Artisanal mining – a strategic sector

The professionalization of artisanal mining (ASM) is strategically essential.

With 45 million miners producing various minerals across 80+ countries, the sector delivers:

1. Critical minerals that are in short supply, including 10% of the world’s cobalt, 5% of copper, meaningful quantities of nickel, manganese, and rare earths, amongst other things

2. 20% of the world’s gold, 85% of our sapphires, and many other precious metals and stones 

3. Construction materials - rock and sand

Opportunities centre around professionalization, where direct productivity is multiplied in ways that improve lives, ecological impacts, and regional economies, all while de-risking the operations of large mining projects that artisanal miners often share land with.

Strategic opportunities 

The minerals that ASM produces and the outcomes that it generates are globally significant.

1. Geopolitical rivalries centre around secure critical minerals supply. The world needs to mine as much copper in the next 50 years as we have over the last 5,000, an eye-watering statistic that speaks to the need for tremendous growth and investment.  Other critical minerals require significant growth as well.  We have recently seen China leverage their rare earths refining dominance in trade negotiations with the US, and the US is now becoming a mining investor in an environment where private capital is not providing the investment needed to grow supply.  The strategic stakes couldn’t be higher.  In this context:

A. Training, equipping, and transitioning artisanal miners to good practices through professionalization multiplies productivity
B. Artisanal miners often share land with large-scale mining projects - collaboration on professionalization mutually de-risks operations
C. ASM is often an early indicator for large-scale exploration - frameworks that support equitable collaboration with mining majors can increase the effectiveness and the speed of exploration
D. Professionalization of ASM is cost and time-effective - for instance, it may take close to 20 years and $10B to operationalize a large copper mine, while it takes 18-24 months and $500K to change the dynamics of an ASM coop

Put simply, stable, predictable productivity can be significantly increased through a strong focus on professionalizing ASM.

2. Social and environmental impacts of ASM are reimagined as professionalization takes hold.  Amongst other gains:

A. Human rights adherence increases, ranging from child labor elimination to improved gender equity which decreases risks of sexual violence
B. The dignity of work is improved for miners, which includes better safety outcomes and poverty alleviation
C. Ecological impacts of mining are improved through better practices - mercury elimination, reforestation, reduced soil and water contamination, and mitigated impacts on biodiversity

3. Sustainable development is catalyzed as ASM is reimagined

A. Stable, predictable, and equitable business relationships cascade beyond miners toward broader economic activity in mining regions
B. As poverty is alleviated for miners, economic multipliers set in that catalyze broader growth
C. Capacity development for miners positions broader regional capacity development, which, of course, increases economic opportunities in the area

All told, ASM may be the largest commercially realistic opportunity area for delivering strategic value and positive impacts that is largely unfulfilled at the moment.  Recognizing the interplay of asset classes, awareness is rapidly increasing, and sectoral strategies will play out.

What success looks like

Transforming a large, diverse sector requires integrated, authentic strategies that combine value and impact in commercially reasonable ways.  Key elements include:

1. Democratization of access to capital – asset classes and transparent validation routines are foundational for building dialogue between investors and miners in ways that open the door for capital flows.  Recognizing that financial value co-mingles with a variety of positive external impacts that professionalization delivers, financial instruments that target the nature of the sector need to be developed.  Sustainability bonds are a natural opportunity area for at-scale financing.  With a $1 trillion sustainability bond market operating globally, leveraging practices and frameworks in ways that reflect the realities of ASM is a strong approach for engaging diverse investor segments. The Blended Capital Group, Veridicor, and Capital Hubs Canada are focused on standing up a digital marketplace with these characteristics, so that at-scale capital is delivered as investor-miner dialogue intensifies

2. Legal frameworks and public policies that support and encourage professionalization – government encouragement and support of legitimization, formalization, and ultimate professionalization recognize the reality that ASM is a strong source of local employment for 45 million people while also being a solid opportunity for catalyzing value and development.  From a regulatory perspective, governments that interact with ASM as a development opportunity, not as a tax grab, open doors for considerable opportunities

3. Clear standards on LSM-ASM relationships – risks as well as opportunities are often at the intersection between large-scale and artisanal mining. Clear standards and good practices around what collaboration looks like that are supported by investors, while making sense for assorted players in mining value chains, support professionalization as expectations around relationships are clarified.  

4. Flexible frameworks that engage miners in differentiated ways across the huge global sector – found in over 80 countries and involving tens of millions of people, ASM is highly diverse. Realities differ across places, ranging from abusive to dignified. Values, beliefs, and business conventions vary by place and are foundational for how business is conducted at local levels. Approaches and solutions for ASM professionalization are not one size fits all, and cannot be imposed on miners from a distance; they need to be collaboratively developed and put into place with the miners who will ultimately be the owners and operators of ASM activity

Democratizing access to capital, developing fit-for-purpose policies, and enabling flexible frameworks for engagement are not stand-alone activities, but three legs of a common stool that need to be considered and integrated in genuine ways in order to deliver the potential of the sector.

In summary

We need more critical minerals, underdeveloped countries need more development, large mining projects need to mitigate conflict risks, and miners themselves strive for dignified opportunities.  A focus on artisanal mining professionalization is not just smart business; it is strategic, with the potential for significantly increasing minerals supply directly and through the de-risking of LSMs, while improving lives, environmental, and economic outcomes associated with the sector. Success requires multiple integrated approaches that reflect the realities, the common challenges, as well as the locally differentiated realities of the vast sector. It is time.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

Interested in the companies shaping our sustainable future? See on illuminem’s Data Hub™ the transparent sustainability performance, emissions, and climate targets of thousands of businesses worldwide.