BEYOND ILLEGALITY: CONCEPTS AND APPROACHES TOWARDS IMPROVED GOVERNANCE OF INFORMAL MINING

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development, and Investment
(Apr 2013)
CHAPTER 18A
BEYOND ILLEGALITY: CONCEPTS AND APPROACHES TOWARDS IMPROVED GOVERNANCE OF INFORMAL MINING
Paulo De Sa
Manager, Sustainable Energy, Oil, Gas and Mining, the World Bank
Rachel Perks and Daniele La Porta, The World Bank
Washington, D.C.

PAULO DE SA is Manager of the Sustainable Energy Department, Oil, Gas and Mining Unit at the World Bank in Washington, D.C., where he coordinates and leads the Bank's oil, gas, and mining lending activities and technical assistance in more than 50 countries. Dr. de Sa also heads four global programs and partnerships in the oil, gas, and mineral sectors, including: the Extractive Industries Transparency Initiative (EITI), the Global Gas Flaring Reduction (GGFR), the Extractive Industries Technical Advisory Services (EI-TAF), and the Petroleum Governance Initiative (PGI).

Introduction

Artisanal and small-scale mining (ASM) in mineral development policy agendas has undergone several articulations over the last forty years. These articulations have generally corresponded to specific political and economic global periods, engendering resonating effects on the articulation of mineral development strategies for many developing countries.

Pelon and Martel-Jantin (2007) propose that since the post-colonial period, the position of ASM within mineral policy has transitioned from one of isolation to that of integration. Such a transition was evidenced firstly by a firmer inclusion of ASM in national mineral legislation and policy starting in the late 1980s and into the mid- 1990s. This legislative reform focus was accompanied in several circumstances with technical assistance, such as small grant programs or credit and loan schemes, to establish more viable small-scale mining operations. Furthermore, specific ASM government departments or agencies typically under the umbrella of the Ministry concerned with mining were established or further support to provide advisory and technical services to artisanal and small-scale operators.

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The ASM agenda shifted in the late 1990s and early 2000s to one of development (Pelon and Martel-Jantin, 2007). This shift had the effect of integrating ASM into the global fight against poverty within the Millennium Development Goals (MDGs) framework. By aligning ASM more closely to the poverty-alleviation agenda, the strategies to support ASM changed quite dramatically, as did the actors at the core of this agenda. Government institutions were no longer playing as active a support role, with NGOs and even large-scale mining companies now driving considerably the ASM policy agenda. Issues such as 'fair trade' of minerals and management of conflict between ASM and Large Scale Mining (LSM) operations were introduced alongside child labor reduction projects and women's empowerment. In effect, the earlier attempts in the 1970s and 1980s to address core mining issues such as environmental standards, appropriate technology, security of tenure, and access to finance were largely diminished by the socio-economic development concerns emerging from ASM environments.

In the early 2000s artisanal and small-scale mining started also receiving significant attention for its potential propensity to fuel criminality, as well as civil war and conflict. The relationship of ASM to these issues is however far more nuanced that it might appear. Even in times of conflict, ASM can provide a significant source of employment and livelihood diversification to able-populations otherwise without economic prospects--whether due to displacement, loss of arable land, or loss of working family members. In times of peace, ASM proves to be a gainful source of employment for millions of people globally. Nurturing such potentiality, while not fuelling opportunism in illicit mining, requires a careful policy balance with measures that go beyond mineral development prescriptions.

One strategy in this regard has been the question of formalisation, the process by which governments steer ASM activities into the formal economy as a means to more effectively harness its contribution. Over the last several decades, many Latin American states have made efforts in this regard. Yet, of late, concerns have been raised that the limited success of these formalisation efforts by governments --due to a variety of technical, security and institutional reasons--is "forcing some countries to ban what they term 'illegal' or 'criminal' mining, meaning mining that operates in areas where the government has put some kind of limit on extractive industry" (ELLA, 2012:5). The challenge such actions present is the difficulty of being able to truly distinguish between situations of informality and illegality, and furthermore of identifying where indeed the root of the problem of unregulated mining activities lies.

Further challenges arise when ASM is immersed in a post-conflict or fragile state scenario. During times of conflict, minerals become a source of revenue for a variety of actors and fulfil multiple socio-economic and political functions:

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1. ASM creates jobs as fragility and political crisis takes hold: greater numbers of ordinary citizens may enter the ASM economy as a temporary livelihoods response to crisis--with the suddenly unemployed, the disenfranchised youth, or new female-headed households increasingly participating alongside more established artisanal and small-scale miners.

2. ASM gets embedded in the war economy: national armies and other armed groups may equally capture mineral supply chains for revenue purposes, profiting from these 'ungoverned spaces'.

Most often a mix of these two scenarios occur, in which peaceful, livelihood-oriented ASM economies work in parallel to illegal and predatory ones, all within the same national territory. As has been witnessed in several country case studies, when civil wars, or regional conflict ends, governments and the international community are faced with the pressing challenge of how best to deal with this dual serving economy. Experience has shown in-depth analysis of such issues as trade routes, networks, and livelihood strategies emerging from these economies can build more effective strategies for policy engagement.

This paper seeks to widen the debate on appropriate ways to address government concerns regarding regulation of its ASM economy. It first provides a brief background exploration of the debates on ASM, legality and illegality, and some of the recent measures by governments to address these constraints. Second it explores the present situation in Colombia and its efforts to further develop its mineral sector, of which informal mining may make a significant contribution, and discusses implications from other global initiatives for the Colombia context.

ASM: When does informality become illegality?

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Artisanal and small-scale mining has risen steadily across the globe in the last several decades: from an approximate 10 million in 1999 (ILO, 1999) to an estimated 20-30 million in 2012 (MED, 2013). In sub-Saharan Africa, direct employment figures from ASM are estimated at 9 million (Perks, 2012). In South America, a sub-continental wide figure is not available though individual country estimates include: 72,000 for Bolivia; 10,000 for Brazil; 92,000 for Ecuador; and 30,000 for Peru. What is remarkable is the contribution such forms of mining brings to national economies. For instance, it is estimated that in the Democratic Republic of Congo (DRC), artisanal and small-scale mining contributes to 80% of total gold and coltan production with a direct national workforce of 2 million people. In the Peruvian Amazon, 400,000 miners are working along the Madre de Dios river, contributing nearly a fifth of Peru's annual 175 metric tons of gold (Swenson et al, 2011). Despite such remarkable production and employment contributions, the majority of these operations globally occur outside legal frameworks. In the absence of integration into formal revenue streams, most ASM mineral economies do not provide governments with optimal revenue contributions. Similarly workers and operators in such economies remain vulnerable, often lacking legal recourse on important issues of commercial disagreements and social protection. In effect, the absence of regulation raises the predicaments of informality.

While informality constitutes the manner in which roughly 50% of the world's wage-earners operate (World Development Report, 2012), its predominance in ASM environments continues to ignite significant policy debates. A fundamental point in this debate is the prerequisite of mine title security. In most parts of the world small-holder farmers have recognised communal rights to work the land, and thus invest in their productive activities. Artisanal and small-scale miners however, often predate the advent of industrial mining in most country contexts, but need broadly to comply with the same tenure principles as established for industrial mining operations. This principle, enshrined in national law, confers sole ownership rights to the state for all mineral endowments within its given territory. The state has the right to lease prospective mining areas to third parties capable of extracting these resources. Given the potential contribution such endowments can make to national development--whether through export earnings, taxes or employment and subsidiary business development-industrial operations are more often than not given priority over more traditional or smaller scale operations. In the absence of such titling, many artisanal and small-scale miners globally continue to work outside the legal framework. Though often these operations are peaceful and contribute tangibly to...