The fair gold

Materials World magazine
1 Dec 2017

Little progress has been made to improve conditions for small-scale gold mining communities, especially in Africa. Remarkable as they are important suppliers for the global market, argues Fartrade's David Finlay. The NGO therefore launched a new investment facility to bring about change.

Bathed in red dirt with no release from fresh water, millions of miners toil day after day in search of the winning ticket. The artisanal and small-scale mining (ASM) sector is one of the most at-risk and dangerous industries in the world. Often, workers live in abject poverty, and many are left even more at risk due to the lack of the most basic health and safety protection.

Nevertheless, it is often more financially attractive to work in mining than, for example, in agriculture as miners are important suppliers to the international jewellery market, as well as fashion, information and communication technologies and electronics sectors. Around 90% of the labour force involved in gold mining is made up of artisanal and small-scale miners, the World Bank estimates. They produce between 300-500 tonnes of gold each year, according to research done by the University of São Paulo, Brazil. This, in turn, generates US$135bln of consumer spend per year on gold jewellery. 

However, little progress has been made to improve conditions for mining communities, especially in Africa. While Fairtrade continues to grow in other product areas linked to agricultural commodities, there remain systemic issues within the world of extractives and small scale gold mining, which make it challenging to deliver equivalent impact.

In Africa, the majority of ASM takes place around Lake Victoria, in Uganda, Kenya and Tanzania. In Uganda alone, 130,000 people directly earn an income through ASM, and a further 800,000 benefit indirectly. Unlicensed artisanal gold miners produce as much as 2.8 metric tons of gold per year, which would be enough for 82 million mobile phones. 

Yet, often artisanal gold is mined and exported illegally due to poor regulations. Unregulated gold mining has led to conflicts in the sector, competition for land use, smuggling of gold, child labour, human rights abuses, environmental and human health concerns and tax revenue losses.

But things are slowly changing. Against this dark backdrop there is a glimmer of hope and in September, at the Goldsmiths Centre in Farringdon, London, the Fairtrade Foundation delivered two significant announcements that will improve lives of ASM miners.

First was the arrival of Fairtrade certified gold from Africa to reach the UK. Secondly, an investment facility was launched. This has been developed by Fairtrade and will be provide mine sites with access to low interest investment finance to acquire enhanced mining equipment and reduce their reliance on mercury. This approach will be trialled with an initial collection of mine sites from Uganda, Kenya and Tanzania.  

From first-hand experience, when travelling to the various different ASM communities we work with in East Africa, mine sites have little access to affordable finance and tend to find themselves indebted to middlemen traders who expect repayment in gold at discounted rates in exchange for any temporary money they provide. This creates a bonded-labour relationship between middlemen and small scale mine sites, meaning communities are unable to independently finance better, more productive equipment and have no way to invest in the future of their operations while still laying claim to the gold they extract. 

Addressing the endemic social and environmental challenges in ASM communities from the ground up means we could tackle poverty and bring about change in a way no other system has done before in the niche of African small-scale gold mining.