Artisanal mining — sector strategies for impact

Artisanal Mining.  Small Scale Agriculture.  Construction.  Tourism.

Regional, country and global economies include a wide variety of intersected sectors.  When we think about sustainability strategies and how to shift impacts in the context of value, we need to remember how these strategies will be deployed in specific sectors of the economy.

Luc Lapointe and I were at COP16, the biodiversity COP, in Cali last October.  We heard and saw conversations about hundreds of specific sustainability-related focus areas.  Many discussions were about the need for money in order to support very important impacts that they will deliver as soon as capital can be brought to bear.  At the same time, we saw many financial institutions and investors who were saying that they were open-for-business, just needing to see sustainability-related requests for money in the financial terms that they speak in the course of running their investment operations.

There were two things that we didn't see a lot of:

1. sector specific approaches for delivering sustainable impacts given in the context of their business realities

2. dialogue based on a common language between investment and sustainability professionals

Reflecting on what we saw, we understood that our work needs to be grounded in sector-specific terms using the language of investors in order to gain traction.

What does this look like in artisanal mining (ASM)?

Sectoral realities – the starting point

There are 45 million largely informal artisanal miners operating in close to 100 countries.  The sector reflects the inherent diversity of the countries where it is found, with outcomes that range from dignified through to extremely sad. 

What is in common across most of the sector:

1. lack of legal recognition where regulatory frameworks reflect the realities of the sector

2. lack of access to non-predatory capital

3. lack of engagement from global experts who support ASM professionalization in flexible ways given local realities

4. lack of collaboration between ASM and large-scale mining (LSM), even as land concessions are often shared

Recognizing that these gaps impede the sector’s ability to professionalize, a starting point for sectoral strategies is to address each of these gap areas.

Legal recognition

With 45 million miners on the ground, it is clear that ASM is here to stay.  Public policy that recognizes the legality of the sector is a starting point insofar as it recognizes the obvious.  More apt policies recognize that formalizing artisanal mining is not a tax grab opportunity.  Why would miners go along with that?  On the other hand, professionalization that fosters sustainable development through the delivery of stable predictable business relationships that improve the dignity and productivity of work is a win/win.  Why wouldn’t legal frameworks both recognize legality while encouraging the professionalization that supports broader growth and value?

Access to capital

Miners lack access to non-predatory capital.  Many investors steer clear of ASM recognizing questions on human rights, legality, social and environmental impacts and corruption.  Opening doors for capital that supports commercially sustainable gains in value and impact requires a common ‘language’ between miners and investors, where asset classes, KPI’s and clear validation routines increase visibility for investors who need to make choices, while highlighting the potential for value that the sector represents, not just the negative narratives that have historically concerned investors.  Today’s technology – blockchain, tokenized assets, stablecoins – also provides mechanisms for engaging investors in ways that target participation, limit risk and increase visibility on operational dynamics and opportunities.

Engagement

ASM is found in close to 100 countries.  This simple fact means that it is highly diverse, including differing legal environments, business practices, values and beliefs.  Even within countries, realities are often different between one region and another.  Engagement that supports professionalization is not a one-size-fits-all process, but a targeted discipline where flexible frameworks change paradigms in ways that reflect realities on the ground.  Solutions aren’t imposed in other words, they are collectively delivered, with the voices of miners and nearby communities being central to defining, delivering and sustaining professionalization that supports value and impact.

ASM-LSM collaboration

Artisanal miners often share land concessions with large scale mining projects.  This is a simple fact, true whether or not ASM or LSM participants want it to be that way.  Collaboration is common sense in this context, where large scale projects support ASM professionalization, and potentially engage in a variety of commercial activities that includes off-take agreements and sharing of labor.  There are separate standards that outline responsible mining for LSM’s and ASM at the moment, with limited focus on what the intersection of the two sub-sectors looks like and how collaboration can deliver value and de-risk operations.  As LSM standards converge and as ASM-LSM dialogue increases, it is inevitable that practices and standards will strengthen significantly at the intersection of the two.

Theories of change / commercial realism

Show me the money.  Large scale miners will only collaborate with artisanal miners if it makes commercial sense.  Similarly, most investors will only consider ASM as a target opportunity if risk-return relationships make sense.  The fact that social, environmental and economic impact all result from professionalization may marginally change the perspective of some investors on risk-return, but at core commercial viability is essential for scaled capital flows.  In this context, theories of change need to not only outline paths to professionalization for artisanal miners, but the specific economic implications on diverse stakeholder groups that include large scale mines, investors and a variety of other stakeholders that may be impacted by transformations.  As understanding on ASM increases and as key enablers that range from legal frameworks through to LSM collaboration expectations mature, it is likely that the quality as well as the results of theories of change will continue to improve.

In summary

Sectoral strategies are essential for moving the needle on challenges that are essentially sectoral in nature.  In the case of artisanal mining, these include reimagined investment flows, legal frameworks, engagement approaches, ASM-LSM relationships and clarity on theories of change.  Why?  Because these have been gaps in the past that have limited gains in value as well as in social, environmental and economic impacts.  As these gaps are addressed, doors open for scaled professionalization, which means scaled value and impact.  The good news is that the joint work of The Blended Capital Group, Capitals Hub Canada and Veridicor geared toward standing up a digital marketplace for the sector is addressing these areas from a sectoral perspective where the differing elements integrate into a cohesive whole.

Although this article has primarily focused on sectoral strategies in artisanal mining, at a broader level the same premise holds true in other sectors, where strategies need to and can target the specific factors that are needed for delivering value and impact in the specific context.  In a post-USAID world this is all the more important, as commercially realistic sector-relevant approaches are essential for improving outcomes across a variety of contexts.

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