Artisanal and small-scale miners walk a thin line

Author Anuradha Ramanathan, Deputy Editor

The Covid-19 pandemic once again has cast a spotlight on the vulnerability of artisanal and small-scale miners (ASMs) in Africa to global threats and economic fluctuations, along with the fragility of supply chains for key metals such as cobalt, tantalum and gold.

The outbreak has “disproportionately affected” the livelihoods and well-being of the ASMs, as well as threatened to disrupt the responsible sourcing on-the-ground initiatives, the OECD Due Diligence Guidance for Responsible Mineral Supply Chains and Multi-stakeholder Steering Group said in late May.

Falling international mineral and metal prices, stoppages at production sites to implement lockdown measures, logistical bottlenecks and dampened outlooks for downstream consumer industries have weighed on the ASM sector in recent months.

Lower demand for cobalt from the super-alloy and automotive industries sent 99.8pc alloy-grade prices to near-one-year lows of $15.00-15.60/lb duty-unpaid Rotterdam in June, while average prices for 65pc tungsten concentrates dropped to their lowest level since September 2019, to $165/dmtu in-warehouse Rotterdam, as demand from the automotive and oil and gas industries declined.

Transportation issues compounded woes.

Movement of material between land-locked countries such as Rwanda, which produces tantalite ore, and the Tanzanian port of Dar es Salaam resulted in delays to international shipments. Tantalite ore prices for 25pc min Ta2O5 content rose sharply to $65-67/lb in May on the back of logistical issues and tightening spot supply. Ore prices were rebounding from historic lows of $50/lb reached mid-2019.

These factors have highlighted the ASM’s need for support from multiple stakeholder groups, which in turn will strengthen security of supply from the region. It is an important aspect of the supply chain because of its quick response to price changes that help balance the market and ease any short-term supply/demand shocks.

SM accounts for 20-40pc of the Democratic Republic of the Congo’s (DRC’s) cobalt production, according to Trafigura’s head of corporate responsibility, James Nicholson. However, sometimes ASM “can be dangerous and the working conditions have been exceptionally tough, but it is a fact of life”, he said. “ASM will continue to play an important role in the [cobalt] supply chain.”

The sector accounts for 83pc of the world’s mining workforce, employing about 40.5mn people. Men and women typically work individually, as a family or in partnerships, with predominantly simplified forms of exploration, extraction, processing and transportation. It is low-capital-intensive and uses labour-intensive technology.

The International Tin Association (ITA) estimates that ASMs contribute up to 40pc of the world’s tin supply, while LBMA said ASM’s gold production rose by 40pc over a decade to about 560t in 2019.

Responsible sourcing strengthens ASM, supply chain.

As more of the world’s consumers demand clean components for goods and services, the emphasis on the traceability of minerals is only likely to grow.

Historically, the so-called ‘3T conflict minerals’ of tin, tungsten and tantalum, along with gold, were mined for the benefit of non-state armed groups, particularly in but not limited to central Africa, using child labour and contributing to human rights violations. Tungsten, a strategic material, is used along with cobalt in the automotive, aerospace and oil and gas industries, while tantalum is used in the electronics sector to produce capacitors and high-power resistors.

Although ASMs still sometimes are seen as an “illegal” industry, international policies such as Section 1502 of the Dodd Frank Act, which requires publicly listed US companies to conduct due diligence in their supply chains for tin, tungsten, tantalum and gold, have resulted in the increasingly responsible sourcing of minerals.

One longstanding programme, ITSCI, has developed a responsibly sourced mineral certification process in the DRC, Rwanda and other countries in Africa’s Great Lakes region that establishes a conflict-free supply chain. Among the initiatives, the London Metal Exchange last year introduced responsible sourcing requirements for all brands listed for good delivery on the exchange.

The OECD and other trade associations have called on all stakeholders, including governments, companies and civil societies, to allocate funds to the programmes and provide humanitarian aid to support the ASM sector during the coronavirus crisis.

“Saving the hard-won gains of due diligence in mineral supply chains and sustaining support for responsible artisanal mining communities are vital. Recovery will only work if we do not have to restart from zero,” the OECD said.

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