ASM’s growth rate is not achieved by regulatory policy

Artisanal mining continues to consolidate its place in the mining industry, as its scope and impacts are steadily increasing each year.

However, the growth of the sector has not been kept pace with the development of effective regulation of its activities. Similarly, the continued negative impacts of the sector have overtaken perceptions of artisanal mining and complicate the task of creating a sustainable solution for the sector.

Nonetheless, it is essential to underscore the continued need to find solutions to help artisanal mining make the transition to a safe, viable and sustainable vocation for those who wish to participate in the mining industry. One of these issues that is essential for the successful integration of the sector into the formal economy is the development of an effectively regulated artisanal mining market.

AUTHOR: Selina Zhuwarara, Principal Consultant at Autem Mining

While many challenges plague the artisanal mining sector, the sector’s vulnerability to market uncertainty plays an important role in the continued informal state of existence and poverty that has become characteristic of the sector. It is common in many host countries for artisanal mining that the artisanal minerals market is poorly regulated, there are multiple unregulated or poorly regulated traders / traders / intermediaries, and the market is completely unregulated. in some cases. It is essential that the artisanal minerals market is regulated and organized around a government-led system, especially in the initial stages of formalization.

It is a considered view that the disaggregation of the artisanal minerals market must be addressed if formalization efforts are to be successful. Artisanal mining can only become commercially and economically sustainable when miners receive fair value for their product and their efforts. Ensuring a fair, predictable and sustainable market structure would allow the activities of artisanal miners to fit into a defined value chain structure that is more manageable and the government to have influence over the main stages of the chain. valuable.

In addition, the certainty of structure and order in critical activities such as harvesting allows governments to formulate a viable model for regulating the sector. It provides the regulator with identifiable and determinable processes where checks and balances can be successfully introduced. To this end, governments must prioritize the development of market structures defined on how artisanal minerals can be purchased, traded and processed once mined.

It is well established that the difficulties faced by artisanal miners in accessing markets, their low production volumes and the vulnerability caused by illegality significantly erode the bargaining power of artisanal miners. In most cases, minors are subject to arbitrary price distortions, such as those encountered at the start of the COVID-19 pandemic.

When the initial national lockdowns were instituted globally, buyers / traders of artisanal products took advantage of the increased difficulty in accessing markets. As a result, traders and traders offered lower spot prices, especially in the gold sector. The level of vulnerability experienced by artisanal miners therefore perpetuates the cycle of tight capital, low liquidity and poverty in the artisanal mining sector.

The formalization of the artisanal mining sector inevitably requires that significant regulatory protections be granted within the commercial framework of the sector before the sector can sustain itself. The most viable way to gain such an understanding would be to host the trade in artisanally mined minerals under government-led systems. Depending on the extent and predominant structure of the artisanal mining sector in a given jurisdiction, governments should position themselves as direct and unique aggregators or as primary enablers in the aggregation of the sector’s products.

A direct and exclusive aggregation role would imply a closed system where the government is solely responsible for the sourcing and aggregation of all artisanally mined minerals for subsequent sale. This approach inevitably eliminates the involvement of other buyers and dealers in the industry. The main benefit of such an approach is that it gives regulators full market oversight and enables the government to better plan and manage the artisanal mining sector.

However, its main drawback is that the artisanal mining sector has already evolved and matured with the participation of private buyers and traders. The sudden elimination of private buyers can stimulate the artisanal black market and meet resistance, especially when the government purchasing system is not deemed favorable or is too cumbersome in its procedures. The single mandate approach also limits the potential participation and integration of the different roles that ordinary citizens can assume within the artisanal mining value chain.

On the other hand, the facilitating aggregation approach would involve a marketplace that welcomes and allows private buyers and traders to purchase artisanal minerals with the direction of a centralized government trading system or platform. The main advantage of this approach is that integrating and formalizing existing actors such as private buyers and traders is an inclusive approach that is likely to gain support from the sector’s value chain.

It also allows regulated competition between buyers, a scenario that would benefit artisanal miners. However, a downside of such an approach would lie primarily in the manpower and resources required to establish effective oversight over multiple dealers and traders. In addition, such a system would require well-designed criteria for the verification and licensing of private traders as well as sufficient oversight mechanisms to ensure that all transactions take place on the designated system.

It is important to note that the successful aggregation of products produced by the artisanal sector requires that the host governments of artisanal mining establish effective control over the sector. This inevitably requires the deployment of significant resources and manpower to give effect to the formalization efforts coupled with the establishment of a separate regulatory framework that highlights the operations of the sector.

Therefore, there is a need to put in place a framework of institutions specifically mandated to administer and manage the integration of the artisanal mining sector into the formal economy and to navigate and guide its interactions with the systems of the big economy.

It should be noted that a considerable number of host governments of artisanal mining make the common mistake of allocating inadequate resources and institutional capacities to formalization initiatives. The successful formalization of artisanal mining is an important development in any host country. This requires a long-term structure of resources, skills and institutional capacity to support and maintain the desired objectives.

The current state of the artisanal mining market cannot support sustainable formalization as the market lacks adequate structure and supervision. Therefore, artisanal host governments need to take a decisive lead in guiding the sector towards regulatory and commercial sustainability by organizing the sector. Formalization will not take root without addressing how the artisanal minerals market is structured and how it functions.

The formal integration of the artisanal sector into the mining industry is a relevant issue for the development of the mining economy in Africa. The ability to revive and nurture the artisanal mining sector is essential for inclusive economic growth and the accumulation of social capital within the mining industry. It is well established that most of the citizens of the mineral rich countries of Africa feel increasingly estranged from the workings or benefits of the mining industry.

Such perceptions have only served to deepen the intrigue and mistrust between the industry and its social partners. Expanding the opportunities of small-scale and artisanal mining can play an important role in demystifying the functioning of the mining industry and creating a common good and a shared goal among all stakeholders in the mining industry. within the industry.