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sharing in governance of extractive industries

How the EITI can support artisanal and small-scale mining (ASM)

At the recent EITI Global Conference in Lima, Peru, I facilitated the session on Artisanal and Small-Scale Mining (ASM) and how the EITI can support countries’ efforts to formalise and professionalise the ASM sector.

 

Why is this important?

The answers are multiple and straightforward. Everyone knows the ASM sector is wrought with challenges, but also massive opportunities for local poverty reduction and rural economic diversification. As my colleague, Eddie Rich wrote on the same topic last year, a key challenge is that the data on the sector is “sparse, unreliable, and all over the place”.

Much money is spent on ‘snapshot’ studies on ASM, while mechanisms designed with the objective to consistently generate reliable ASM data for easy public consumption, so to further transparency and accountability in the sector have seen somewhat less attention.
The EITI provides a platform for strengthening government systems to collect and improve the quality of data, to get data interoperable with other government data, to build a platform for dialogue and to build trust. ASM data is an area the EITI can help with.

That’s a controversial suggestion, which in the past was often met with a frown, rather than an enthusiastic smile. However, having ASM on the agenda at the EITI Global Conference and the more granular levels of conversation around this issue suggest more people understand the vision.

Vision? Well, here is ‘what if’:

What if the ASM “sector”, which provides a livelihood and a major source of economic opportunity for millions of people is no longer ‘too unknown’ or ‘misunderstood’ to be considered ‘too complex’ to engage with?

What if the data required for Governments and other stakeholders to effectively work with the ASM sector was readily accessible in a digestible and practically meaningful format?

What if this data consisted not just of mine sites, production volumes or export values, but also of more detailed data on environmental, political and social indicators?

With access to such data it is possible to implement an ASM management strategy that sub-categorises the sector sub-nationally so to open up engagement-, impact mitigation- and management opportunities to help ASM operate more responsibly.

While this does not resolve the over-arching challenge for ASM to obtain legal titles to land and resources, better data on the sector can inform better ASM management strategies. Better strategy implementation can allow ASM realise its rural development potential, which it otherwise often fails to deliver on.

 

RCS Global’s on-going work on the ASM Management Guidance for Governments (draft) developed for the Intergovernmental Forum on Mining, Minerals and Metals provides a strategic framework to achieve this. In the context of the EITI Global Conference we simulated the implementation of the compact version of this practical tool assisting Governments – together with other stakeholders – to better manage ASM.

The simulation of the Guidance, drawing on the Peruvian case, was a success and the final version of the ASM Management Guidance (compact and complete versions) will be available to implementing Governments and other stakeholders within 2-3 months.

 

How can the EITI help?

Tapping existing data sources and finding new ways to generate data to inform the implementation of ASM management strategies is essential to achieve progress.

The EITI, now implemented in 51 countries, has historically focussed on the oil, gas and industrial mining sectors. ASM typically does not produce material revenues at the national level and was therefore often ignored in EITI reports.

However, requirement 6.3 in the 2016 EITI Standard requires an estimate of the informal extractive sector’s contribution to the economy. This includes contextual (and more data) on the ASM sector.

Selected EITI implementing countries, such as the DRCGhana, Niger and Togo, already include some data on ASM production in their EITI reports. While not part of the formal EITI reconciliation exercise this data provides important insights into the ASM sector and its interrelationship with formal economic and development processes in the countries. Many other EITI countries have expressed an interest in further guidance on how the EITI can be a tool for addressing ASM challenges.

In complementarity to the forthcoming final RCS Global/IGF ASM Management Guidance for Governments, the World Bank has produced a useful short note (currently in draft format) elaborating some ideas for MSGs on EITI ASM reporting. The note spells out some of the benefits of incorporating ASM into EITI reporting and suggests three options for reporting of one – or a combination – of the following data sets: a) providing an overview of ASM activity, b) production, and c) revenue data.

Collecting this data will be a step in the right direction, yet the challenge with existing Government collected data sources is that in many EITI implementing countries these are often incomplete and lack sufficient scrutiny. The ASM sector is a useful money-laundering tool and is often abused by criminal elements seeking to benefit from smuggling or under- and mis-declared activities. Increasing the capacity of Governments to collect data can only partially improve the situation unless such capacity building measures are coupled with anti-corruption measures and making ASM sector operators a willing stakeholder in reporting.

In a second step, just like with the abundance on oil, gas and industrial mining data, the ASM data has to be made available in a meaningful and easily digestible format.

 

Incorporating into EITI reporting vetted data from supply chain initiatives

Some work has been done over the years on the significant synergies that exist between the EITI and the rich ASM production and trade related data that ASM mineral assurance and/or certification programs such as, for example, CTCFairminedITSCI, the Kimberley Process and the Better Sourcing Program generate.

Integrating the respective databases underpinning these programs with public EITI reporting would provide additional assurances over the integrity of the collected data, overcoming some of the data challenges mentioned above. Matching the production and export volumes and values through these schemes can in certain countries also help efforts to curb smuggling and illegal exports, where extraterritorial legislation (such as the US Dodd Frank Act Section 1502) requires exports in certain minerals and metals to be certified compliant with international guidance, such as theOECD Due Diligence Guidance for Responsible Supply Chains.

Looking at the trade in artisanally produced minerals and metals in turn complements well theEITI’s current efforts to extend the initiatives from one focussed on the extractive stage to one that includes the trading stage in the value chain.

Much of this activity shows that ASM – as a subsection of EITI implementation – is becoming a more dynamic and innovative thematic area. This makes it very important to pick up early lessons from the first movers in implementation and to continue to push the scope for collaboration between the EITI and other supply chain initiatives.

 

About

 

This blog note written by Dr Nicholas Garrett was originally posted on RCS Global website and can be consulted directly here

Dr Nicholas Garrett is a Director at RCS Global and at the Better Sourcing Program. He is a globally recognised expert in issues of transparency, ASM and responsible global supply chains.

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