The planetGOLD programme and the large-scale gold mining sector

This piece is included in a larger report by the World Gold Council entitled "Lessons learned on managing the interface between large-scale and artisanal and small-scale gold mining". Read the whole report here. 

While both large-scale gold mining (LSM) and artisanal and small-scale gold mining (ASGM) seek the same element, they differ in many aspects. This has often led to misunderstanding and sometimes outright conflict. However, fostering a better relationship between the two would be largely beneficial to all.

LSM is the domain of large mining corporations. It is present on all continents and while it produces 80% of the word’s gold output, it is a largely mechanised activity with a lean workforce structure. It can access deep, complex and/or lower-grade deposits, which are unreachable or unfeasible to its ASGM counterparts. In recent years, LSM has had to comply with a number of due diligence criteria in order to sell its gold to international markets (e.g. Dodd Frank, EU Conflict Minerals Regulation).

On the other hand, ASGM is a widespread activity. It employs 15-20 million miners and is the source of livelihood for 100 million people, often in rural and remote areas where few economic alternatives exist. Because of the high price of gold and the minimal transformation steps to the final bullion, ASGM should be an ideal vehicle for poverty reduction. However, complex legal systems; lack of institutional support; lack of awareness on appropriate technologies; and long value chains – often on the margin of legality – mean that mining communities are not getting out of poverty and the sector is the largest user and emitter of mercury globally. Due to the low level of mechanisation, ASGM often extracts gold from surface or shallow deposits (up to 20 meters). Therefore, there should be little overlap with LSM. However, both often occur in the same location leading to social conflict and increased perceived corporate risks for the LSM operators.

International efforts to formalise the ASGM sector and transfer more efficient, cleaner technologies have been the focus of many efforts by international development institutions, bilateral donor agencies and non- government organisations. The Minamata Convention on Mercury focuses on the sector in its Article 7, requiring parties to take action for reducing and, where feasible, eliminating the use of mercury in the sector. Addressing the main barriers to improving ASGM is the goal of the GEF-funded planetGOLD programme: formalising the activity; improving access to finance and international markets; and increasing knowledge on alternative methodologies. This cannot be achieved without active collaboration with the large players. The planetGOLD programme works with investors (local and international) and with international refiners and gold consumers, but active collaboration with LSM has thus far been limited, probably due to the perceived reputational risks posed by a sector that has suffered from a very negative narrative in the media and the difficulty of persuading governments to come on board.

By fostering better collaboration, LSM would reduce the risk of conflict and strengthen its social license to operate, while ASGM would gain access to formalisation, cleaner and more effective technologies, and geological data. On formalisation, social conflicts could be greatly appeased if support was given to formalise the ASGM sector. It would also lower the perceived risks for LSM if it was to associate with a formalised ASGM sector. In fact, AngloGold Ashanti has reached out to develop joint activities in the context of the planetGOLD-Guinea project currently in development. Their existing activities with the Ministry of Mines on formalising the ASGM communities surrounding their operation will be replicated nationally by planetGOLD. The collaboration between LSM and ASGM could also cover capacity building with the industrial operator; provide technical training to the ASGM communities on prospection and ore processing; and, potentially, agree to process their ore, thereby ensuring the highest recovery rate. Finally the collaboration could cover aspects of the value chain. ASGM operators often sell their gold through long and complex value chains where due diligence is impossible to guarantee, resulting in lower gold prices for them. Working together with local LSM operators the due diligence could be streamlined and ASGM would benefit from more direct access to international markets.

We hope that more LSM operators will join hands with planetGOLD to demonstrate such collaboration. The UNEP Global Mercury Partnership will continue to work closely with the World Gold Council to identify partners and geographies to implement these ideas.