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Mongolia: Impacts of COVID-19 are currently low, but uncertainty in Artisanal Gold Mining Communities remains high

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Authors:
Namuun Tsegmid
, Communications Assistant for planetGOLD Mongolia, Artisanal Gold Council
Dulguun Mijiddorj, Investment Specialist for planetGOLD Mongolia, Artisanal Gold Council

 

Since Mongolia transitioned away from central planning in 1990, mining has come to play a dominant role in the economy. In 2016, the mineral sector accounted for 20.6% of Mongolia’s GDP, 80% of its exports, 30% of the national budget revenue, and more than 70% of the country’s foreign direct investment.  Gold is the single largest mineral by value produced in Mongolia.  In 2019, the Central Bank of Mongolia bought 15.2 tonnes of gold of which 48% or 7.4 tonnes were supplied by individuals including artisanal and small-scale miners[1].

Artisanal and small-scale gold mining (ASGM) operations are present in as many as fourteen of the country’s twenty-one provinces. Artisanal miners are estimated to number somewhere between 40,000 to 60,000 people, or 12%-20% of Mongolia’s rural labor force. A third of these miners are women.

Artisanal miners at the Bulag-1 site, Selenge province, Mongolia
Artisanal miners at the Bulag-1 site, Selenge province, Mongolia

Rapid precautionary measures against COVID-19 kept numbers low

Following the news of the outbreak of COVID-19 in neighbouring China, Mongolian authorities took immediate and rapid measures to prevent the virus from entering the country. The Mongolian government closed all border crossings and suspended universities, public institutions, and public events for nearly six weeks, starting very early in the last week of January 2020 and continuing until March 2, 2020. This has since been extended to April 30, 2020.  On April 14, authorities announced that schools would remain closed until September 1, 2020.

Authorities credit these restrictions with keeping the number of COVID-19 infections in Mongolia quite low, though those numbers are now rising.  With a population of around 3.2 million, Mongolia had as of April 14, 2020 reported 30 cases of  COVID-19, an increase of 13 cases from the day before. Most of these cases were actually Mongolian citizens repatriated from abroad who had travelled through Russia on their way home. To date, there have been no deaths.

Had the virus not been kept out so effectively it might have hit artisanal mining communities particularly hard, as is evident in other countries (see Burkina Faso and the Philippines). Closing artisanal mining can be devastating because many artisanal miners in Mongolia earn income solely from their day-to-day labor and need to sell the gold they recover for sustenance. This leaves miners highly vulnerable to any shut down or interruptions in the gold supply chain. To date, thankfully, the impacts of COVID-19 remain minimal.

The gold supply chain is weakened but not broken

According to miners and gold traders, local gold prices in Mongolia have not yet been strongly affected. Mongolia has tightened its isolation measures twice – once for 10 days during the Lunar New Year celebrations, and a second time for a few days after March 10, when the first case of COVID-19 was reported. During these days, miners were prohibited from travelling to their mine sites but at all other times, mining has continued as normal. During February and March, aside from a minor increase in the prices of meat and rice in some areas, the supply and prices of food and common goods have also not altered drastically.

Miners by a secured shaft, Bulag-1 site, Selenge province, Mongolia
Miners by a secured shaft, Bulag-1 site, Selenge province, Mongolia

Women miners face gender-specific challenges

While no dramatic impact from COVID-19 has yet been observed, the closure of all educational institutions at all levels does risk harming women miners’ productivity. Women miners carry the double burden of taking care of their children and families as well as earning an income. With schools closed, female miners are faced with the choice of foregoing income to stay home and care for their children, or bringing their children with them to an active mine site with its risks.

A miner’s story

“During the first lockdown, we were quarantined in Tunkhel village, and a few miners who were working at the Bulag ASM site were also stranded as the area became inaccessible,” said B. Myagmarsuren, a miner in Selenge province. Myagmarsuren has been selling gold to a processing plant in Bornuur Soum in Tuv province for about ten years at a competitive price. As recently as April 8, this processing plant was buying gold at 130,000 MNT (about US$46.67) per gram, or about 88% or world price. As world gold prices have increased, the price offerred by this processing plant has actually increased to 140,000 MNT (US$ 50.31) or about 90.5% of world price.

Myagmarsuren added that if other preventive measures are announced, such as an extended in-country travel ban or lockdown, then “we would have to cease activities or work in a very limited scope, making us very vulnerable,” she said.

Miners believe that interrupting their ability to extract ore and sell gold would freeze the local economy. Gas stations and grocery stores are mainly dependent on the local gold market. For many communities, the artisanal gold sector is one of their most important sources of income.

Formalization of Mongolia’s artisanal gold mining sector an added challenge

Artisanal and small-scale gold mining in Mongolia remains a largely informal sector. The Artisanal Gold Council has been working since 2019 in partnership with the government authorities through its GEF-funded planetGOLD project towards providing improved conditions for formalization.

Hoping the current situation surrounding COVID-19 does not get worse, one miner said: “Cancelling the formalization process is another fear we have … it would drive artisanal miners into the black market and consider operating in illegal ways to extract gold.”

Should conditions surrounding the artisanal gold sector in Mongolia worsen due to COVID-19, formalized miners may be less vulnerable than the informal ones because they would have a higher chance of receiving government assistance. In an odd way, the current health crisis could also be an opportunity. Governments looking to mitigate the crisis might come through with loans or assistance programs for formalized miners and thereby create a lasting incentive with clear benefits for the informal parts of the sector to move forward with their own formalization efforts. Many mining communities continue to dream of a scenario in which the artisanal gold mining sector is regarded just like any other small to medium enterprise in the country and the COVID-19 crisis makes a good example of why it is important to realize that dream.

 The AGC in Mongolia and planetGOLD

The AGC has been working on artisanal mining issues in Mongolia for several years is a proud participant in the country’s Global Environment Facility-funded planetGOLD programme. PlanetGOLD is an innovative programme that aims to improve the lives of artisanal and small-scale gold miners by focusing on four core areas: technical solutions, access to finance, formalization, and knowledge creation/awareness raising.  Here is what planetGOLD is doing already about COVID-19.

 

Contributions and editing: Kevin Telmer, Shawn Blore, and Rébar Jaff

This article was originally published on April 14 on the Artisanal Gold Council website

 

[1] Central Bank of Mongolia (https://www.mongolbank.mn/dblistgoldbom.aspx)
[1] USGS 2015 Minerals Yearbook – Mongolia

 

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