The World Gold Council and its member companies support the responsible mining and trading of gold from all legitimate sources, including artisanal and small-scale mining (ASM). The responsible development of gold resources both through large-scale mining (LSM) and ASM, especially when coupled with sound governance, has the potential to deliver broad social and economic benefits to individuals, communities and countries.
There has been a significant growth in artisanal and small-scale mining in many developing countries over the last twenty years. ASM issues have become more salient in public policy debates as a result of the adoption of instruments designed to prevent the funding of illegal armed groups and from the implementation of the Minamata Treaty on reducing mercury in the environment.
In many situations, the nature of the orebody means that it may not be suitable for LSM or ASM activity. In all cases, it is important for host governments to consider how best to ensure the optimum model to develop an orebody, to support sustained social and economic development for nation and the local community.
Large-Scale Mining is very different from Artisanal and Small-Scale Mining
The impacts and social context for ASM are very different from those for LSM operations. Large-scale gold mining is governed by a framework of regulatory controls, permits and inspections and is subject to health, safety, social, environmental, closure and governance standards. Large-scale mining involves the payment of royalties and other taxes to governments in return for developing publicly-owned mineral resources. Leading LSM operators also implement international standards, in areas like disclosure of payments to government, cyanide management and conflict-sensitive business practices. Moreover, LSM typically requires significant upfront investment conducted over many years, in order to bring to account what are often geologically or metallurgically complex gold resources. LSM firms will also often be required to deploy financial and technical expertise and resources without which it would not be possible to develop a deposit for the benefit of the host country and its people.
Diversity of ASM contexts
ASM is practiced in many forms and contexts and provides livelihoods for a significant population who may not have access to viable alternatives. However, ASM is also often poorly policed by local authorities, either due to an absence of a regulatory framework, a lack of enforcement capacity or corruption. ASM is, as a result, often associated with social conflict, human and labour rights violations and environmental degradation. It commonly lacks adequate health and safety safeguards and there are often a high number of fatalities and injuries in the sector. Poor social and environmental practices often negatively impact on local communities.
ASM mining often occurs in locations where there is no LSM presence. Where legitimate ASM activities and LSM occur in the same vicinity, there can be mutual benefit in working collaboratively towards more positive and sustainable outcomes and in seeking to avoid conflict.
In-migration and criminal activity associated with ASM
Lack of livelihood opportunities in a region can lead to high levels of migration in to active ASM areas, and more so if a large mine, offering the potential for formal employment, is being built or operated nearby. Such an influx increases population density, pressure on water resources and food production and may cause social tension or conflict. Although these impacts are not directly attributable to the LSM operation, companies should work with local authorities and communities to minimise these pressures.
In some countries, illegal ASM is associated with wider criminal activities. Where there are concerns about criminal activities or about the presence of illegal armed groups associated with local ASM, the large-scale mining industry has a responsibility to ensure that it does not support or facilitate such activities.
It is difficult for large-scale mining companies to consider co-existence models on their concessions, if the concession owner may then be held liable for environmental damaged caused by ASM operators. LSM companies may also be deterred from a more pro-active stance by concerns about potential liabilities and significant reputational damage arising from any association with unacceptable social and environmental practices. We urge national governments and other actors to create frameworks to address these concerns and to facilitate the engagement of large-scale mining as a partner in the improvement of the ASM sector.
Potential roles for large-scale gold mining companies
The leading role of governments in formalising ASM and in improving social and environmental practices is of fundamental importance. We recognise, however, that where a host government provides such leadership other actors in civil society and business may have an important supporting role to play. Any such role for LSM companies will vary according to the local context. However, as part of their role in supporting dialogue and engagement, large scale gold mining companies may consider a number of options including:
- advocating for formalisation and legitimising ASM activities and supporting governments and other actors in establishing legal and regulatory frameworks for the ASM sector
- working with governments and other actors to combat breaches of human rights associated with abusive ASM activities; to promote awareness of, and access to, technologies that reduce environmental and worker safety risks and improve yields; and promoting awareness of the dangers of the worst forms of child labour, modern slavery and gender-based violence
- recognising artisanal and small-scale miners as stakeholders, including when undertaking site-level impact assessments; community engagement and considering social investment priorities
- fairly compensating established artisanal and small-scale miners if they are legitimately physically or economically displaced by the development of a large-scale mine and, as appropriate, supporting alternative livelihood initiatives
- utilising the Voluntary Principles on Security and Human Rights in implementing security strategies
- implementing the UN Guiding Principles on Business and Human Rights in their interactions with ASM and local communities, including through the provision of appropriate grievance mechanisms
- considering facilitating access to legal markets for legitimate ASM production, including where environmental, social and governance due diligence requirements have been met, accepting gold-bearing material for processing
- where such intelligence becomes available, passing information to national authorities and national and international law enforcement agencies about the activities of criminal organisations intended to intimidate, extort or exploit, ASM groups
- reviewing the potential for providing assistance with mercury replacement and the facilitation of capacity-building to improve ASM practices and incomes; and
- giving consideration to relinquishing, where appropriately supported by national authorities, concession areas that are not viable for large-scale mining activities; and seeking to work with local authorities to pre-empt any related influx of miners that might undermine the sustainability of such schemes and the social fabric of the local area.
OECD Due-Diligence Guidance on Responsible Mineral Chains and its Application to ASM
The World Gold Council, working through a consultative, multi-stakeholder process, published the Conflict-Free Gold Standard in October 2012. This provides support to large scale gold mines in operationalising the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
We strongly support the OECD Due Diligence Guidance and were closely involved in the drafting of the Gold Supplement. The Guidance aims to strike a balance. On the one hand, it seeks to raise due diligence standards; on the other, it seeks to ensure that ASM producers, who may find it difficult to meet these standards, are not excluded from the formal market. If the Guidance is to be effective in meeting its objectives over the medium term, this tension needs to be addressed and the capacities of ASM producers to meet due diligence requirements raised. It should be noted that all indications are that the great majority of ASM producers are not directly linked to unlawful, armed groups or other criminal entities but are often subject to their influence.
We support access to gold markets for ASM operations which are not linked to the funding or facilitation of conflict or criminal groups or poor safety, labour or environmental practices. We recognise the constructive efforts of those governmental and civil society entities that are working, in good faith, to improve ASM conditions and practices and to facilitate access to licit markets We are committed to working in close co-operation with the London Bullion Market Association (LBMA), whose Responsible Gold Guidance sets out due-diligence processes and requirements that refiners should implement for accepting gold from ASM sources.
We welcome and support initiatives designed to enable legitimate ASM operations to discharge reasonable due diligence enquiries such as the CRAFT Code and, for larger or more sophisticated, operations, the Fair Trade and Fair Mined certification schemes. We also support the World Bank’s DELVE initiative designed to improve understanding of the presence, structure and dynamics of artisanal and small-scale mining.
Central bank domestic ASGM purchase programmes
Formalising the sector in a responsible way can increase prosperity and alleviate some of the socially and environmentally damaging issues that beset the sector. Through the use of domestic ASGM gold buying programmes, central banks of gold-producing nations wield market power that can be used to foster and enforce lasting change through implementation of international standards and best practices. The World Gold Council has examined four countries whose central banks actively purchase gold from domestic ASGM production – the Philippines, Mongolia, Ecuador and Ethiopia – and found that these programmes have the potential to encourage responsible ASGM practices and confer economic benefits.
The advantages are:
- Central banks can buy gold using local currency rather than diminishing their international currency reserves.
- They can spur economic development by supporting the livelihoods of responsible artisanal and small-scale miners.
- They can leverage their market power to formalise smallscale mining, discourage damaging environmental and social practices and support due diligence requirements so that artisanal gold can be sold on the international market.
- They can provide small-scale producers with greater confidence about the terms on which they trade their gold and make them less vulnerable to extortion or intimidation by criminal groups.
- They can foster best-practice across the entire gold supply chain and reduce the influence of illegal actors by providing benefits for those who comply with standards of governance.
For the purposes of this statement, the following definitions are used:
Alternative livelihoods: the development of different sources of income for individuals and families who are engaged in illegal mining or other illegal activities which have damaging social or environmental impacts in order to help divert them from these livelihoods.
Artisanal and Small-Scale Mining (ASM): ASM is a collective term embracing both small scale and artisanal mining. It covers formal or informal mining which is characterised by low capital intensity and high labour intensity and relatively simple methods for exploration, extraction and processing. ASM can involve men and women working on an individual basis as well as those working in family groups, in partnerships or as members of co-operatives or other types of association. This does not include activities which are criminal, such as trespassing or armed incursions into active mining areas to steal mined or processed materials, or organised schemes involving employees to steal refined or processed material.
Formalisation: Formalisation is a process that seeks to integrate ASGM into the formal economy through regulatory and policy reforms designed to address many of the negative associations of ASM. Legalisation is an important dimension of this process.
Illegal Mining: illegal mining refers to mining or processing activities which run contrary to nationally or regionally applicable laws, including mining in areas allocated for use by other rights holders (where the rights holder has not given their permission for such exploitation) or where the methods used for extraction are in breach of accepted social and environmental laws or regulations.
Large-Scale Mining (LSM): Large-scale mining refers to gold mining operations that are not considered to be artisanal or small-scale.
Legitimate Artisanal and Small-Scale Mining: The OECD Due Diligence Guidance Supplement on Gold sought to explore the issue of ‘legitimacy’. We understand ‘legitimate’ ASM to refer to artisanal and small-scale mining which is undertaken consistent with applicable laws – i.e. where ASM activities are conducted within a legal framework and where artisanal miners can establish a right to mine in an area; or where a legal framework covering ASM does not exist, where such activity is undertaken in good faith and does not run counter to the legitimate property rights of others and occurs with due regard to the environment, safety, health and human rights. A further element in determining ‘legitimacy’ may be whether the relevant miners seek formalisation, where this is a viable option.