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Industry expectations for LSM-ASM relationships – where do we stand?

Industry expectations for LSM-ASM relationships – where do we stand?

June 19, 2020, by Angela Jorns


For large-scale mining companies (LSM), managing relationships with ASM stakeholders is crucial in order to mitigate operational and financial risk and to maintain their social licence to operate. But there are other reasons too why LSM companies should pay more attention to ASM engagement and management. Increasingly, downstream buyers, customers and also investors are asking questions about how these relationships are handled by their LSM suppliers. This is accompanied by a growing body of industry standards and guidance on the topic.

These standards provide a useful pointer for companies that are trying to understand what is already expected of them or will be in the future. Even if not all the mentioned standards and requirements will be applicable for each LSM company or at each mine site, their expansion provides a view of the broader movement in the sector towards paying increased attention to ASM-LSM relationships. Below we present a summary of these expectations, discuss what they mean in practice, and highlight some of the key emerging trends.

What does industry guidance say about ASM-LSM relationships?

Several standards, industry requirements and expectations for ASM-LSM relationships have emerged in recent years. Today, two broad sets can be distinguished:

  • expectations around engaging with and managing ASM as a stakeholder to an LSM mine site,
  • and expectations on LSM companies sourcing or buying minerals from ASM producers, who become their subcontractors or suppliers.

a) LSM engaging and managing ASM

For managing ASM around LSM sites, three key expectations stand out in particular: LSM should (1) manage risks related to ASM, (2) engage with ASM as stakeholders, and (3) where possible support the improvement, formalisation and professionalisation of the ASM sector more generally. Expectations have evolved over time, and the last requirement in particular is a more recent trend, recognising the role LSM can play in collaboration with other actors in enabling a formal, responsible ASM sector.

As a starting point, the GRI standards on sustainability reporting include an ASM-specific indicator for companies in the mining and metals sector. This requires companies to report on the “number (and percentage) of company operating sites where ASM takes place on, or adjacent to, the site; the associated risks and the actions taken to manage and mitigate these risks.” It’s important to note that the guidance not only mentions risks to the company, but also risks that ASM poses to the companies’ stakeholders (e.g. communities), as well as risks that the company may itself pose to stakeholders, including ASM. To fulfil this requirement, LSM companies need a solid site-level monitoring and reporting system geared to the dynamic ASM situation, and include ASM in all risk assessments and risk management systems.

Several standards and industry guidelines go beyond this risk-based approach, also including requirements for on-going and proactive engagement with ASM stakeholders, as well as, where applicable, for a contribution to the improvement and formalisation or professionalisation of (legitimate) ASM more broadly. This may be done as part of a multi-stakeholder engagement programme, together with the respective government authorities and civil society, as well as with ASM stakeholders directly.

Examples include the Responsible Mining Index’s assessment criteria, as well as the Risk Readiness Assessment tool developed by the Responsible Minerals Initiative, which is used by downstream customers to assess risks related to their LSM (and other) sources. These extended requirements are also reflected in the Responsible Jewellery Council’s Code of Practices (RJC COP) and the Responsible Mining Standard developed by the Initiative for Responsible Mining Assurance. Although ICMM’s performance expectation regarding ASM remains more general, requiring, “where appropriate” engagement with government to support improvement of ASM, many sector specific standards and guidelines include more detailed and expansive requirements, including De Beers’ Best Practice Principles, the Copper Mark, and the World Gold Council’s (WGC) Responsible Mining Principles. The WGC has also published a list of concrete suggestions for actions related to ASM to be taken by LSM companies. Fulfilling these requirements calls not only for solid monitoring and risk management, but also requires LSM companies to include ASM stakeholders in ESIAs, stakeholder engagement plans, resettlement and livelihood restoration plans, and community development plans, as a standard practice.

b) LSM sourcing from ASM suppliers

Along with the variety of models for LSM management of ASM, industry guidance for a ‘collaboration model’ has also emerged, specifying the requirements and expectations for LSM companies who source from ASM suppliers or sub-contractors, where the legal framework permits such practices. These requirements mainly revolve around conducting appropriate due diligence and risk mitigation on and with the ASM supplier, in accordance with the OECD Due Diligence Guidance (OECD DDG). However, a few standards, such as the RJC’s COP and De Beers’ Best Practice Principles go beyond the OECD DDG and include requirements to mitigate additional risks such as mercury use and environmental impact, working conditions and health and safety, and providing direct or indirect support to ASM suppliers in achieving this. The RJC even includes the requirement to work towards offering ‘fair commercial terms’ for ASM suppliers, something few other industry standards mention but may be crucial for the development and improvement of ASM communities (and thus ultimately lowering the threat that disgruntled ASM communities may pose to the LSM neighbour).

Despite these emerging standards and guidelines, LSM companies who engage in a commercial relationship with ASM suppliers – including as a way to manage site-level relationships – still often face hesitancy and risk-aversion from their downstream business partners and customers towards such models. However, this trend may be reversing slowly. Ensuring that (legitimate) ASM producers can reach responsible markets has been the recent focus of a variety of downstream market associations such as the LME, the LBMA, and the WGC, who have (re)designed their requirements, principles and standards to enable and encourage inclusion of legitimate ASM in supply chains.

With all these standards and guidelines, what is the minimum LSM companies need to do?

Considering the current landscape of standards and industry expectations, and likely future trends, it becomes clear that no matter which ASM engagement or management model an LSM company chooses, it must consider and implement a few minimum requirements:

  • Put in place robust ASM monitoring and reporting systems, which allow for a continuous information flow and enhance an up-to-date analysis and understanding of the ASM context and dynamics in all its facets.
  • Feed this information into a process that enables the identification of ASM-related risks, the assessment and prioritisation of these risks, and the implementation of management or mitigation measures through cross-departmental controls.
  • Include ASM in their stakeholder engagement plans, and conduct either direct or indirect engagement with such actors through an approach that is tailored to the specific (and often divergent) characteristics of the various actors within ASM. The OECD’s Guidance on Meaningful Stakeholder Engagement includes a set of key requirements for engagement with ASM stakeholders, which provide a useful starting point.
  • Give consideration to or explore opportunities to support or facilitate the formalisation and professionalisation of the ASM sector, where feasible and appropriate, in particular in collaboration with government and civil society.

Since one of the minimum expectations is engagement with ASM stakeholders, our next blog in this series will provide concrete suggestions and examples of how LSM companies could approach and engage directly or indirectly with ASM stakeholders, and discuss some of the most common pitfalls LSM companies encounter in this process. Stay tuned!

Standard / industry guidance

Requirements / recommendations on LSM-ASM relationships (abbreviated in some cases – please refer to the original documents!)

Global Reporting Initiative
Mining and Metals Sector disclosure, requirement MM8

Requires reporting on:

“Number (and percentage) of company operating sites where artisanal and small-scale mining (ASM takes place on, or adjacent to, the site; the associated risks and the actions taken to manage and mitigate these risks”

Responsible Mining Index
Assessment requirement D.09

Indicator requires:

  • “D.09.1 Where applicable, the company has systems in place to ensure its operations facilitate ongoing and proactive engagement with artisanal and small-scale mining (ASM) communities and activities in and around their operations.”
  • “D.09.2 Where applicable, the company has systems in place to ensure its operations support technical assistance programmes and/or alternative livelihood programmes for ASM miners.”
Performance Expectations, Principle 9.4

“Collaborate with government, where appropriate, to support improvements in environmental and social practices of local Artisanal and Small-scale Mining (ASM).”

Initiative for Responsible Mining Assurance (IRMA)

Responsible Mining Standard, Chapter 3.6 (abbreviated)

Objective: “To avoid conflict and, where possible within the scope of national law, foster positive relationships between large-scale mines and artisanal and small-scale mining (ASM) entities, and support the development of ASM that provides positive livelihood opportunities and is protective of human rights, health, safety and the environment.”


  • Understand the ASM context
  • Engage with ASM entities and communities
  • Foster positive relationships and opportunities for ASM and communities, i.e. security forces are trained in VPs, demonstrate considerations for enhancing opportunities for positive impact of ASM
  • Perform due diligence in commercial relationships with ASM, where applicable

Other requirements include:

  • ASM should be included in stakeholder engagement plans
  • ESHIA and HRIA need to include impacts on ASM
  • ASM should be included in the process to plan and determine community benefits
  • ASM should be part of resettlement action plans or livelihood restoration plans, where applicable
  • ASM should be involved in mine closure planning

Responsible Jewellery Council

Code of Practices, requirement 35

“Members in the mining sector shall, where artisanal and small-scale mining (ASM) not under their control occurs within their areas of operation:

  • a. Engage directly with the ASM community as appropriate and seek to maintain a continuous dialogue with them as a distinct group within the stakeholder engagement programme (COP 32 Stakeholder engagement), social and environmental impact assessment and ongoing risk management activities (COP 34 Impact assessment).
  • b. Actively participate in initiatives, including multi-stakeholder ones, that enable the professionalisation, formalisation and certification of ASM, as appropriate to the situation.”

There are also requirements for sourcing from ASM. The requirements are outlined in more detail in the RJC COP Standards guidance, which also provides further examples of initiatives/actions LSM can take.

Responsible Minerals Initiative
Risk Readiness Assessment Tool, norm relating to ASM

“To engage artisanal and small-scale miners (ASM) and facilitate their formalization and improvement of their environmental and social practices, where there are known to be legitimate ASM in the sphere of influence of the site / facility.”

Copper Mark
Requirement 25

Requirement 25 (based on the above Risk Readiness Assessment Tool):

“To engage artisanal and small-scale miners (ASM) and facilitate their formalization and improvement of their environmental and social practices, where there are known to be legitimate ASM in the sphere of influence of the site / facility.”

World Gold Council
Responsible Gold Mining Principles, principle 3.3

Principle 3.3: Market access for ASM

“3.3 We support access to legitimate markets for those artisanal and small-scale miners (ASM) who respect applicable legal and regulatory frameworks, who seek to address the environmental, health, human rights and safety challenges often associated with ASM activity, and who, in good faith, seek formalisation. We will consider supporting government initiatives to reduce and eliminate the use of mercury by ASM.”

The WGC’s Conflict-Free Gold Standard also includes requirements for sourcing from ASM along the OECD Due Diligence Guidance, and a commitment to support the formalisation of ASM and to not exclude legitimate ASM from supply chains.

As a guidance for LSM companies in their role in supporting dialogue and engagement, the WGC also published a list of concrete suggestions and options for action.

De Beers
Best Practice Principles, Assurance Programme Requirements 2019, D7


  • “D . 7.1 Mining Facilities will, as appropriate, participate in initiatives, including multi-stakeholder initiatives, which enable the professionalisation and formalisation of artisanal and small-scale mining (ASM), where it occurs within their areas of operation.”
  • “D . 7. 2 Where artisanal and small-scale mining operates on or around a Mining Facility, the entity will engage directly with them as part of their Social and Environmental Impact Assessment and community engagement processes.”

Additional requirements apply if an entity is sourcing directly from ASM operators (B7).

Guidance on Meaningful Stakeholder Engagement in the Extractives Sector, Annex E (abbreviated)

Requires (abbreviated):

  • Understanding the ASM context
  • Ensuring that ASM stakeholders are properly identified and prioritised
  • Designing appropriate and effective engagement activities and processes
Photos: Olivia Lyster for Levin Sources in Brazil, 2016

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