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I had the opportunity to consult briefly (in late 2011 and early 2012) to the Contraloria de la Republica, Colombia's comptroller-general, which has an oversight function over other government agencies. The general topic of my work concerned the environmental effects of mining, seen against the background of an environmental ministry which appeared to be unable or unwilling to fulfill its mandate.

I recall discussions about huge existing coal mining operations and a large gold exploration project in the mountains. There were undoubtedly serious and long-term environmental and social issues to resolve, but at least government agencies can interact with a small number of large companies, and these have international reputations and stock exchange rules to abide by.

When we discussed small-scale mining, however, there appeared to be a perception that the problem was a lot smaller:

- A perception that the environmental impacts were less;

- A perception that the social impacts were small, since these were merely local people eking a living out of their immediate surrounding, not unlike farming.

I have worked in the gold exploration industry in West Africa (Ghana, Burkina Faso, Mali), and have been involved in mining governance projects in countries like Ghana, Ethiopia, Kenya and Mongolia.  Small-scale mining is a serious problem in all of those countries, one that cannot merely be wished away or legislated out of existence.  In contrast to the perceptions described above, I've noticed that:

- The environmental impacts can be huge, including mercury-related issues (whether used in sluice boxes like in Colombia, or whether 'merely' used in the amalgamation of gold from concentrates, on land).  Moreover, small-scale mining activities generally add a lot of sediment into river waters, and this increased sediment load has a serious effect on the aquatic life in these rivers.  And river beds, often dug up to extract gold from old river terraces, are left disturbed, not replanted, etc.

- Social impacts, probably initially not so heavy, always increase over time.  Outsiders turn up, also start working in the same areas, but as the article above notices, they tend not to integrate well with local communities.  In Ghana, however, I've seen that even when they interact with communities, this usually brings all the problems associated with quick money: alcohol, drugs, prostitution.

- Unlike large mining companies, small-scale miners tend not to pay royalties, which essentially means that they are stealing the country's wealth from the current and future citizens.

The main problem for governments is the fact that the very large numbers of small-scale miners makes it very difficult for them to be governed in any meaningful sense.  At the same time, groups of small-scale miners working in profitable areas tend to grow into rather structured cooperations, with persons renting out earth-moving equipment, pumps, setting up service industries (ranging from catering to prostitution, etc.).  This may have a beneficial economic effect, but it has been noticed in some countries that real benefits tend to accrue to a small number of people (owners of equipment, for instance) while the local people merely eke out a survival in an environment that deteriorates rapidly.

ASM is an industry that will not go away, cannot be legislated away, cannot be easily governed or controlled.  The only sensible solution (even if it's only a partial solution) is to regularise the industry, licensing operators, thereby allowing them access to (loan) funding, and at the same time to organise some sort of government-led buying scheme so that royalties can be extracted or withheld. If ASM operators can be convinced to form cooperatives or companies, these also become somewhat easier to govern and it becomes somewhat easier for government agents to impart knowledge about environmental practices, etc.

I therefore agree completely with the various formalisation strategy described above.