meant that revenues continue to flow abroad rather than benefiting the Malagasy government and its people (EITI, 2015) Sources: (McQuilken & Hilson, unpublished 2016), (Hilson, unpublished 2016), (EITI, 2015)
• #9: Script: Governments waking up & Introducing the panel Ghana, a long-time powerhouse in large-scale extractives, is no longer as attractive a destination as it once was. Whilst Ghanaian institutions have been mostly built around large-scale mining, the discovery of gold and subsequent liberalisation of mining codes in countries like Burkina Faso and Mali has created a more competitive investment environment in West Africa, which LSM miners often resist. Combined with the relative downward trend in gold and a battered diamond industry, more and more Ghanaians are turning to ASM as a means of securing a livelihood. Consequently, the Ghanaian Minerals Commission is beginning to realise that ASM is becoming a viable economic contributor to the economy. After an IIED-sponsored dialogue in January, participants from AS, government and civil society came together to collectively design a formalisation “roadmap” for the country. By contrast, Ethiopia has never had a large-scale mining industry. In effect, the Ethiopian government has been left with a carte-blanche, able to formulate policies that directly target and support ASM to harness its developmental potential. To continue the conversation, we have invited two guests, Jikssa Kidane from Ethiopia and Georgette Barnes from Ghana, to share their experience with developing their informal mining sectors. [Close of presentation; begin w/ Jikssa on Ethiopia; Georgette to speak more on the Ghana “roadmap”]