MINING INDABA •

By Kgothatso Nhlengetwa , founding director of Imbokodo Mining Services ( Pty ) Ltd , serving as an ASM consultant , researcher and advisor .

The potential of artisanal and small-scale mining ( ASM ) in Africa is no longer in question with many scholars and organisations alluding to the fact that it can play a vital role in the economy .

The role of the state in African countries is not to just draft and implement a legal framework but also to allow space for illicit supply chains to be dealt with through innovative solutions .

Supply chains and illegality The fact that most artisanal miners work outside of the legal framework is a push factor into illicit supply chains . In South Africa for example , secondary informal syndicate supply chains arise from illegal gold mining , which include food , liquor , prostitutes and blackmail . The illicit mercury trade directly influences the gold supply chain in South African illegal mining hotspots . Gold buyers and dealers who are often mercury traders offset mercury costs on gold prices . This directly influences the illicit gold supply chain and makes it difficult for artisanal miners to get market prices for their gold . The mining syndicate bosses dictate work conditions for exploited miners .

Illicit gold trade in South Africa is approximately 1.6 % of the annual world production of gold . The theft of gold from mines and refineries countrywide is estimated at R1-billion . It is projected that about 10 % of South Africa ’ s gold production is lost through smuggling and theft .

The South African example is one out of many countries that echoes the need for critical change in the sector . The call for formalisation must include the assessment of illicit supply chains and requires a collective approach to curb the impact .

Supply chains and sustainability Illicit supply chains are the driving force in maintaining the status quo for ASM as an illegal informal activity . Many syndicates and powerful forces gain from the instability of the sector , thus creating a glass ceiling for those working towards a secure and sustainable industry . The many challenges of ASM including environmental damage , child labour , health and safety are the superficial complexities that can be attended to easily through projects by NGOs , civil society and multinational donor companies . The unseen activities of this sector that drive its illegality fall in the area of illicit supply chains that are run by kingpins that are often in the legal space of mining , politics or corporate .

To create a sustainable sector , it is crucial not only to investigate these illicit supply chains , but also to apply punitive measures to those who are active participants . It is critical to understand where and how these illicit supply chains flow . For example , majority of the illegal ASM gold in DRC ends up in the UAE . This is a well-known fact , but action has never been taken to stop the flow of this gold , instead this illicit gold crosses over into the legal space and is sold as jewellery to the high-end market .

In 1987 the first definition of sustainability by the UN was ‘ meeting the needs of the present without compromising the ability of future generations to meet their own needs .’ Currently the ASM sector does not align with this definition . In fact , if left unattended the ASM sector will be detrimental to the future generations of Africa . A sustainable ASM sector requires a unique multidisciplinary approach from all interested and affected stakeholders . Not just on a superficial level but also at levels of the underworld that runs the ASM industry .

Supply chains and security The lack of safety and security in ASM regions is a direct result of illicit supply chains . Human trafficking , child labour and injustices to human rights are some of the complex problems that exist in countries such as the DRC and South Africa . The illicit trade of gold , mercury , explosives and sex work give rise to a sector that is unsafe and unsecure . The crux of the issue is to reveal these syndicatebased activities in order to create parallel formalisation options .

At this point it is important to note that the artisanal miner is typically a pawn in an exploitative syndicate . This exploitation is what leads to a poverty trap and a lack of financial security for the miners who work the soil . The illegal trading of minerals also means a lack of financial security for the miners .

This lack of access to markets acts as a huge barrier for artisanal miners and a playing ground for illicit traders . The high-ranking individuals who often are intricately involved in the illicit supply chains sell this cheap gold for market price once ‘ legal ’ and walk away with millions daily .

The role of the state in African countries is not to just draft and implement a legal framework , but also to allow space for illicit supply chains to be dealt with through innovative solutions .