Artisanal Gold: Opportunities for Responsible Investment in Mongolia

The planetGOLD Mongolia project published the article  ‘ARTISANAL GOLD: Opportunities For Responsible Investment’ in the March 2021 issue of the Mongolian Mining Journal in English and in the ‘Daily News’ newspaper in Mongolian on March 30th. It touched on some of the key points summarized below. To read the full article in English and Mongolian, please access them via the resource library or directly through the Mongolian Mining Journal’s website.

Artisanal and small-scale gold mining (ASGM) is a significant source of livelihood, either directly or indirectly for millions of people. Often an informal business, it  is the chief source of income for many rural, low-income communities in the developing world. Informal ASGM can be a source of significant negative social and environmental impacts, including the widespread use of mercury, a highly toxic metal. However, when governed well and conducted responsibly with appropriate environmental safeguards, ASGM can generate significant income and positive social and health benefits for miners and their surrounding communities

Since 2010, the Government of Mongolia has taken significant steps to regulate the sector in various degrees through eighteen (18) legislative acts. The main one is Regulation on Extraction of Minerals by Artisanal and Small-Scale Mining (ASM Regulation 151) approved by the Government Resolution #151 on May 24, 2017. It establishes procedures for proper extraction of minerals in economically inefficient deposits for industrial mining methods and in waste fields derived from mining and technology, protecting the environment, and reducing poverty through increasing workplaces in local areas. 

For responsible ASGM to serve as an economic catalyst in the local ASGM communities, it needs to minimize if not completely avoid the negative impacts. One of the ways forward is the acquisition and adoption of more efficient, mercury-free technologies coupled with sound environmental management practices. Improved ASGM practices require a level of upfront financing that informal lenders are either unable—or unwilling—to make. Although in the past, ASGM operations have benefited from grant finance and public donor funds, formal private capital remains a key factor in establishing a responsible and economically viable ASGM that can reach its full development potential.

The ASGM sector has a number of unique characteristics that make it attractive for investment and finance. These include: 

●    Artisanal miners being at locations where the presence of gold has already been established – often through their own prospecting - which de-risks this aspect of the business. 

●    There is increasing consumer and corporate demand for responsible artisanal gold. Consumers seek responsible jewelry and other products, while refiners, manufacturers, and retailers seek corporate social responsibility values among other things.

●    Investors who engage early in ASM countries and establish leading relationships will have greater access to investment opportunities in the sector.

●    Investment in relatively simple technologies can increase recoveries typically by 30% over existing operations, buffering other potential financial risks such as variable world gold price, and also significantly improve environmental performance of the operation.

The planetGOLD Mongolia project will be publishing an article on Access to Finance with an in-depth look into the Mongolian context later this year.