Quick Insight: Formalisation - the answer to artisanal mining?
Or how we can make sure our supply chains are values aligned
We have all seen the images of artisanal miners at work. Dirty, dangerous work, with limited equipment and few if any safety standards. And, behind the scenes, extensive exploitation, and in many countries organised crime.
In many cases the ‘solution’ is expressed as some form of don’t use the products they produce. But, is that really viable?
Once artisanal product is mixed with product from other sources, we cannot tell the difference. And believe me, the global supply chains for metals and minerals are long and complex. A better solution looks to be to try to bring artisanal miners into the mainstream. Which brings us to finance and the law.
Artisanal and Small scale Mining (ASM) is a massive global industry that we cannot ignore. To quote PACT :
“ASM provides a vital livelihood for nearly 45 million people around the world, with tens of millions more people also dependent on the sector, including family members and small business owners along the ASM supply chain. Artisanal mining is an important driver of development in communities from Africa to Asia, where there are often few other opportunities available for generating income”.
It’s a good bet that a proportion of many of the minerals and metals you use everyday will have come from artisanal miners. This covers everything from the better know cobalt, through tin, tungsten & tantalum to gold, gemstones and even sand.
We asked Rob Karpati from The Blended Capital Group, to write us a series of blogs on ASM, and how the challenges it poses can be resolved. Rob is now on blog three, starting to look at the solutions. His previous blogs looked at the scale of ASM globally, and its contribution to gold production.
As Rob argues, one solution is to formalise the sector, making it possible for the miners to legally earn a living. This is a good solution, but we need to recognise that each location has its own specific challenges - there is not a single catch all solution.
Rob’s latest blog is on what the formalisation process actually involves, and why it’s much more complicated than you might first think. If the process is too complex, bureaucratic, and time consuming, the miners will just ignore it.
There are broadly two reasons why investors should care about finding a solution to the challenges in ASM. One relates to fairness, ASM opens up communities to exploitation. The second reason is, if we care about supply chains, then we need to care about where our raw materials come from.
The reality is that we are going to rely on mining to deliver the raw materials we need for the Sustainability Transitions. And, our supply chains are coming under greater attention. Not just from a social perspective, but also legally.
This means the challenges around ASM will become, if anything, even more prominent. The solutions are not easy, but they can bring benefits to us all. This is something that everyone is sustainable finance needs to care about.
You can read Rob’s full blog here.
And don’t forget to look out for our comments and thoughts on all things relating to Sustainability Finance in Notes