Untapped Resources – How artisanal miners boost economies

Stone Crusher Stone crushers rattle for 12 hours. 6 days per week. A man is standing by its side feeding the machine shovel after shovel with gravel. A shawl covers his face against the stony dust.

Gold that will later decorate the necks of Indian brides, be displayed in a Turkish souk or stored in the vaults of central banks first has to be scrapped from the belly of the Earth, often in devastating conditions around the world.

Given the volatility of gold prices and the general depression of metal prices many large mining companies lack the spirit and financial muscle to engage in new gold ventures. Countries around the world feel the pinch and increasingly turn to their home grown artisanal mining sector to make up for the shortfall.  This could be a welcome shift from many countries obsession with mega projects back to their own mining force.

Oftentimes large mines operate as enclave industries with very weak links to the rest of the economy, although their environmental and social impact on the surrounding communities can be dramatic.

Foreign owners/operators repatriate profits back to their shareholders based in the world’s financial centres and seldom in the countries of operations. Efficiency, financial muscle for infrastructure developments and technological superiority is often cited as the main advantages of multinationals. However, small-scale miners contribute directly to the national economy through the immediate raise of income by a larger amount of people. Some studies indicate that income benefits accrued by artisinal miners are four times higher per output than for workers on large mines. This plays to most developing countries’ strength of a large labour force and high unemployment.“We appreciate the contribution made by the large scale mining companies, but at the same time we recognize the important contribution made by the small scale miners in job creation,” said Stephen Masele, Tanzania’s Deputy Minister of Energy and Minerals in an interview with the World Bank.

2015-02-28 12.12.35Despite these clear benefits informal miners face various obstacles, lack of geological information of the ore bodies causes the artisanal miners to just dig everywhere with often poor results, local cartels extort bribes, millers cheat miners out of much of their profits. Other problems such as child labour, mercury poising and failure to adhere to environmental laws have bought the sector in disrepute. However, high fees for registration, outdated mining codes and corruption of local officials prevent many from formalisation. In Zimbabwe for example high levies charged by the Ministry of Mines and Mining Development which run up to $13 000 and delays in issuance of licences prevent small-scale miners from joining the formal sector, according to a local newspaper article.

 

A license would be the first step for an artisanal miner to demarcate a claim and develop a small business. Through persistence and hard work, Crispen Gorombe recently acquired such a license. After years of making ends meet in the bush, he graduated from an informal digger to a recognised small-scale miner. Together with his brothers he founded the Forest Mining Company, running a small gold mining operation outside Harare, Zimbabwe. He now employs 15 workers.

“We have very good claims, but only one crusher and one generator. We need to fetch our water with a truck from the river about 1 kilometer away. Our dream is to upgrade our equipment and grow our business to provide more jobs to the people in the area. A simple water pump would also increase our output. Unfortunately, we have no means of getting a commercial loan anytime soon.”

This is a common problem in the developing world and donors as well as Governments are slowly waking up to the potential small-scale miners have to strengthen economies and increase national income levels.

Countries like South Africa, Tanzania, Peru and Zimbabwe are crafting policies to regulate the informal artisanal mining sector. Chairman of the University Of Zimbabwe Institute of Mining Research Lyman Mlambo lists the economic benefits if artisanal small scale miners were properly registered: “It will reduce smuggling and leakages, and hence increase fiscal revenue.  Formalisation of artisanal small-scale miners will also make it possible to provide technical expertise and assistance to miners if they are registered and have central processing facilities and training.”  The Government of Zimbabwe is currently exploring to develop regional small-scale mining centres with technicians, a mill and geologists to upgrade skills of miners and increase output.

2015-02-28 12.14.26In Zimbabwe, about 70% to 85% of the rural population are into artisanal mining. Since 1999 the contribution of small-scale gold miners to Zimbabwe’s gold output has increased from 5% to 30% according to The Herald Newspaper. In Ghana small-scale mining contributes to about 15%.  To support this trend, some Governments develop regional small-scale mining centres with technicians, a mill and geologists to upgrade skills of miners and increase output.

Tangible support is urgently needed. This can range from access to training programmes on sustainable and environmentally friendly mining techniques to more information on ore quality to better integration into the mining value chain as well as access to finance.
However, putting the spotlight on small scale producers does not proclaim the demise of multinational mining conglomerates. First, small-scale mining is mostly practiced in alluvial or shallow deposits and not suitable to deep underground deposits. Big mining companies also bring valuable technical skills and are able to contribute to large scale infrastructure developments with the potential to create wider economic development opportunities.
The onus lies mainly on Governments to ensure that large companies and artisanal miners can happily coexist.
Governments need to implement clear strategies for their extractive sector to make room for smaller, labour intensive operations as well as maximise the economic benefits of foreign investment.

 

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