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