June 12 2014

See inside small scale mining

Over the next year we will be working with small scale miners in Africa to develop Fairtrade practices & international trading. Here is an introduction to the challenges facing the small scale miners we met in Tanzania & Kenya:

Small scale mining produces as much 25% of the world’s gold supply.  The image below is typical of what you’d see at one of these mines in Tanzania—a mix of people around water, dirt, diesel and machinery.

In the developing world, small scale gold mining is subsistence based, almost always illegal, unregulated, and extremely toxic.   A small scale gold mine can look like destroyed river banks or patches of toxic tailings in the middle of a rainforest.   Sometimes it is done part time, to supplement or substitute for agricultural.  Amost universally, it is considered huge problem in the developing world.  Annually, small scale gold mine spills 1400 metric tons of mercury into the environment– mercury is one of the most dangerous of all neuro-toxins.

Fairtrade gold works with small producers.  What is considered small versus medium or large is not yet clearly defined.  One benefit of small scale mining is that it employs a lot of people.  Worldwide, 60% of the gold is produced by large mining companies that might pay a small royalty to a government and export the gold out.  Large scale mining employes about 700,000 people.  Worldwide, small scale gold mining is done by 25 million people. This potentially could be a a huge amount of money entering the local economies in producer communities.

Once the miners get their gold, they sell it, often the same day. A small scale gold miner might make between a half a kilo and kilo of gold a month. But they don’t know the true value of their ore and they are never fairly paid for their efforts. They sell to middle men who buy their gold at up to 30% under its real value. Also, because refining methods are not that efficient, miners can leave another 20% of their gold in their tailings. They don’t have the equipment to get the full value of their ore. The miners from Uganda told us stories of how when they were selling their gold, they were often marked and robbed. Even if the miners did want to sell to an international market, and accumulated enough to do so, there is also the issue of documentation and logistics.  

Fairtrade succeeds in transforming small scale gold miners from a resource curse into in an environmentally responsible business initiative that alleviates poverty.  The operations we saw employed forty to sixty people.  They might produce between three quarters of a kilo and a kilo of gold a month.  Fairtrade gold is not charity.  Fairtrade provides a certification structure and credibility that allows fair business between empowered producers and ethical international business people.