Blog by
20 April 2010

Bringing together small-scale miners and globalised mining operations could help to find solutions for many of the ills affecting artisanal miners worldwide.

Mining activities, both large-and small-scale, are highly emotive and the focus of endless debate. Media and academic reports have helped entrench negative views on mining. Small-scale mining is often associated with ‘blood diamonds’, ‘conflict coltan’ and ‘dirty gold’ – hand mined and sold illegally to finance conflict and war. Exploitation, environmental damage and social harm are similarly seen as part and parcel of large-scale mining. 

There is room, however, for a nuanced perspective on all this – and more, one that recognises the legitimacy of both forms of mining, and seeks to find solutions in which to bring together small-scale miners and globalised mining capital.

Scraping a living

It is estimated that over 100 million people in over 70 countries worldwide are dependent, directly or indirectly, on ASM for their livelihoods. Artisanal and small scale miners are generally subsistence, working independently on mineral exploration, excavation, processing and trade. Women account for 30 per cent of artisanal miners worldwide and 60 per cent in Africa.

Small scale miners operating in both informal and formal economies have been hard hit by the global recession. In the Democratic Republic of Congo, where ASM contributes 70 to 80 per cent of mining exports, some 18,000 informal miners lost their jobs and livelihoods due to the recession’s impact on mineral prices. In Zambia, falling copper prices put a third of the country’s 30,000 artisanal miners out of work.

UK-based development think tank the Overseas Development Institute (ODI) has indicated that employment in the mining and garment industries has been the worst hit by the global financial crisis.

In better times, however, estimates show that 40 per cent of all diamonds, 20 per cent of gold, 40 per cent of tin and nearly all coloured gemstones are produced artisanally. Staggeringly, this amounts to some 15 per cent of the global mineral market – and that is worth trillions of dollars.

Though artisanal miners capture little of the true value of their produce, they generally earn a higher income than workers in agriculture and construction. ASM has the potential to contribute to poverty alleviation by offering diversified incomes in areas where there is minimal infrastructure. Formalising the activities of small-scale miners and providing access to markets could help to alleviate poverty for millions of people dependent, directly or indirectly, on mining for their livelihoods.

Big digs

Large-scale international mining companies have long borne the brunt of criticism for the developed world’s ‘exploitation’ of the developing world’s natural resources. Corruption within the industry, ‘mismanagement’ and a lack of transparency on resource revenues has helped sully the reputation of large-scale mining activities worldwide and, in certain cases, deservedly.

The recession has had catastrophic effects on the price of minerals and the profits of mining companies. However, unprecedented demand, particularly from rapidly developing countries such as China, is leading to recovery within the sector.

Minerals and metals are used extensively in consumer and industrial goods worldwide. Indeed, the global metals and mining industry generated total revenues of US$1,661.1 billion in 2008. To meet demand, mining companies are increasingly required to operate in remote and developing regions. Estimates indicate that in 20 years, around half of all copper and gold will be mined on land used or claimed by indigenous people. This means mining companies must meet stringent social and environmental requirements.

Mining companies have not been blind to their responsibilities and the poor reputation they have is, in an increasing number of cases, unfair. The environment within which mining companies operate, their reliance on local government and community support, and the ‘social licence’ that they need to operate points to a clear business case for improved environmental and social relations in most instances.

A suite of market governance mechanisms and a recent commitment to partnership on development should not be naively dismissed as social- and green-washing for the mining sector. Rather, recognising the potential of large-scale mining companies to meet the demands of the communities within which they operate requires new discourses and, in some cases, new business models.

Linking solutions

Massive employment and income potential for millions of artisanal miners, and a large and growing market for metals and minerals, demands that we consider the potential of both to engage with new development solutions as market governance mechanisms and models for inclusive business proliferate within the sector.

The risks, of exploitation on the one hand and to reputation on the other, as well as risks to investment and the risk of market fluctuations, are all apparent. Artisanal miners face unique vulnerabilities to corruption and require mineral certifications for all produce legally traded given the risks of ‘blood diamonds’, ‘conflict coltan’ and ‘dirty gold’. These dramatically increase the reputational stakes for large-scale mining companies.

Moreover, cases of artisanal miners not receiving a fair price for their produce are not unheard of. However, trading with large-scale mining companies demands that small-scale miners adhere to a range of environmental, social and health and safety standards. These inherently assist these miners to mitigate the risks associated with their activities.

Moreover, the rewards are not to be sneered at. The benefits for large-scale mining include better community relations, access to otherwise restricted mineral reserves and an increased workforce. Artisanal miners benefit from reduced risk and improved income (and personal) security. Improved access to technologies and skill transfer further improve the recovery rate for minerals leading to improved profits for both small and large-scale miners. In this way, inclusive business models within the mining sector have enormous potential to provide solutions for many of the ills affecting artisanal miners worldwide.
 

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