Small-scale artisanal mining is a largely informal sector for which information on production, revenues, operations, and even location is often limited. Regulation of the sector is often inadequate and it is difficult to make estimates of its actual contribution to a country’s economy.
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In many resource-rich developing countries, the small-scale artisanal mining sector provides an income for millions of people and is also an important source of economic development for many rural and regional communities. The sector often does not generate significant revenues at the national level and is therefore often excluded from EITI reporting. The EITI does, however, require the disclosure of an estimate of informal sector activity.
The EITI has traditionally focused more on the industrial and formal mining sector but is increasingly seeking to provide a more complete picture of the contribution of the extractive sector to the economy, both formal and informal. This includes tax revenues, employment, exports, wages, investment, and contribution to GDP by related sectors. Including the small-scale mining sector in the EITI process could improve public awareness of these activities, the issues associated with certain aspects of the operations, and provide a basis for evidence-based debate about the costs and benefits of the sector.
What is small-scale artisanal mining?
While there is no universal definition, the OECD Duty of Care Guide defines the sector as “Formal or informal mining involving mainly simplified forms of exploration, extraction, processing and transportation and manual labor, and using limited mechanization. These are generally low capital-intensive operations using labor-intensive technologies. ”
According to this definition, the term artisanal mining can include men and women “working individually or in family groups or partnerships, or as members of cooperatives or other types of legal associations or enterprises involving hundreds or even thousands of miners. “Distinctions are made in some countries where the term “artisanal” refers to purely manual work, while “small-scale” may mean that fixed facilities or some degree of mechanization is used. However, the operations of the sector are very diverse and generalizations are short-lived. Small-scale and artisanal activities can be carried out by men, women, youth, and children.
Obtaining detailed information on the scale, dynamics, and economics of the sector can be difficult, and even in countries where research has been undertaken, the data are often poorly stored. Production may therefore be clandestine, hidden, and unrecorded. Quantifying production may be possible, but this often depends on the level of informality/clandestinity of the sector, the level of illegal trade, and the nature of the minerals extracted. The higher the value and portability of the mineral, the more likely it is to be traded illegally and the more difficult it is to quantify production. Miners may be mobile, work may be seasonal, and mines may have a short life span, all of which result in erratic production and challenges in quantifying the extent and value of the sector. At the same time, the more professional small-scale miners may well be entrepreneurs, employers and exporters.
Artisanal mining is often subject to official costs as well as an informal system of taxes and payments whereby rents are collected by government officials, traditional authorities, security forces, and other actors in the supply chain. The sector is thus a major source of mining production and an engine of economic activity, especially in rural areas, but the true value of artisanal mining is rarely reflected and the sector often does not generate official revenues for the state.
Coverage of artisanal mining in EITI reporting
The International Secretariat conducted an assessment of artisanal mining disclosures in EITI declarations in 2018 and found that the artisanal sector is of importance in at least 31 EITI implementing countries and of these, 16 countries [1] had included targets related to artisanal mining in their work plans.
In terms of disclosure, EITI statements generally begin to refer to existing official studies and statistics on the estimated contribution of the sector to the economy, with employment figures for example. The data is generally old, unreliable, and not sufficiently detailed. The review also shows that only a few countries with sector-related targets had a comprehensive approach to covering artisanal mining in EITI reporting. Finally, the review notes that EITI Reports are widely disseminated in mining areas and that artisanal miners and their communities affected by artisanal mining are in many cases well aware of the EITI process.
Examples of artisanal mining in EITI statements
Democratic Republic of Congo: Artisanal mining is widespread, with estimates ranging from 500,000 to 2,000,000 for the number of people employed. The 2012 report shows that trafficking in minerals from the artisanal sector was still very costly to the government. Lost revenue from mineral trafficking is estimated at US$8 million per year for gold.
Ghana: According to Ghana’s 2012/13 EITI report, approximately 34% of the country’s total gold production (total production of 4.3 million ounces) is from the artisanal sector, with miners paying no royalties or taxes.
Central African Republic: Rough diamonds are the country’s main export mineral and mining to date has been exclusively artisanal. According to the Kimberley Process certificate, rough diamond exports are around 371,000 carats, worth US$62.1 million in 2012. This figure represents half of the Central African Republic’s total exports and 20% of its budgetary revenues.
