Panning for gold

By Rob Karpati, The Blended Capital Group

Artisanal scale mining (ASM) often shares land concessions with large-scale mining projects. As extensions of neighbouring communities, these miners are a unique stakeholder group that are integral for the community relationship focus of larger mining companies.

There are 45 million artisanal miners operating in more than 80 largely underdeveloped countries around the world. Including their families, there are more than 200 million people who are fully supported by ASM, and the World Bank estimates¹ that another 134-269 million people sell food, shelter, clothing and equipment into the sector.

These figures show that ASM is often deeply integrated into nearby communities, with not only the miners themselves, but also the businesses that sell products and services to the miners often originating from these communities.

At a global level, 30 per cent of artisanal miners are female, and in Africa it is more like 50 per cent – another statistic that underscores the community inclusion side of ASM.

In the past, ASM was often on the ground before large mining projects were contemplated, and may even have been there for many years prior. The fact that ASM is present and active can be an exploration indicator for potential large projects, indicating the possibility of valuable mineral reserves.

Shifting focus to Australia

Companies like Rio Tinto, BHP and Fortescue, along with many mid-sized mining companies, operate projects across all continents. As a country with a strong mining industry, there are many Australian mining majors that also operate on international and global scales.

A basic reality that many of these projects face is that artisanal miners are present on or near their formal land concessions. How artisanal miners are engaged and what collaboration looks like can significantly affect conflict, PR and legal risks for large projects, while also directly impacting their ability to earn social license with broader communities in the vicinity of projects.

Recognising that artisanal miners are unique stakeholders as well as potential extensions of communities is a key part of ensuring that relationships are geared to long-term success and win/win value.

Transparent dialogue and collective solution design may lead to large projects supporting ASM activities in different ways:

  • Training and supporting the implementation of good practices in and beyond safety for the artisanal miners, given the natural expertise and resourcing that large projects have
  • Equipping artisanal miners to increase their productivity while also reducing risks is a natural approach toward LSM- ASM collaboration
  • Supporting formalisation paths for artisanal miners, where they are organised in ways that make sense to them while specifically reducing vulnerabilities to intermediates and potentially corrupt value chain players
  • Remembering that artisanal miners and those who sell various goods and services to these miners may be community members. This is also a natural opportunity area for integrating local content strategies, which may broaden sustainable development in the region while directly adding value to artisanal miners, to the large project itself and to small businesses in local communities

Success starts with open earnest engagement, and remembering that ASM may have been on the ground first and are part of the broader context of earning social license can be a vital part of stakeholder engagement.

For projects that are on or adjacent to Indigenous lands, respecting and collaborating with artisanal miners may also be instrumental in moving toward free, prior and informed consent as trust is gradually earned.

Engaging with ASM

Successful engagement with artisanal miners goes well beyond the social teams that are often part of a large project’s organisation.

When thinking in terms of equipping, training and facilitating the implementation of strong practices forartisanal miners that share land concessions with large projects, dialogue that includes social teams need to be followed by support from different parts of large mining organisations. This may mean engineers, geologists and various other core mining professionals that support technical upgrades of various kinds. It may also mean lawyers and more administrative- oriented support staff when it comes to facilitating formalised organisation of artisanal miners in ways that reduce their potential vulnerability.

Support functions like procurement may also be involved, depending on whether there are opportunities to leverage local content strategies with ASM miners sharing land concessions.

A key thing to remember is that fit-for-purpose support may come from different parts of a large mining organisation, depending on what solutions are agreed to and what needs to be delivered.

Artisanal miner looking for goldASM engagement in practice

Mining news can have a tendency to focus on failures, and so both success and failure when it comes to engagement with ASM has been on display.

In Peru, conflict in the Las Bambas and Tia Maria projects has been broadcast, with a variety of root causes and community concerns that include issues with artisanal miners found on land concessions.

In Tanzania, Barrick Gold engaged security in removing artisanal miners from its land concessions, allegedly resulting in the deaths of dozens of miners and the result of this situation currently being litigated in Ontario courts.

Successful engagement does not often tend to make its way into the news, for the simple reason that success results in quiet collaboration. Newmont Gold is an example of a large mining company with successful relationships with artisanal miners.

The economic results for large projects in cases of both success and failure are clear – collaborative productivity enhancements or value destruction through conflict.

For artisanal miners themselves and for neighbouring communities, outcomes are similarly clear, with collaboration resulting in enhanced dignity and the potential for sustainable development, whereas conflict results in further immiseration.

The business case for artisanal miner engagement makes sense and can be estimated. Project economics are improved in a number of ways:

Reduced conflict risk

Put simply: blockades cost money, and violence costs more money. Materially reducing conflict risk improves project net presnt value (NPV) as these risks do not play out on projects.

Reduced security costs

Collaboration can change the profile of what security is needed and what security it makes sense to have.

Enhanced productivity through collaboration

Collaboration can have exploration and broader benefits.

Faster path to land rights

Social license that is partly earned through ASM collaboration is the fastest, lowest risk way of securing concession rights.

Along with the benefits of relationships angled towards collaboration instead of conflict, building trust with artisanal miners can contribute to earning social license with broader communities in the region, keeping in mind that artisanal miners are often extensions of these neighbouring communities.

Impacts on results can be very significant, along with external benefits that will result for artisanal miners as well as for communities in the area of influence of a project. Being disciplined and clear on theory of change implications that  these impacts is an essential part of developing the understanding that is key to success.

As with broader community engagement that leads to earning social license, successful engagement with artisanal miners needs to be culturally grounded in the large mining company.

Respecting and valuing the perspectives of artisanal miners is a starting point for earnest dialogue that seeks out win/win solutions. Patience is essential – the speed of trust cannot be bypassed as part of this dialogue.

Looking deeper, solutions that build mutual LSM-ASM value require flexibility in LSM functions. Value is long term and may require doing things that are outside of leveraged LSM business practices, such as collaborating offline and in environments with legal contracts are not as formally documented as they may be with other stakeholders. This might be necessary in a situation where a contract supported by digitised business flows may not be fit for purpose with potentially illiterate artisanal miners who do not have the educational context for engaging on that level.

Taking a proactive stance on engagement with artisanal miners who share land concessions with large mining projects brings value to the large mining community, to artisanal miners themselves and to broader communities that are in the area of influence of the project.

Success requires earnest, respectful engagement and collaborative solution design that integrates the voices of artisanal miners. This work is essential for delivering sustainable value and development as trust becomes the norm in relationships.

Large-scale projects are natural focal points in formalisation initiatives, which also require highly capable socio-economic, data, safety, mining practice, digitisation, communication and engagement expertise.

Delivering success makes strong business sense as conflict and other risks are converted into collaborative productivity improvement opportunities for large projects, catalysing potential sustainable development in neighbouring communities and enhancing both dignity and productivity or artisanal miners themselves.

Footnotes:

  1. 2020 State of the Artisanal and Small-Scale Mining Sector, https://delvedatabase.org/uploads/resources/Delve-2020-State-of-the-Sector-Report-0504.pdf

 

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