Artisanal and Small-Scale Mining (ASM) as defined by the OECD Due Diligence Guidelines, is a “formal or informal mining operations with predominantly simplified forms of exploration, extraction, processing and transportation. ASM is normally low capital intensive and uses high labour-intensive technology.” (https://eiti.org/ASM)
ASM occurs in approximately 80 countries with approx. 40mn miners worldwide (compared to 7mn in industrial mining) in Africa, Asia, Oceania, and Central and South America. ASM miner’s production supply accounts for 80% of sapphire, 20% of gold, and 20% of diamond globally; as well as minerals needed to produce electronics (e.g. laptops and phones) such as tantalum (26% of global supply) and tin (25%). Although widely informal and generally low in productivity, ASM provides income opportunities to local populations living in rural areas of developing countries.
Sustainability practices in mining have become increasingly important where companies are expected to take into consideration the social, environmental, and economic implications. Mining companies are incorporating sustainable practices into all their decision-making processes. For example, mining operations across Africa are currently using fossil-fuel based sources in order to generate power. This could be replaced with other types of technology such as solar photovoltaic, hydro and wind to deliver clean energy.
ASM is largely sourced by an unskilled workforce using basic and undeveloped tools and techniques. As a result, this informal industry is lacking in the ability to carry out efficient and effective environmental, health and safety practices. This is not only a high risk to the workers which results in illnesses such as respiratory diseases from the blasting and drilling, but a risk to the environment where crops and farms are degraded (resulting in decreased or lost food production) and streams and rivers become polluted and unsafe for drinking and fish stock.
Studies have shown that ASM consumes a relatively large amount of mercury and has been found to have the largest releases of mercury into the environment (approximately 400 metric tons per year). In 70+ countries ASM facilities, also known as “Gold Shops”, vaporize mercury to refine gold ore. When released into the atmosphere elemental mercury becomes a powerful neurotoxin. In addition, most of these Gold Shops do not have the proper type of filtration system or method of capturing vaporized mercury.
The Gold Shop Mercury Capture System (MCS) was implemented to design a low cost and easily constructible technology in order to reduce airborne mercury emissions by capturing vaporized mercury. It was developed by the U.S. Environmental protection Agency (U.S. EPA) and the Argonne National Laboratory. MCS is easy to construct (using readily available materials), straightforward to install, easy to transport and it can potentially reduce Gold Shop mercury emissions by as much as 80%. The mercury vapor is cooled, condensed and collected in liquid form for safe management.
Formalization of this informal sector (70 to 80% of miners are informal) is key in ensuring responsible sourcing as without this miners and communities can be trapped in cycles of poverty and excluded from legal protection and support. Formalization includes building capacity through local institutional partnerships, encouraging the formation of cooperatives and associations, encouraging large-scale mining (LSM) companies to support capacity building, using microcredits to lend to organized groups of miners and communities, and improving miners’ access to efficient and cleaner technologies. [LSM refers to major, mid-tier and junior level exploration and production companies or any company that complies with international performance standards.]
We are of the view that any large scale miner (when compared to the informal mining industry) that can help or coordinate informal miners in terms of making this activity environmentally less damaging or even environmentally neutral, can attract a higher rating multiple and so greater valuation from younger investors in particular and be viewed more favourably by government licensing agencies. Showing environmental credibility in one area of mining can be used by a corporate as a signalling mechanism that it is likely to want to show environmental credentials in other mining sub-sectors – i.e. the corporate is building trust.
Renas Sidahmed is part of ACF’s Sales & Strategy team and is a staff analyst. Before joining ACF she worked at the IMF, IFC, World Bank and Japan’s second largest brokerage. She has a global international background, an MBA and Ivy league maths degree. Her sector expertise includes natural resources.