Over 45 million artisanal and small-scale miners (ASM) operate in 80+ countries, a testament to their resilience and resourcefulness. Including their families, 225 million people are fully supported by ASM, 2.5% of the world’s population. The World Bank estimates that a further 134-269 million people sell food, clothing, shelter, and equipment in the sector, demonstrating the vast network of support and economic activity these miners generate.  

Artisanal mining can loosely be broken down into three categories:

1. Precious metals and stones: 20% of global gold, 80% of sapphires, and significant quantities of other precious metals and stones are artisanally mined

2. Critical minerals: 15% of cobalt, 5% of copper, and many other strategic minerals are mined through ASM

3. Construction materials: rock and stone quarrying is often conducted by artisanal miners

In short, the sector’s social and economic footprint is massive.

However, despite its vast scale and importance, artisanal mining is often misunderstood. These misconceptions, which we will explore in detail, hinder access to capital, impede legalization efforts, and complicate fit-for-purpose engagement approaches.

Misconceptions that impede access to responsible capital

Misconception 1: ASM formalization is too high risk for responsible investors

Formalization actually delivers commercially reasonable results that combine returns driven by productivity increases with significant positive social and environmental impacts. 

There are places where formalization is not feasible given intense conflict or corruption, and local risks can vary widely for any given project depending on the context, but a portfolio of formalization projects delivers results that make sense to investors as risks are spread.  Training miners to use better practices boosts productivity and financial returns. Transitioning miners to stable formalized business relationships lowers their vulnerability to corrupt actors and improves safety, environmental, and human rights adherence while catalyzing sustainable development in neighbouring communities, all equating to a positive impact.  Productivity and positive impact in aggregate swamp locally specific risks that are mitigated through savvy project selection.

Despite being starved of responsible non-predatory capital due to perceptions of risk, the potential for positive change is immense. As awareness increases, a robust investment marketplace featuring a variety of financing instruments will mature, offering a beacon of hope for the sector. Given that return and impact make sense in the context of risks, the future of responsible capital in artisanal mining looks promising.

Misconception 2: ASM is not viable for increasing critical minerals supply

Artisanal mining is a significant, largely untapped opportunity for critical minerals supply. Using largely manual processes, ASM generates 15% of global cobalt, 5% of copper, and meaningful quantities of other critical minerals.  Formalization includes equipping, training, and transitioning miners to good practices, which increases volume significantly, 2X, 3X in some cases even by 5X.  Recognizing global shortfalls in supply outlooks makes ASM an essential and attractive area for bridging supply gaps.

Misconception 3: ASM is very destructive 

In reality, both large-scale and artisanal mining can adversely impact the environment and local communities.

Impacts from ASM are much smaller than those from large-scale mining, given the relatively lower mechanization and smaller physical footprints of artisanal mining. Carbon footprints, in particular, are meaningfully lower for artisanal miners than for large-scale mining.

While there are specific environmental impacts, such as mercury use in ASM gold mining, that cause harm, it's important to note that these can be mitigated through formalization. The sector's commitment to replacing harmful practices with benign alternatives should reassure the audience about its dedication to environmental and social sustainability.

Misconception 4: Human rights are abused everywhere

There are undoubtedly sad situations that include child and forced labor in artisanal mining. Commonly cited examples include abuses in cobalt mining in the DRC, as well as in situations where mercenaries like the Wagner Group control mining. These sad realities are not the general norm across the sector. Poverty and vulnerability to corrupt intermediates may exist, but fundamental human rights abuses are essentially not in play.

Unsafe work practices may be considered a human rights issue. Lack of access to responsible capital makes it difficult to move toward safe practices in cases, resulting in a pattern of tragic accidents, like the Malian mine collapse in January, where over 70 miners died. Lack of safe work conditions differs from more fundamental human rights abuses, though, and is mitigated as formalization takes hold.

Misconceptions that impede access to legalization

Misconception 1: Artisanal mining and illegal are the same thing

Artisanal and illicit mining are fundamentally different. Artisanal mining is often an extension of neighboring communities, traditional work that has taken place for a very long time. As members of mining communities in the vicinity, ASM is part of the local economic and social fabric. By contrast, illegal mining involves corruption and bad actors who are often not locals. Examples range from Brazil’s Amazon region with illicit mining gold through to unlawful mining in South Africa and mining in parts of the Sahel controlled by mercenaries. Mining at the ‘barrel of a gun’ in these situations is very different from traditional community-based ASM.

Some countries do not recognize ASM as being legal or limit it to certain areas – this is a choice that does not reflect the fact that ASM has been on the ground for a very long time. Laws that recognize the difference between ASM and illegal mining are essential for enabling formalization and sustainable development while enhancing human rights by targeting police action against what is inherently illegal.

Misconception 3: Artisanal miners hinder large-scale mining

Artisanal miners were often working in an area before a large project arrived, with ASM often actually being a leading indicator of exploration that fosters large-scale mining.

Relationships between large projects and artisanal miners vary widely. 

Recognizing that ASM is often a traditional extension of communities, engagement and support of artisanal miners through large projects contributes to earning a social license and joint productivity. Conversely, conflict can result when large projects ignore the interests of artisanal miners or try to push them off land concessions. The bottom line is that artisanal mining helps large-scale mining. Like other stakeholders, relationships determine what collaboration looks like.

Misconceptions that impede fit-for-purpose engagement

Misconception 1: ASM is homogenous

In reality, ASM is highly diverse. There is strong gender and broader diversity in artisanal mining, which includes 30% women worldwide and 50% in Africa. There is LGBTQ+ representation along with broad cross-cultural participation. Women and different kinds of minorities face challenges that include potential violence and limits to their access to the best roles, but the starting point when considering the sector is that it is highly diverse and that barriers to equity can be targeted through formalization.

Conditions across the sector also reflect socio-economic realities in the different places where artisanal mining is found. This means that realities for miners range from very disadvantaged, including forced and child labor in some areas, to dignified work where artisanal miners are small business persons who can earn well. 

Misconception 2: ASM formalization doesn’t contribute to sustainable development 

Formalization involves a transition toward stable, predictable business relationships. For miners, productivity and dignity of work are enhanced, with productivity equating to financial value. 

Sustainable development naturally results for communities as the benefits of stable business relationships extend value, increased productivity multiplies value and capacity as well as infrastructure enhancements that may be part of specific formalization initiatives increases value. The bottom line is that formalization is actually a highly effective public policy and impact investment mechanism for extending gains through broader development.

In conclusion

Understanding realities in the sector is the first step toward targeting engagement in ways that make sense. 

When the realities of the sector are well understood, it becomes clear that:

1. Mining and impact investment that supports ASM formalization is commercially wise, combining returns with positive social and environmental impacts.

2. Legal frameworks that recognize and support the sector are a foundation for broader sustainable development as formalization takes hold.

3. Engagement approaches that respect the inherent diversity of the sector, where voices of miners and nearby communities are reflected in solution design, are critical for success.