LME Offers Recognition to Artisanal Mining but with Caution

Earlier last year, the London Metal Exchange announced plans to accept supplies from small-scale miners to ensure that those who rely on artisanal mining for a living can trade internationally. Some say this would help legitimize the troubled industry, while others believe it will lead to further illegal activities and human rights violations. Who is right? We’re examining.

The London Metals Exchange’s (LME) new roadmap for responsible metal sourcing was released in October last year. Not only did she advocate transparency across the supply chain, she also confirmed that she would include small scale mining (ASM) in her business. This statement has caught the attention of industry members – for better and for worse.

The LME made its decision on the grounds that the exclusion of goods from conflict areas could “preventively punish” workers because of their location, while their inclusion could actually support economic development in these regions. The creation of an unbiased and sustainable mineral sector has long been a priority for trade and government agencies. However, some argue that legitimizing ASM can only allow money to flow to areas known for illegal activities.

While the future of ASM’s role in the global mining industry remains uncertain, the demand for a change in approach is growing. Industry members choose their side, and LME follows these demanding measures and explains: “We can criticize ourselves. However, we believe that this issue is too urgent for the LME to be able to take an active part in this debate. “

The role of small-scale mining

Much of the mining activity is made up of ASM and the rise in the sector shows no signs of stopping. The Intergovernmental Forum for Mining, Minerals, Metals and Sustainable Development estimates that 40.5 million people were involved in ASM in 2017, almost six times more than in 2013. Both miners and their families around the world depend on ASM. This is in comparison to the roughly seven million that rely on industrial mining.

However, due to the lack of formal structure in the sector, it is often viewed with skepticism and supplies resulting from these operations are generally considered to be affected by humanitarian and environmental problems.

This perception is reinforced by the isolation of many of these places. The rapid expansion of the sector means that increasingly remote locations in Sub-Saharan Africa, South America and Southeast Asia are being searched for minerals. With the isolation of the sites, concerns about maintaining good practices have increased, and public interest in reports of child labor and unsafe working conditions has made areas like the Democratic Republic of the Congo (DRC) examples of textbook mining.

The case for inclusion

Dylan McFarlane, senior program officer for mine sales as part of the nonprofit pact, believes that reviewing these locations – and consequently excluding ASM employees – is a completely wrong tactic. “In the Democratic Republic of the Congo, Pact’s 15 years of experience working with artisans have shown that supporting legitimate livelihoods increases stability,” says McFarlane.

“It enables governments to learn what is produced where and by whom, and to formalize tax flows to local, regional, and national authorities.” McFarlane believes that this view is incorrect in terms of financial aid to conflict areas.

“The idea of conflict minerals has been debunked by scientists for a decade,” he says. “But the mass media didn’t understand it (or didn’t want to) because the mining media are largely influenced by large mining companies that have a lot to lose through ASM legitimation.” DELVE has changed the way it is portrayed, and leaders like LME, Trafigura and Apple have shown that supporting ASM offers incredible development benefits for marginalized communities. “

Including ASM in the trading process is a popular solution, and companies, distributors, and governments around the world are striving for transparent supply chains. Earlier this year, small gold mining companies in the Philippines were exempt from excise and income tax when they were sold to the country’s central bank. This allowed these independent workers to build a relationship with the trading body and pave the way for a more responsible supply chain.

Such measures indicate a change in the perception of ASM. However, formalization is not welcomed by everyone.

Is the formalization sufficient?

Marcello Veiga, a professor of mining engineering at the University of British Columbia, says that simply involving workers in the formal process will not solve the environmental and humanitarian problems associated with the industry.

“The problem is not formalization, but training,” he says. “You have to train miners because they still use incredibly polluting methods. What good is formalization if people don’t know what they’re doing?”

In addition, the formalization process in many regions is unnecessarily complex. Peruvian artisans from Madre de Dios must have a training certificate, a document on the absence of archaeological remains, a permit to use explosives and an accreditation as a mining craft company – all formalized workers. In Colombia, artisans have to complete 281 steps in an equally complicated process.

“Miners still have no mechanism because the government complicates the formalization process,” he says. “54% of workers in Latin America are informal, 86% in Africa are informal. That’s a reality. These miners have nothing from the government – no training and no support. “

Instead, Veiga writes in a paper on this subject, that legislation needs to be changed to relate taxes directly to ore production and to discard “useless definitions” of different types of miners.

“Frankly, it should be an easy process,” he says. “If you produce more, you pay more. If you produce less, you pay less. Who cares if the type is conventional or artisanal? “

Veiga also advocates site-specific training projects for artisans, where best practices are made possible by training based on the environment and the needs of workers. The LME roadmap also points in this direction and indicates the need to develop programs to actively support small-scale miners. The panel itself has “made a specific financial commitment” to improve working conditions in mining communities and to provide the funds from the fines for charitable initiatives in this sector.

“In this way, and in line with our responsible sourcing requirements,” the report says, “we can expect the metal trading community to have a direct and positive impact on the lives of those who support our global supply chain.”