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Artisanal mining formalization: in my backyard

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By Rob Karpati

· 5 min read

Communities make or break conflict-free mining projects. Dynamics are similar for major projects in any industry that bring the potential for community disruption – dialogue and trust are fundamental for acceptance. Earned trust is the glue that enables social license, transforming potential conflict into productive collaboration. Trust requires earnest transparent dialogue that leads to mutually agreeable solutions.

Any mining project generates a variety of concerns for neighbouring communities.

  • Will water, air or soil be contaminated?

  • Will the mine be an ugly blight in the region?

  • Will the mine impact local ecology?

  • Will the mine adversely impact communities? Are there adverse implications for pre-existing businesses like local farms?

  • Will the mind impact how traditional lives are lived in the community? 

Not in my backyard / Please in my backyard

When solutions are not clear or not accepted, lack of social license translates as a NIMBY mindset - not in my backyard. The social license has not been earned and conflict risks are all too real.

The challenge as well as the opportunity for a mining project is to earn trust, where transparent agreed-to solutions address community concerns, and where the community comes to believe that there is something ‘in it’ for them, which could be sustainable development gains based on local content, infrastructure development and broader industrialization strategies. Solutions may involve multiple stakeholders, ranging from local communities to governments to downstream value chain participants.

Earned trust and aligned solutions can change community narratives from NIMBY to PIMBY - please in my backyard. Social license has been earned and dialogue focuses on collaboration opportunities. Understanding the mutual value and transparency of solution design is key to earning trust. 

Wherefore artisanal miners

In underdeveloped countries, artisanal miners are a key stakeholder group in the process of earning trust. ASM is often a traditional extension of communities with locals working on small-scale surface-level mining in often highly manual and informal ways. ASM is found in over 80 countries, often sharing or neighboring large project land concessions.

The existence of ASM, found in an area before large-scale mining starts, is a leading exploration indicator that points larger companies toward the potential of meaningful reserves.

Large mining companies can have a range of relationships with artisanal miners sharing or neighbouring their land concession. Ignoring or being actively hostile to ASM can be caustic for trust, recognizing that artisanal miners were there first and are often extensions of nearby communities. Conflict results. The Las Bambas and Tia Maria projects in Peru are examples of what this looks like, where community trust was not built for various reasons, including conflict with ASM. The Barrick Gold project in Tanzania is another example of active ASM-related conflict, resulting in legal and PR risk for Barrick.

Collaborating toward mutual success with artisanal mining starts with recognizing the reality that they have boots on the ground, resulting in respectful dialogue that determines:

  • What does land sharing look like between large-scale projects and artisanal miners?

  • How will the LSM support ASM professionalization? Potential approaches may include training, equipping and collaborating on good practices with ASM through active formalization support that assists in the implementation of cooperatives or associations that provide structure to ASM

  • Recognizing that artisanal miners are often extensions of communities, how will ASM collaboration cross-fertilize with broader community engagement? For instance, are infrastructure development and local content strategies targeting opportunities for both artisanal miners and the broader community?

  • Knowing that artisanal miners were likely on the ground before large projects and that they may have been an early clue toward exploration opportunities, is there scope for collaboration on exploration? And on work in the LSM project itself?

Collaboration with ASM is not charity – it is simply smart business:

  • Various risks are mitigated for the large mining project – a conflict that potentially destroys value, along with associated legal and PR risks

  • Engagement with ASM is an integral element of earning broader social license with communities, recognizing that artisanal miners are often extensions of communities – mitigated risks result from broader social license of course

  • Collaboration based on agreed-to approaches has the potential of directly increasing productivity. At a basic level, artisanal miners are an early indicator for exploration, a foundational opportunity area for large projects; along with this, local content, shared labor, services and other strategies can directly support productivity

  • Investors care about social risks and support responsible mining practices because they directly increase value in the long-term – a strong demonstrable focus on a social license that includes collaboration with ASM increases project attractiveness for investors, potentially lowering barriers to capital access and cost

  • Downstream customers care about social risks and support responsible mining practices given reputational risks that result from situations where social and/or environmental norms are abused – demonstrating responsible behavior that includes collaboration with artisanal miners can contribute to positive relationships with refiners and downstream customers

Supporting the professionalization of artisanal miners directly increases the productivity of these miners as they are equipped, trained and transitioned toward good practices. The very large majority of this productivity increase should accrue to the miners themselves, who are often relatively disadvantaged, but productivity increases based on collaboration may position joint value through royalty-sharing schemes.

Although ASM support and collaboration require upfront and ongoing cost and attention, the above topics translate into tangible value that can be estimated in business cases given theories of change.

The bottom line: it’s their backyard

The bottom line for any large mining project is clear – NIMBY destroys value, PIMBY adds value. Earnest engagement that results in social license changes narratives from potential conflict toward collaboration, economically smart work. Where artisanal miners operate on or near the land concessions of large mining projects, they are an important part of this work, a strategic stakeholder group that can contribute toward broader trust and a PIMBY narrative when large companies collaboratively engage in ways that support their professionalization – after all, they were there first, it’s their backyard.

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.

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About the author

Rob Karpati is a multi-national finance leader, currently serving as Partner and Senior Advisor to The Blended Capital Group. His focus is on delivering significant positive social and environmental impact through the definition and delivery of paradigm altering approaches to the global artisanal mining sector based on commercially realistic formalization methodologies.

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