Download - Artisanal gold mining
AFRICA RESOURCESAFRICA RESOURCESINVESTMENT CONGRESS
Artisanal gold mining Andre Van Zyl – Oak Ridge Mining
IRONMONGERS’ HALL, CITY OF LONDON ● TUESDAY-WEDNESDAY, 14-15 JUN 2011www.ObjectiveCapitalConferences.com
Artisanal Small‐scale MiningArtisanal Small scale Mining as an alternative investment
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A dAgenda
Introduction
Some thoughts on the conflict in the eastern provinces Some thoughts on the conflict in the eastern provinces of DRC
Introducing Fairmining and Kalminco Introducing Fairmining and Kalminco Fairmining overview Kalminco Challenges and update The future of ASM Fairmining
Artisanal Small‐scale Mining Artisanal Small scale Mining as an alternative investment
Over 13 million people work directly in small mines throughout the world, mainly in developing countries. The sector is known for its high environmental costs, inefficiency and poor health and safety record. It is l i d fit bl d f d t ll t i blalso viewed as unprofitable and fundamentally unsustainable.
Oak Ridge Mining Solutions has a different view
We believe ASM can play a crucial role not only in poverty alleviation and rural economic development but also in regenerating local, regional and in some cases national economies, while providing exciting new and , p g galternative investment opportunities.
Today in the Congo 80% of all mining are still generated by artisans
Wh Who are we…
Oakridge Mining Solutions Ltd (ORMS) was established as a social and philanthropic enterprise to transform communities in the developing world through enabling artisanal/small scale mining cooperatives toworld through enabling artisanal/small scale mining cooperatives to mine more effectively, profitably, safely and responsibly.
These cooperatives are supported through joint ventures to in turn p pp g jgenerate sustainable economic transformation. ORMS provide management expertise, assets, finance, business process, communications/ IT infrastructure and international trade capability to these commercial small scale mining companies.
Our main area of operation is the east of the Democratic Republic of CCongo.
C fli t i E t CConflict in Eastern Congo…
Mineral trade in the DRC has been a central feature of conflict in the Congo for decades,
Resulting in the lowest per capita income in the world,
A d f th ld l t i h it i di t And one of the world longest running humanitarian disasters.
It’s a complex and multi faceted conflict, where superficial d i lifi d tt t t l ti t d t t tand over simplified attempts at solutions tends to perpetuate
rather than help the cause.
O i f th iOur views on some of the issues...
Blood in the Mobile movie – very subjective and one sided.
DRC Government mineral ban – proof that the law of unintentional ti h iti t !consequences can sometimes have a very positive outcome!
US Dodd Frank Bill – de facto embargo that could lead to economic genocide. Not properly thought through with no alternatives or solutions put in place Impossible to comply with on the scalesolutions put in place. Impossible to comply with on the scale needed to ensure a positive outcome.
Colonization vs Investment – what Africa needs is investment capital cash used to start businesses factories mines etc to create wealth‐ cash used to start businesses, factories, mines, etc to create wealth
The real problem facing artisanal miners – debt, not militia
C fli t iCongo conflict overview
Extract from article by Jason Stearns, previous head of the UN team of Special Investigators into the East Congo Conflict
“ My article in Foreign Policy received several helpful comments from friends who…My article in Foreign Policy received several helpful comments from friends who objected to the emphasis on conflict minerals by some advocacy groups in the United States and elsewhere. There is a growing number of people ….who are skeptical of this approach.
…. minerals were not the source of the conflict in the Congo, not will severing the links between the mineral trade and armed groups bring an end to the violence. The excessive focus on conflict minerals has the perverse side‐effect of believingThe excessive focus on conflict minerals has the perverse side effect of believing that the war is driven by greedy warlords, can prompt irresponsible policy and lead people to believe that the violence is somehow impossible to stop and due to deep rooted antagonisms.”
C fli t iCongo conflict overview
The conflict in the Congo is complex, and is being perpetuated by a mixture of permissive, structural factors and active spoilers. The country lacks functional institutions to police the country, secure equitable property rights and courts to p y, q p p y gpeacefully adjudicate disputes. It has suffered from outside interference ……with a mixture of motives. At the very local level, disputes over land and citizenship ‐complicated by crises in civil and customary authority ‐ have fueled feuds and conflicts often expressed in ethnic termsconflicts, often expressed in ethnic terms.
Given all of this, the war in the Congo requires a much more comprehensive strategy that looks toward the long‐term transformation of Congolese society to become a less violent, more equitable place. In the end, this will be the responsibility and concern of Congolese citizens, not foreigners.
The new face of miningThe new face of miningDeveloped in Africa for Africa
Oakridge Mining Solutions, in conjunction with local stakeholders in the DRC have developed Fairmining, a sustainable new approach to poverty alleviation and long term rural development by developing the artisanalalleviation and long‐term rural development by developing the artisanal mining sector into community owned small scale mining companies with a dedicated social development and wealth creation objective.
An African developed, Congo led initiative
Fairmining ‐ The future of mining re‐defined
Wh i F i i iWhat is Fairmining….
Fairmining promotes a sustainable approach to poverty alleviation, long‐term rural development and ultimate wealth creation by providing a framework for
‐ ethical trading,en ironmental a areness‐ environmental awareness,
‐ social development and‐ regulatory compliance.
This standards based frameworks forms the basis for the development of practical and self sustaining artisanal p gand small scale mining activities in developing countries.
C it b d i iCommunity based mining
Fairmining assist communities and artisanal miners to form sustainable community based cooperatives.
l d l d h ll f d d d Social development and ethically focused investors are introduced to these cooperatives under Fairmining guidelines
Local joint venture mining companies are formed where these cooperatives retain a majority stake.
These mining companies operate under the Fairminingmodel.
This will create a new generation of smaller, effective and environmentally sensitive mining companies that will ensure wealth creation for the benefit of local communities and regions while delivering high social and financial return on investment for investors.
Th f f i b d i iThe future of community based mining
Mechanisation
Profitable commercial small scale
Formation of community b d i i
Mechanisationof artisanal mining activities under control of mining
mining companies owned by community cooperatives
Ad Hoc artisanal mining activities
based mining cooperatives
cooperativescooperatives
activities
F i i i D li bl Fairmining Deliverables
Transparent business model that allows open negotiation, builds trust across the stakeholders and delivers returns at local, regional and national levelnational level
Joint Venture structure that shares best practice management
Investment vehicle that attracts international capital through high levels of return and significant risk mitigation
Supply chain rationalisation through an inclusive approachapproach
Best in class IT and Communication systems that allow for end to end process management, enhancing security and output authentication.
Partnering with world standards organisationssuch as Fair Trade and ITRI to assure end users in their CSR requirements.
F i i i Mi l T bilit
d h b l k l d
Fairmining Mineral Traceability
We consider the ability to track mineral production from source to export across the entire supply chain as part of any business’s normal operational processes and not as an “add on” or independentprocesses and not as an add‐on or independent activity.
All companies that adopts the Fairmining modelAll companies that adopts the Fairmining model will be required to adhere to this and implement Fairmining traceability in conjunction with the relevant regulatory or industry representative g y y pbodies.
The Fairmining traceability will help to establish a transparent chain of custody.
Re‐defining miningRe‐defining mining
The Fairmining model introduce a number of important new elements into the current approach to mining in predominantly thi d ld d l i t ithird world developing countries.
1. A new approach to social development by incorporating wealth creation as integral part of social developmentwealth creation as integral part of social development.
2. A new approach to the acquisition of mining concessions with the incorporation of community co‐ownership.with the incorporation of community co ownership.
3. A new way to access development capital and investment for small scale mining and artisanal mining cooperatives.g g p
Th fi t F i i iThe first Fairmining company…
The first Congolese minerals company owned by theThe first Congolese minerals company owned by the local community.
Oakridge COMIMPA
Generic Fairmining Business Model
Mining Solutions
COMIMPA Cooperative
20% 80%50%
Kalminco
20% 80%
Social
40%* 35%*
DevelopmentProjects
PartnerP
Partner
40%*
70%*
35%*
PartnerCompany
Eg. Smelter
PartnerCompanyEg. Trader
PartnerCompany
Eg. Exploration
* = Percentages depending on business agreement
K l i ’ h llKalminco’s challenges…
The DRC Government mining ban was announced only days before the launch of the first Kalminco pilot mining site, putting a hold on all operations for 6 monthsall operations for 6 months.
Three weeks after the lifting of the DRC mining ban the US Dodd Frank induce electronics industry embargo came into effect on 1 y gApril creating further delays.
Raising the required investment capital.
Building trust amongst members of communities.
Debt – almost all artisanal miners are in debt to traders.
K l i d tKalminco update…
Kalminco management played a leading role in the negotiations that led to the lifting of the DRC mining ban and the adoption of a new artisanal mining code of conduct.g
Kalminco VP elected as representative of all artisanal miners in North Kivu, leading to the establishment of an umbrella cooperative representing all artisanal miners in the provincerepresenting all artisanal miners in the province.
Kalminco have committed to implement the Fair Trade Gold standard for small scale and artisanal mining, which together with Fairminingtraceability will give a clear chain of custody that would comply withtraceability, will give a clear chain of custody that would comply with Dodd Frank and SEC requirements.
Kalminco’s first Fairmining gold site have become operational this month.
Th f t f ti l F i i iThe future of artisanal Fairmining…
Since the end of the DRC Government ban a total of 36 cooperatives in South and North Kivu have been formed based on the Fairmining model. They are now in the process of registration before setting up joint venture structures.
This conservatively represent around 800 000 miners.
Mechanised small scale mining in DRC have the potential for exceptional high yields providing very attractive ROI to investorsyields, providing very attractive ROI to investors.
A high number of women mine owners are currently involved in these mining cooperatives.
Its not a silver bullet, it’s a slow and sometimes painful road, but it does provide the local communities with a sustainable platform for economic and social transformation.
Th b fit f ti l F i i iThe benefits of artisanal Fairmining
We believe that the adoption of the Fairmining Model by local artisanal mining will bring a number of important benefits :‐ It will address the local community’s economic and social aspirations It will address the local community s economic and social aspirations,
which in turn will create a more favorable climate for co‐existence with large scale commercial mining.
It will provide an alternative investment opportunity for the investor demanding a higher social dividend than what is possible in traditionaldemanding a higher social dividend than what is possible in traditional commercial mining, while still delivering very attractive financial returns.
Community owned small scale mining companies like Kalminco offers a new, sustainable and robust platform for international mining exploration and other commercial partnerships with local communities, mitigating one of the biggest risk in mining investment in Africa today – local community conflict and political dependency.
Th k Thank you…
We believe in the future of Africa as a primeof Africa as a prime investment destination and encourage you to join the people of Africa as they build a new f t f t bilitfuture of peace, stability and prosperity.