Artisanal and small-scale mining

Introduction

Artisanal and small-scale mining (ASM) is largely an informal sector with limited available information on production, revenues, operations and even location of activities. Regulation of the sector is often inadequate and its real contribution to a national economy is difficult to estimate.

In many resource-rich developing countries, artisanal and small-scale mining provides a livelihood for millions of people and is a major source of economic development for many rural and regional communities. ASM does not typically generate material revenues at the national level and is thus often excluded from EITI reporting. However, the EITI does require that an estimate of informal sector activity is disclosed (Requirement 6.3).

While the EITI has traditionally focused on the formal, large-scale mining (LSM) sector, it increasingly seeks to provide a more comprehensive picture of the contribution of the extractive sector to the economy, both formal and informal. This includes fiscal revenues, employment, exports, livelihoods, investment and contribution to GDP through linkage industries. Inclusion of ASM within the EITI process has the potential to improve citizens’ awareness of ASM activity, the issues associated with aspects of its operations, and support an evidence-based debate on the costs and benefits of ASM.

What is artisanal and small-scale mining?

While there is no universal definition, the OECD Due Diligence Guidelines defines ASM as: “formal or informal mining operations with predominantly simplified forms of exploration, extraction, processing and transportation. ASM is normally low capital intensive and uses high labour-intensive technology.”

According to this definition, ASM can include men and women working on an individual basis as well as those working in family groups, in partnerships, or as members of cooperatives or other types of legal associations and enterprises involving hundreds or even thousands of miners.” In some countries, a distinction is made between artisanal and small-scale mining, whereby ‘artisanal’ typically refers to pure manual mining while ‘small-scale’ may have fixed installations or use mechanised equipment. However, the diversity of ASM operations is vast and generalisations are easily contradicted. ASM can be carried out by men, women, youth and children.

Obtaining detailed information about ASM scale, dynamics and economics can be challenging and, even in countries where ASM research has been undertaken, data is often not well stored and rarely used for policy and decision-making purposes. Most ASM activity is informal or illegal in nature. Production, therefore, may be clandestine and hidden from official view or registration. The ease of quantification of production is often linked to the level of informality/clandestine activity in the sector, the levels of illegal trade, and the nature of the materials extracted. The higher the value and portability of the material, the more likely it is to be traded illegally and the harder it is to quantify production. Miners may be migratory, work may be seasonal, and mines may be short lived, all of which lead to erratic production and challenges in quantifying the scale and value of the sector. At the same time, more professional small-scale miners may be leading rural entrepreneurs, employers and exporters.

Often, ASM is further subject to both official charges as well as an informal system of taxes and payments in which rents are sought by government agents, traditional authorities, security forces, and other actors in the ASM mineral supply chain. Thus, despite being a major source of mineral production and an engine of economic activity, especially in rural areas, the true value of ASM is rarely captured and the sector typically fails to generate official revenues for the state.

Coverage of ASM in EITI reporting

The EITI International Secretariat conducted a stocktake of ASM disclosures in EITI reporting in 2018 and found that ASM is relevant in at least 31 EITI implementing countries and among those, 16 countries[1] have included objectives related to ASM in their work plans.

Stakeholders’ representation and engagement in the EITI process remains uneven. Governments are generally well represented by regulatory agencies frequently participating in MSG meetings, but participation of representatives from artisanal mining associations, and formal or semi-formal trading companies remains limited.

With regards to disclosures, EITI reporting is overall beginning to make references to existing studies and official statistics on the estimate of the ASM contribution to the economy, such as employment figures. The data is however generally out of date, unreliable and often not sufficiently detailed. The stocktake also found that only a few countries with EITI objectives related to ASM have designed a comprehensive approach to cover ASM in EITI reporting. Finally, the review noted that EITI Reports are widely disseminated in mining areas, and artisanal miners and communities affected by artisanal mining are in many cases aware of the EITI process.

Examples of ASM in EITI reporting in EITI reporting

Democratic Republic of Congo: ASM is widespread and estimates of the number of people employed vary between 500,000 to 2,000,000. The 2012 report showed that mineral smuggling from artisanal mining was still costing the government significant revenue. Lost revenues due to mineral smuggling were estimated at USD 8 million per year for gold alone.

Ghana: According to Ghana’s 2012/13 EITI report, around 34% of Ghana’s total gold production of around 4.3 million ounces was produced by ASM with miners paying no royalties or taxes.

Central African Republic: Rough diamonds are the country’s leading mineral export and exploitation has so far been done exclusively through ASM. According to the Kimberley Process Certification Scheme, rough diamond exports stood at 371,000 carats, worth USD 62.1 million, in 2012. That figure represents about half of CAR's total exports and 20% of budget receipts. Visit CAR's country page here.


[1] Burkina Faso, Central African Republic (suspended), Colombia, Cote d’Ivoire, the Democratic Republic of the Congo, Guyana, Mali, Myanmar, Nigeria, the Philippines, Senegal, Tanzania, Togo and Zambia.