The future of artisanal mining: formalising an informal trade?

Small-scale mining in DRC. Credit: Lionel Healing/AFP via Getty Images

The world’s demand for minerals to power the ‘green economy’ continues to drive the production of mined commodities. Although large-scale mining operations are supplying - and will continue to supply - the bulk of these resources, small-scale mining operations are becoming increasingly common. 

However, many of these small-scale miners operate within a legal grey area. This creates something of a dilemma for western consumers and the regulatory authorities within the source countries. While demand for all metals continues to rise, there are wider societal concerns about the environment as well as the ethics of supporting the activities of these miners. 

This is particularly evident in the case of gold and cobalt mining, where artisanal and small-scale gold mining (ASGM) have created an issue with toxic mercury waste. Research at Japan’s Ritsumeikan University and the University of Tokyo suggests that there are “about 10 to 19 million people involved in ASGM activities in Asia, Africa, and Central and South America.”

In Brazil, the clash between illegal gold miners in the Yanomani reservation and the government goes back decades. Indeed, around half of Brazil’s gold exports are estimated to be illegally mined. But while “wildcat” mining on the reservation has long been illegal, with thousands of gold miners evicted in 1992, a blind eye was turned to these activities by the former right-wing president, Jair Bolsonaro. 

Now, with the inauguration of president Luiz Inácio Lula da Silva in January, the tide has again turned against illegal mining. In April, Brazil’s indigenous affairs minister Sonia Guajajara called for penalties to be applied against the importing countries and companies that support the illegal gold trade. 

Supreme Court judge Justice Gilmar Mendes also granted an injunction for a crackdown on the illegal sector. The injunction suspends the currently legal practice of buyers accepting the origin of purchased gold based on paper receipts and the word of the seller. The government has until July to establish a new regulatory framework.

To the west of Brazil, Ecuador’s conservative President Guillermo Lasso’s administration has also ordered a crackdown on illegal mining, declaring it, “a national security threat with links to money laundering, and drug and arms trafficking.” 

The government claims to have identified illegal mining camps in at least 21 of the country’s 24 provinces since 2000. In February, the Monitoring of the Andean Amazon Project (MAAP) reported that in just five years, more than 1,620 hectares of rainforest had been destroyed due to mining – both legal and illegal – in key areas of the Amazon that were being monitored.

Although the government is trying to boost the legal mining sector while curbing illegal mining, president of the Ecuadorian Chamber of Mining Maria Eulalia Silva conceded to Reuters that, “illegal mining could yet put the legal mining industry at risk, by deterring investors due to security concerns. It is no secret that the Ecuadorian state does not have sufficient capacity to deal with illegal mining in general.”

However, advocates of artisanal mining argue that small-scale miners are merely trying to make a living in difficult circumstances. They suggest that they are, in fact, just as much victims of the industry as indigenous peoples. Indeed, in much of Africa small scale mining is the sole means of livelihood for millions of people. 

This is certainly the case in Ghana, the Democratic Republic of Congo (DRC), Tanzania, Cameroon and Zimbabwe, where gold miners face similar mercury pollution hazards as in Latin America. Ghana is Africa’s largest gold producer, with ASGM accounting for 40% of all the 129 metric tonnes per year of gold produced in the country. Its social footprint is huge.

Prince K. Bansah, a Ghanaian PhD research student at the University of Lincoln, estimates that ASGM employs “approximately 1 million people in Ghana with an additional 5 million people’s livelihood dependent on its proceeds.” But regulating this unlicensed mining sector presents an enormous challenge to the Ghanaian government, which finds itself unable to enforce even its current mining laws. “About 85% of artisanal and small-scale mining operators have no license to operate. This is because of the long hours it takes to process mining license applications,” Bansah said.

Faced with these bureaucratic obstacles many would-be licensed miners see little alternative other than to engage in the unlicensed sector. The financial rewards for engaging in this sector are tempting. “An average Ghanaian can generate an average income of $3 daily. This compares with $0.6 per day as a farmer,” he said. 

An additional incentive is that ASGM can take place year-round, while farming is highly dependent on the seasons. However, ASGM in Ghana is in danger of falling victim to its own ”success” as illegal gold mining becomes more mechanised. Since 2000, the arrival of Chinese miners has exacerbated the degradation of the area. Bansah says the heavy equipment and larger-scale activities now in use as a result of the Chinese arrival are decimating whole plantations in Ghana’s “cocoa belt” Ashanti Region. 

Meanwhile, the DRC produces 70% of the world’s total of mined cobalt, with the majority of it coming from large scale mines. However, artisanal miners supply an increasing proportion of this, leading some in the metals industry to question whether now is the time to embrace the sector. 

Last December Michele Burlington, Microsoft chief of staff, technology and corporate responsibility, visited the Mutoshi artisanal mining site. This site is vast, with up to 15,000 miners, including children working at the mine in highly dangerous conditions. Andy Home, a metals industry analyst who reported on the visit for Reuters, said that until its closure in 2020 due to coronavirus restrictions, the site marked a successful pilot scheme for formalising artisanal workers. However, even this semi-formal artisanal mining arrangement has now deteriorated, with more traditional mining techniques planned for the future.

This deterioration endangers the DRC government's attempt to realise its vision of integrating the entire artisanal cobalt workforce into the official sector. The vision was announced in 2021 with the launch by the government of the Enterprise Generale du Cobalt. It aimed not only to formalise the sector, but to become the buyer of all its output. 

However, in little less than a year, the initiative has floundered on the back of numerous political difficulties. The resultant inability of the DRC government to regulate the country’s informal cobalt mining sector remains problematic for the West. It still needs the DRC's cobalt for a wide range of consumer electronics, including mobile phones and laptops, not to mention electric vehicles (EVs).

There have been moves by the electronics industry to reduce its reliance on cobalt. For example, EV makers have made some strides towards adopting non-cobalt battery chemistries such as lithium-iron-phosphate. However, around 74% of the EV battery market still uses the metal. According to UK-based trade association The Cobalt Institute, this is because the metal is favoured for its energy density, safety and performance attributes. Complicating matters still further is the Memorandum of Understanding (MoU) the US signed in December with DRC and Zambia to jointly develop a supply chain for EV batteries. The US statement said the aim of the MOU was to “support the DRC and Zambia’s goal of building a productive supply chain, from the mine to the assembly line.” 

But although the statement claims that the US is also committed “to respect international standards to prevent, detect, and take legal action to fight corruption throughout this process,” about the deal ultimately acts in the US’ favour, protecting the supply of a precious resource important in its energy transition. As the statement emphatically reminds, “These resources...are crucial components of the urgently needed global energy transition.” 

The EU is similarly determined not to be left behind in its race to secure green metals. Last December, the outlined its Critical Raw Materials Act, aiming to strengthen the EU’s raw material supply chains. A study from trade association Eurometaux projects Europe’s 2030 energy transition goal will require between 10,000 and 20,000 tonnes of cobalt in 2030. This could rise to 50,000-60,000 tonnes in 2050, equivalent to up to 350% of today’s European cobalt demand. 

A European Commission statement addresses this by acknowledging that “it will be crucial for the EU to embed critical minerals in the development of strategic partnerships or trade agreements with cobalt-rich countries, such as the Democratic Republic of the Congo and Australia”. 

The “mood music” from Western leaders is abundantly clear. No matter how often and how loud concerns about human rights in the ASGM and illegal mining sector are stated by western regulators, a blind eye is likely to be turned to the plight of the millions of artisanal miners across the globe so long as the supply of increasingly important mined metals to western consumers is assured. 

As for supplier countries, governments there are likely to remain under symbiotic pressure to not allow a sector that provides a living for millions of rural citizens, with otherwise limited alternatives, to collapse.