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LSM and ASM relationships: from risk management to positive impact

LSM and ASM relationships: from risk management to positive impact

April 5, 2020, by Estelle Levin-Nally and Dr Fabiana Di Lorenzo


During the Investing in Mining Indaba 2020, the USAID Commercially Viable, Conflict-free Gold Project (CVCFG), implemented by Levin Sources and Global Communities, organised an informal discussion between leading mining companies, industry associations, standard setters and academics. In this blog, we share some of the key messages identified during those discussions.

Much of this is emerging thinking and will provide key themes for future engagement by CVCFG with large scale mining (LSM) and their stakeholders, as we continue to unpack what good ASM engagement looks like, and what role others have in supporting constructive ASM-LSM relations. As the dinner took place in the early days of the global Covid-19 pandemic, our suggestions don’t reflect the rapidly-evolving situation, but we are in constant contact with our partners on the ground to understand the novel coronavirus’ impact on the sector.

During the dinner, we considered how LSM and ASM relationships could move beyond risk management towards positive impact. We also explored how donor-funded programmes, like CVCFG, could provide avenues for reduced-risk engagement with ASM by LSM companies. The companies involved have already been tackling ASM issues across west, central, and southern Africa. Below, we summarise the main messages for governments, mining companies and NGOs.

Producer nation governments should:

  • Fulfill their responsibilities towards ASM and their duty to protect human rights.
  • Acknowledge that ASM requires a medium to long-term socio-economic strategy. ASM is often driven by high unemployment rates, poverty, and the ability of miners to earn more than other available professions – understanding these choices is crucial. Mining companies can’t tackle these issues on their own.
  • Work with companies and ASM to identify long-term incentives for the eventual transition of people out of ASM into other economic sectors, especially where there is a threat to LSM.
  • Avoid unnecessary force where ASM must be contained or moved out of an illegal site, to mitigate the risks of conflict and human rights violations.
  • Lower the risk for LSM to engage with ASM, by considering legislation to make it easier for LSM to act as facilitating partners with ASM, or working with donors and other stakeholders to support constructive LSM-ASM engagement.

Market nation governments should:

  • Appreciate the broad implications of their legislation. For instance, the Dodd Frank Act had an impact on producer nation governments, disrupting and reshaping supply chains. For one mining company, this external pressure encouraged their government to help them deal with the issue of ASM.
  • Consider using their influence and technical assistance from donor arms within producer nations to de-risk LSM engagement with ASM.

Mining companies should:

  • Be realistic about ASM and the incentives required to encourage miners to leave. Seek to increase their understanding of ASM.
    • Have a more nuanced view of ASM. Do not categorise all miners as either ‘noble’, valiantly struggling to gain a livelihood, or ‘criminal’, using violence to steal what is not theirs. ASM miners have diverse demography, motivations, vulnerability and ability to change practices.
  • Open a dialogue with ASM, for instance:
    • Do they want to continue mining somewhere else? Can they work with the government to identify a nearby site and consider investing to make it more productive?
    • Do they want to be employed in LSM? Is this viable and, if so, at what parts of the mining life cycle?
    • Do the migrant miners want to return home? Would support help?
  • Manage communications and expectations with ASM and their stakeholders very carefully.
  • Consider effective community development programmes to build people’s economic options and ensure diversity in the local economy.
  • Work in partnership with government, but be clear on mutual roles and responsibilities.
  • Share their vision for better collaboration or cohabitation with artisanal mining with the government and how responsible industrial mining is good for the country.
  • Create a safe space for internal conversation to avoid this becoming binary and shutting down productive exchanges, including:
    • Encouraging executives to understand that ASM is not a ’problem’ that will go away once miners are removed. It needs constant monitoring, management and investment – in collaboration with government
    • Encouraging honest and frank internal conversations across different roles, priorities and opinions.
  • Prioritise training ASM on good health and safety practices.
  • Make sure LSM management understands the complexity around child labour.
  • Clarify how traceability systems measure their impact in addressing the underlying goal – reducing trade of illicit minerals – and evidence the positive impact of such programmes on ASM.
  • Use development resources to drive commercial impact. Building schools isn’t helpful if people have no revenue to pay the fees for their children. Instead:
    • Support what is really needed, such as subsidies or interest-free loans to cover the upfront costs of formalisation by ASM.

NGOs and donors should:

  • Create financial structures that enable diverse stakeholders, including private enterprises, to jointly finance a) upgrades to ASM production methods to help formalisation, b) de-risking of private sector investment in ASM formalisation, and c) provide debt finance for working capital to overcome cash flow issues.
  • Consider putting in place a billion-dollar credit authority to work in several African countries to guarantee loans from financial institutions to artisanal businesses and traders.
  • Report on ASM with nuance to ensure downstream buyers do not stigmatise the group.

Overall, the participants concluded that building a responsible and sustainable ASM sector is primarily the responsibility of the government; while the private sector – whether mining companies, financiers, or mineral buyers – can help facilitate responsible ASM. They should use their leverage as either business partners or stakeholders to influence and support formalisation, professionalisation, improved production practices and greater benefits to ASM communities. Solving the problem of ASM on one concession rarely solves the problem in the longer-term: it usually displaces it elsewhere.

Success relies on a range of factors:

  • Partnerships underpinned by good cooperation between government and business, with support from other stakeholders such as donors and market nations
  • A good value-proposition for the ASM miner, his/her financiers and buyers to formalise
  • Evidence-based decision making
  • Excellence in communications within and between institutions/stakeholders
  • Setting strategies that work with realistic timeframes
  • Allocating resources to the right things

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