social, legal, financial issues susan egan keane conclusion workshop southeast asian regional...

Social, Legal, Social, Legal, Financial IssuesFinancial Issues

Susan Egan KeaneSusan Egan Keane

Conclusion WorkshopConclusion Workshop

Southeast Asian Regional Artisanal and Southeast Asian Regional Artisanal and Small Scale Mining Strategic Planning Small Scale Mining Strategic Planning ProjectProject

March 23, 2011 March 23, 2011

OutlineOutline

Observations and conclusions of ASGM Global Forum regarding social, financial, and legal issues

Introduction to the UNEP Formalization Document– Approaches to formalization from

around the world

UNEP ASGM Global ForumUNEP ASGM Global Forum

Held December 2010 in Manila 17 ASGM countries from three

regions: governments, miners, donors, NGOs, experts

Discussed technical, social, legal and financial issues

Priority Social IssuesPriority Social Issues

Health and occupational hazards to miners, mining communities and adjacent communities

Open burning of amalgam without any protective

equipment

Photo: Ban Toxics!

Social issues (con’t)Social issues (con’t)

Women panning with children, Mali Photo: L. Bernaudat

Gender issues Child labor, ILO “Minors out of Mining”program

Social Issues (con’t)Social Issues (con’t)

Land and resource conflicts in mining areas;

Unregulated migration in gold rush areas, creating conflict and strains on social services.

Case Studies on Case Studies on Legalization and Legalization and FormalizationFormalization Cases from Zimbabwe, Tanzania,

Ecuador, Bolivia, Peru, Mongolia

Highlighted common issues countries face when developing a legal framework for ASGM

Definition of ASMDefinition of ASM

How to define different activities of ASM – individuals, cooperatives, associations, individuals, cooperatives, associations,

community enterprisescommunity enterprises– artisanal versus small scale versus medium scaleartisanal versus small scale versus medium scale

A long-standing, unresolved issue Definitions provide basis for creation of ASM-

specific policies, licensing and enforcement Often categories ignored, becoming “extra-

legal”

Artisanal?Artisanal?

Photo: UNIDO Global Mercury Project

Small Scale?Small Scale?

Photo: UNIDO Global Mercury Project

Blue Reef Small Scale Gold Mine (Tanzania) Photo: Global Mercury Project. Final Country Report for Tanzania. November 2007

Medium Scale?Medium Scale?

Complexity of RegulationComplexity of Regulation

Don’t know how to apply for licenses

Don’t know rights and obligations Complicated process Long distances to travel Complex regulations tend to favor

the owners, disempower miners

Land AllocationLand Allocation

Competition with/ preference for concessions to large scale mining – reliable source of tax revenue

One solution: establish ASM mining zones– Bolivia and Brazil: Special concession

regime for cooperatives and ASM mining How do these compete/overlap with

LSM? (note depth limit for ASM)

Where are the Spaces for Where are the Spaces for ASGM?ASGM?

Tanzania Mineral Rights Map(mostly large & medium size companies)

RoyaltiesRoyalties

Some miners avoid becoming legal to avoid taxes One solution: different royalty schemes for ASGM

miners– Bolivia: Special royalty regime for ASM: LSM (4%-7%) vs.

ASM (1.5% -2.5%)– Ecuador: Exemption for artisanal mining from royalties,

royalty for small scale is minimum 5% Question: Why should low income miners pay

taxes? Question: Why not buy gold at above spot prices,

to subsidize the rural poor and eliminate the black market?market?

Barriers to FinancingBarriers to Financing

Most important barrier: lack of Most important barrier: lack of access to credit because of the access to credit because of the informal nature of the sectorinformal nature of the sector

Lack of credit hampers ability to Lack of credit hampers ability to make improvementsmake improvements

One reason why formalization is One reason why formalization is critical to improve practicescritical to improve practices

Financing OptionsFinancing Options

Miners:– Form entrepreneur groups,

traditional funding systems e.g. group saving schemes;

– Develop a savings culture;– Increase income through value-

added activities

Financing OptionsFinancing Options

Financial institutions:Financial institutions:– Affordable credit schemes;Affordable credit schemes;– Mobile banking systems;Mobile banking systems;– Miners’ cooperative banks; Miners’ cooperative banks; – Rotating savings and credit Rotating savings and credit

associations;associations;

Financing OptionsFinancing Options

Third parties:– Third-party guarantees;– Creation of a system of staking and

selling ASM claims– Government-run Mining Development

Fund to support purchase of simple mining equipment

Formalization is critical, Formalization is critical, but:but: Specific requirements will vary from situation

to situation; Requires collaboration across spectrum of

stakeholders; Also requires financial and technical support,

access to markets, capacity-building and training;

Must manage important and complex relationship between artisanal and small-scale gold mining and large-scale mining.

UNEP Formalization UNEP Formalization DocumentDocument Series of case studies to capture

global experience Will serve as a guide to others

who want to approach formalization of the sector

Estimated to be completed by Autumn 2011

Legal Mechanisms Legal Mechanisms

Legal status of miners Diversity and scale of activities Mining and environmental laws

and policies, and their role in formalization efforts

Economic and Financial Economic and Financial MechanismsMechanisms Potential credit mechanisms Use of economic incentives to

formalize, including “responsible gold” Taxes, royalties and the gold supply

chain Advantages and disadvantages of

privatization/free trade of gold Public private partnerships in ASM gold

production

Institutional MechanismsInstitutional Mechanisms

Miners’ organizations: a key factor for Miners’ organizations: a key factor for formalization formalization

Small-scale and large-scale mining Small-scale and large-scale mining “working together” “working together”

Role of the Governments in supporting Role of the Governments in supporting formalization: opportunities and formalization: opportunities and challenges (mining departments, challenges (mining departments, academic, research and technology academic, research and technology centers, others)centers, others)