African Mining July - August 2019 | Page 41

Business opposed to manual tracing systems, which rely on paperwork. Unique tags are electronically generated from various mining sites, which will act as an online record, tracing the minerals from the source to refinery. The system of bagging and tagging metals is designed as a guarantee that the minerals in question are unconnected with conflict, child labour, or other human rights abuses. The system can be supplemented with technology such as facial recognition and a database that captures geographical longitudes and latitudes, and geochemical characteristics, among other aspects. This type of system, based on blockchain platforms, generates an open, distributed ledger that can record transactions along the value chain. User-friendliness is another consideration, such as smartphone applications to record the tag and trace the minerals or gemstones as it progresses through the system. Companies can trace metal even as it is processed into intermediate products and mixed with other raw materials. Blockchain A number of proof-of-concept blockchain platforms are being developed by the minerals and mining industry. A global standard platform still needs to be developed, accepted by industry, and the use thereof implemented. The diamond and gold industries are taking the lead in this regard. De Beers has developed a blockchain platform that is intended as a digital certificate, created by Tracr, for each diamond registered on the platform and storing its key attributes and transactions. It will enable retailers to provide consumers with confidence that the diamond is natural and conflict-free and has been tracked across the value chain. The main advantage touted for the use of blockchain platforms is that they will change the current model of incurring traceability costs, shifting it from miners to the end users. Provisional surveys and studies conducted have shown that there is more demand for traceability higher in the value chain among users of the minerals and that end consumers would be willing and able to pay to ensure that the product is conflict-free. This will have a major impact on small-scale and artisanal buyer companies downstream who, to date, have had to shoulder a larger portion of the cost with little value added for them. Purchasing from artisanal miners There are several models for the purchase of minerals and gems for artisanal miners. The two most popular options are: establishing co-operatives for the artisanal miners that can sell to the larger companies, or establishing purchase centres at mines. The cheapest option is done by organising artisanal miners into legal business entities, such as co-operatives, and providing them with the required training. It is beneficial to cluster these operations geographically into units of five to 10 operations and assign an engineer and a health and safety officer to each cluster. This is followed by creating a central buying agency that will legally buy from these miners and offer them market-related prices. Incentives related to enlisting artisanal miners into co-operatives will also facilitate compliance with regulations. As a case study: In La Llanada, Colombia, members of the Coodmilla mining www.africanmining.co.za co-operative were paid the equivalent of USD8 for a gram of guideline-compliant gold and USD6 for a non-compliant gram in 2018. With the premium, they have been able to fund health, nutrition, and work training programmes. The second option is to establish a purchase centre and buy directly from the artisanal miners. It is a more reliable system, but entails additional start-up costs. These costs include the security (both active and passive), the registration system of the accredited artisanal miners, testing and weighing equipment, shipping package material and tags, along with computers and internet connection. Running costs are related mainly to staff and transport. Bowline Professional Services offer auditing and consulting services to meet industry requirements. Auditing of sourcing ore can be done to demonstrate compliance with the OECD’s responsible-sourcing guidelines. Bowline Professional Services also offer consulting services to meet industry best practices and standards to establish provenance of purchases of ore concentrates or gems from artisanal or informal small-scale miners. Consultation services include: • In-loco inspections and audits of mining and purchase sites; • Guidance on passive and active monitoring of mining activities; • Trade-offs for identification systems, including biometric, for registration of artisanal sellers; • Scrutiny on selection of security measures and companies for buyer centres and stockpiling warehouses; • Evaluation of active and passive infrastructure security; • Selection and training in use of geochemical testing instruments to determine grade of ore material or concentrates and sorting, as well as determining potential provenance of ore; • Assistance on selection of applicable blockchain platform and databases; • Guidance on monitoring methods, from stockpile and packing area and along the transport route to final destination; • Selection of tamper-proof seals and RF tags; and • Periodic audit and monitoring reports. About the authors Breton Scott has over two decades of post-qualification experience in the mining and project engineering industry. He has been involved in a variety of activities, ranging from mine operations, project management, mining and rock engineering, mineral asset valuations, due diligences, EPCM contracts, and related feasibility studies. Nicolaas Steenkamp has a decade and a half of post- qualification experience in the geological and geotechnical industry. He has been involved in various activities, including exploration, geochemistry, geological and geotechnical, desktop studies, due diligence, EPCM contracts, and related feasibility studies. b JULY - AUGUST 2019 AFRICAN MINING 39