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ASM FORMALIZATION GUIDE

IN THE ICGLR MEMBER STATES

July 2017

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Contents

Acknowledgement ................................................................................................................................................ 3

About the Author .................................................................................................................................................. 3

List of Abbreviations and Acronyms ..................................................................................................................... 5

Executive Summary.............................................................................................................................................. 6

Introduction to the Guide ..................................................................................................................................... 7

ASM Definitions and context ........................................................................................................................... 8

ASM Formalization ............................................................................................................................................... 8

What drives ASM Formalization in the ICGLR ..................................................................................................... 9

Recommended Steps to ASM formalization in the ICGLR ................................................................................ 10

References .......................................................................................................................................................... 15

Annexes............................................................................................................................................................... 16

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Acknowledgement The author would like to acknowledge the Member States of the ICGLR for making available the information used for production of the present report, specially the focal points for the formalization of ASM. To the organizations and individuals that provided information, for their time and valuable information on ASM in ICGLR, are all specially thanked. Special thanks are extended to the participants of the Khartoum validation Workshop who provided valuable inputs to the guide.

About the Author Dr Salvador Mondlane Junior is a Mozambican professor of Economic Geology and Economic Evaluation of ore deposits at the Eduardo Mondlane University. He is the director of Master Course in Mineral Resources Management at UEM since 2012. He is Director of GMSC, Ltd (one stop boutique consulting company in Geosciences, energy and environment). During his 25 years of research he has focussed on: Mineral resources evaluation; ASM in Africa and in Mozambique, its social and environmental impacts, and their maximisation or mitigation, and, the geological mapping and characterization of Mozambique’s mineral resources. Recently he was lead consultant for the development of the training material and supporting the delivery of Training workshop on environment, health and safety in LVMM artisanal and small-scale mining in Addis Ababa (for East Africa Region), Accra (for West Africa Region), and Maputo (for Southern Africa Region). He has successfully completed consultancy services with AMDC where he was involved in the implementation of the ASM Pillar on the African Mining Vision at the AMDC/ UN ECA with focus on profiles of ASM in Africa and review of the mining codes in order to understand how they support the development of sustainable ASM in Africa. Further, numerous assignments as a consultant for international organizations and private companies have cemented Salvador’s expertise in Mineral Resources Management and course delivery at University. Furthermore, as consultant he has conducted successfully assignments on Strategic Environmental and Social Assessments, sustainable ASM management and promotion, mineral and hydrocarbons’ good governance, and institutional capacity building; having participated in the drafting of the New Environment, Health and Safety Regulations for mining and geological activities in Mozambique (2005). More recently Salvador was involved in the Rapid Baseline Study of ASM Sector in Mozambique (2012); he also was involved in the Functional Management Review of the Ministry of Mineral Resources of Mozambique, the INP and ENH (2013); finally he was involved as Deputy Team Leader on the Functional Management Review of the Geological and Mining Institute (2014). Salvador and his team developed the Training Needs Assessment at the Ministry of Mineral Resources (2013). He also led the team that produced the 10 years report of the Ministry of Mineral Resources in Mozambique (2014). Salvador holds a Licenciatura in Geology from the Eduardo Mondlane University, an MSc. In Mineral Exploration and Mining Geology from Leicester University, and a PhD in Economic

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Geology from the University of Zimbabwe and Utrecht University; he speaks fluent English and Portuguese and can work in French and Mozambique’s southern dialects.

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List of Abbreviations and Acronyms

3Ts Cassiterite, Wolframite and Coltan

AMV Africa Mining Vision

AMDC African Mining Development Centre

AMZs Artisanal Mining Zones

ASM Artisanal and Small-Scale Mining

CAMI Mining Cadastre

CEEC Centre d’Expertise, d’Evaluation et de Certification des Substances Minérales précieuses et semi-précieuses

CSO Civil Society Organization

CSR Corporate and Social Responsibility

DRC Democratic Republic of Congo

EIA Environnemental Impact Assessment

GDP Gross Domestic Product

ICGLR International Conference on the Great Lakes Region

ICGLR MS International Conference on the Great Lakes Region Member States

KPCS Kimberly Process Certification Scheme

LSM Large Scale Mining

MEM Ministry of Energy and Mines (Tanzania)

NGO Non-Governmental Organisation

OECD Organization for Economic Cooperation and Development

PPLs Primary Prospecting Licences

RCM Regional Certification Mechanism

RIF Rural Investment Facility

RINR Regional Initiative on Natural Resources

ROM Run of Mine

SAESCAM Service d’Assistance et Encadrement du Small-Scale Mining

SSM Small Scale Mining

ToR Terms of References

VAT Value Added Tax

ZEAs Artisanal Exploitation Zones

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Executive Summary bout the ASM Formalization Guide in the ICGLR Members States: the Formalization guide describes fast track processes and recommendations for legalization of the ASM taking into consideration the best practices being implemented in the Region and is

anchored on the field observations on the 50% of the ICGLR Member States. The best practices are harvested in a separate publication and this guide is mainly a set of recommendations of what Member States can adopt to formalize and manage sustainably the ASM.

Figure 1: ASM site for alluvial Gold, Manica, Mozambique.

It is recognised that all ICGLR Member States have processes and procedures for licensing ASM. In most countries, the legislation distinguishes clearly the processes and requirements for Artisanal Miner from Small Scale Miner while two countries consider a generalised legislation that include Artisanal and Small-Scale Miners. The rate of informality in the ICGLR MS is very high in all minerals and reaches more than 90%. Thus, the sector does not fully contribute to the National economies, which constitute one of the reasons for the Governments to lose interest in assisting this sector. The region through ICGLR has approved and established important instruments related to mechanisms and systems to prevent illegal exploitation of natural resources, however, the Member States are rather slow in harmonizing and making their legislations complaint to the Protocols. The only countries that have made significant progress in enacting specific regulations aligned with Regional Protocols are DRC and Rwanda. The Guide aims at assisting Governments that are committed in harvesting benefits from the ASM sector while controlling the negative impacts and the illegal trafficking of minerals and consequently eliminating its contribution to political and military instability in the Great Lakes Region.

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Introduction to the Guide

This guide is a compilation of practices on the basis of ToR commissioned by ICGLR and the

active collaboration of main stakeholders in the ICGLR Member States and provides an

informative overview of ASM sector mainly on 3Ts and Gold and attempt to guide the

Governments on appropriate approaches to formalization of the lower-end of the sector

segment, the Artisanal Miners, by drawing from lessons learned from past experiences in the

region and elsewhere.

The guide is mainly intended to the Governments, especially entities responsible for the design

and enforcement of laws or regulations. Other stakeholders and practitioners from NGO’s,

development partners and civil society organizations (CSO) could use the guide to drive their

contributions in the formalization efforts to ASM.

This guide has to be used in conjunction with other two sister publications “BEST PRACTICES

ON THE STRATEGIES TO FORMALIZE THE ASM SECTOR IN THE ICGLR MEMBER STATES

(AND ETHIOPIA AND GHANA AS BENCHMARK COUNTRIES)” and the “GENERAL OVERVIEW

OF THE LEGISLATION ON THE ICGLR MEMBER STATES (AND ETHIOPIA AND GHANA AS

BENCHMARK COUNTRIES)”, also produced under the same ToR.

The Formalization Guide principles assumes that Governments accept, and to some extent

decided to take steps towards sustainable development of the ASM sector in their countries.

The Guide also takes cognisance of the fact that the Member States are in different levels of

socio-economic capacity and political commitment and stability.

Formalize or legalize or authorize ASM: there is a general tendency to believe that the magic

solution for the sustainable development of ASM is eliminating the illegality by formalizing the

sector. In this context formalization is considered as licensing or attribution of legal rights to

operate to the miners or groups of miners. It is already reported that the context in which

mining rights are awarded vary from country to country in the ICGLR MS1, however, regardless

of the Governments’ efforts in pursuing formalization for the last twenty years, the result has

not yet been satisfactory.

The rights to operate are complex in the region, varying from different structures, from

traditional and customary ownership of land to the central or decentralized legal framework.

This Guide will not try to solve such complexity of issues, but, to propose a path in which

interested Governments may follow to formalize the sector.

1General overview of the legislation on the ICGLR member states (and Ethiopia and Ghana as benchmark countries)

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ASM Definitions and context

Artisanal and Small-Scale Mining (ASM) are formal or informal operations with

predominantly simplified forms of exploration, extraction, processing and transportation. ASM

is normally low capital intensive and uses high labour intensive technology. ASM can include

men and women working on an individual basis as well as those working in family groups, in

partnership or as members of cooperatives or other types of legal associations and enterprises

involving hundreds or thousands of miners2.

The discussion on the definition of the ASM is presented on the “General overview of the

legislation on the ICGLR Member States (and Ethiopia and Ghana as benchmark countries)”, as

part of this study, similarly is presented the significance of the ASM sector in the ICGLR MS.

ASM Formalization

The legal review of the mining laws in the ICGLR MS is also extensively discussed in the

“General overview of the legislation on the ICGLR Member States (and Ethiopia and Ghana as

benchmark countries)”. In the present section of the study, it is important to focus on the

formalization of the ASM sector and proposed steps for formalizing ASM in the ICGLR MS.

All ICGLR Member States have processes and procedures for licensing ASM. In most countries,

the legislation distinguishes clearly the processes and requirements for Artisanal Miner from

Small Scale Miner while two countries consider a generalised legislation that include Artisanal

and Small Scale Miners.

The rate of informality in the ICGLR MS is very high in all minerals and reaches more than 90%

(ASM Study on ASM in Africa, 2016). Thus, the sector does not fully contribute to the National

economies, which constitute one of the reasons for the Governments to lose interest in

assisting this sector.

The region through ICGLR has approved and established important instruments related to

mechanisms and systems to prevent illegal exploitation of natural resources, however, the

Member States are rather slow in harmonizing and making their legislations complaint to the

Protocols. The only country that has made significant progress in enacting specific regulations

aligned with Regional Protocols is Rwanda and to some extent DRC.

2OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk

Areas – Supplement on Gold, Second Edition (2012) www.oecd.org/fr/daf/inv/mne/mining.htm

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What drives ASM Formalization in the ICGLR

There is extensive literature discussing what drives informality of ASM in the world and in the

ICGLR Member States and these include poverty, complex legislation, centralised processes

for legalizations, high licence fees, etc. The discussion here is about finding positive reasons for

formalizing ASM beyond the obvious reason such as revenue collection from Governments,

rational, political, economic, social and environmental management of the sector. The main

drivers to formalization of ASM in the ICGLR include (i) attempt to control the illicit trade of

minerals; (ii) need to comply with international covenants and guidelines, e.g. OECD

guidelines, Dodd Frank Act etc.; (iii) military instability in the region; (iv) six tools of the RINR

(ICGLR); (v) need for traceability of the 3Ts and Gold.

Figure 2. Key drivers for formalization in ICGLR Member States

All the above drivers are valid in the perspective of the regulators or the Governments

(demand side). Probably it is high time that reasons for and from the miners areused to explain

the need for formalization. In the above drivers forformalization, the processes are imposed to

the miners and they are expected to comply.

What could be the tangible direct benefits that miners could accrue from formalization? From

lessons in the world the following benefits to the miners are considered: secure and fairmarket,

fairprice, Government protection, access to technology, access to finance, etc. These might

work for 3Ts and other bulk products, but it does not apply for precious metals and stones

where there is always competitive market, sometimes higher than the world market price.

With exception of Ethiopia which managed to implement a subsidy scheme that support the

1.Military instability in the region

1.Illicit trade of minerals

1.International covenants and

guidelines

1.Traceability of minerals

1.Six tools of the RINR

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buyers by paying 5% above the international market3, very limited experiences can be cited on

this regard.

Figure 3. ASM site in Kivu, DRC

Recommended Steps to ASM formalization in the ICGLR

Governments are fostered to see ASM Formalization in respect to the national structures and,

prioritize the need and importance to develop Formalization by considering, improved

governance structures and improved livelihood alternatives, in consultation with miners and

miners’ associations so that they can identify themselves with policies. There is need for

inclusive approach to formalization.

The present guide or set of recommendations is based on the discussions among the

stakeholders and validated in a regional workshop where 23 recommendations were tabled for

discussion and prioritization (see fig. 4). The recommendations that rated less than 4 out of

five, were disregarded or merged to others for better clarity. Out of 23, the participants to the

Khartoum workshop rated five as below four. Hence, the present set of recommendations has

been consolidated to 14 with the merging of other recommendations.

3The Commercial Bank of Ethiopia buys all gold produced in the country and also offers loans to the buyers. The mechanism secure loan payback by discounting on the gold sold to the Bank.

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Figure 4. Rating of the recommendations by the participants of the Validation Workshop in Khartoum

The following are recommended actions to formalize ASM in the ICGLR Member States:

1. The Region has taken the necessary steps to lead the formalization of ASM by

implementing the RINR and by approving the necessary instruments for it. Countries

need to domesticate the regional instruments as recommended in the ICGLR

Declarations. Such domestication requires that Member States pass legal instruments

for ASM formalization. While doing so, it is key to separate the Artisanal Mining from

the Small-Scale Mining. The other level of separation is by main commodities, i.e.

precious metals, 3Ts, industrial minerals, low value and high volume minerals etc.

There is need to harmonize the concepts in the region in order to prevent cross-

border misapplications.

2. The Legal framework needs to be clear about the sector in terms of definitions of the

sector. Such definition need to be flexible to accommodate the complexity of the sector

– and must incorporate elements related to mechanization, production level, initial

capital investment, depth of the operations, size of the concession (allocated minimum

plot), number of workers, and land tenure, be considered to an extent that all

practitioners and interested parties understand the meaning of Artisanal Mining Sector

(or subsector) in relation to the Small, Medium and Large Scale sectors (or subsectors).

Thus, an initial step is to review and update the legal framework and set the minimum

requirements for legalization in a way that it is accessible and affordable to the miners.

The country legislation need also to take cognisance of the ancillary laws and negotiate

its customization to comply with requirements of the ASM subsectors. For example,

the Environmental requirements4 may need to be simplified for the ASM sector and or

waved for lower level of the ASM, (may need only a checklist or an environmental

4 Understood as the major hinder to formalization of the ASM

0

1

2

3

4

5

6

0 5 10 15 20 25

Rat

e 0

-5

Recommendation

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statement) and still be able to have mechanisms that prevent abuses that may result in

overlooking the negative impacts (environmental, social, cultural and illegality (illicit

trade of minerals, traffic, child labour, slavery, etc)). On the similar path, the land and

forestry laws need to be adapted to accommodate the ASM sector as non-competitive

and guaranty that mined out land can be used for other activities. The fiscal law need to

be adapted to accrue associated revenues and compound to high level of cost benefit,

rather than attempting to prohibitively suction the miners. There is need to minimise

the legal requirements for ASM to acceptable and accessible levels.

3. It seems that some countries have the political determination but do not have the

economic/financial capacity to promote ASM. Very few Member States in the Region

do promote ASM as a way for mining in Africa or a way to pursue the Africa Mining

Vision. This is a decision that each Member State needs to take, by understanding that

ASM is not opposite to LSM. The transition from the lower level of the subsector into

the next level need to be clearly legislated and in a flexible way to accommodate the

socio economic and cultural dynamics of the sector in each country. The legal

framework needs to be clear enough to prevent misuse of the incentives provided to

the lower level by operators of the other levels. The transition to the next level could be

associated to the organizational structure of the miners (e.g. association, cooperative,

small business enterprise, etc.), or timeframe (after a number of renewals of the lower

level permit, miners are obliged to move into next level (e.g. as it is done in Ethiopia)) or

by virtue of non-compliance to any of the lower level prerequisites. Thus, a clear path

from lower level into next level needs to be well defined in the legislation.

4. Issues related to human rights, modern slavery, human trafficking, child labour, mineral

traffic, illicit financial flows require a regional approach and harmonization of concepts,

laws and regulations. This may result in adoption and implementation of regional

instruments that may need only subscription and not necessarily domestication in the

national laws. These are the cases of regional certifications, some of them already

under implementation. The movement of miners and minerals in the Member States

need to be regulated and harmonised. Similar harmonization of procedures is called for

all actors (Governments, CSO, Development Partners, etc.) in the region. Thus,

Member States are called to act together in a synchronized manner and share

information and experiences.

5. Development of National Formalization Strategy – each country needs to develop an

ASM formalization strategy which will prioritise the commodities and streamline the

institutions to be established or revitalised to implement Formalization. The Strategy

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needs to be inclusive (e.g. conflict, culture, traditions, and gender sensitive) enough to

take into consideration all stakeholder’s (Governments, land owners, LSM, buyers,

processors, smelters, end-users, etc.) interests including the Artisanal Miners’ needs

and aspirations. The strategy that will bread thoroughly into the “African LSM”

needs to clearly recognise the importance of the ASM beyond revenue tax collection.

The strategy must also incorporate incentives for promotion of sustainable mining

associations and cooperatives that can nurture into mining houses (mining business

enterprises) in short period. The National Formalization strategy must also

incorporate elements of local practices in each country, for example the land allocation

structures and natural resource management traditional structures. The Strategy needs

to consider adequate (knowledgeable, resourced and decentralised)governance

structures.

6. Governments are encouraged to simplify the formalization processes for ASM while

monitoring the free riders in the process. A recommended option is evaluation of

strategic environmental assessments and the licensing of areas (designated areas)

for ASM, rather than each mining licence. Governments are also recommended to

empower the local authorities (decentralize) and available private structures to register

ASM. The Miners Card could be allocated by a non-State entity (e.g. a miners’ business

centre operator) or miners’ associations congregation. Encourage recognition of

traditional ownership of resources (mainly land) and align it with formalization of ASM

process5.

7. Governments are encouraged to make available detailed geological data6 for ASM in a

ready-to-use format that will allow them to take decision for acquiring licences. The

experience of Exploration and Mining Licence already applied in some countries is a

good practice, where the first six month or so are considered exploration phase and no

mining taxes are applicable. Governments will need to make adequate geological

assessment of the ASM areas (assign designated areas for ASM) and provide

environmental licence which will make it mandatory to comply with specific

environmental minimum requirement for the practitioners(challenge for many

Governments).There is need to encourage Geological assessment and

Environmental licensing of the ASM areas.

5A valid example is the establishment of Designated Areas Committees at District or Provincial level as it is done in Ghana. 6It is important to prevent misuse of geological data by non-legible actors.

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8. Governments need to promote fair market for ASM; in such cases, it is important that

the revenue authorities are well engaged in the process.

a. Regional processing and buying centres or business centres for ASM and SMEs

b. Regional mineral fairs that could link producers and buyers (the experience of

the Arusha Gem Fair can be replicated and expanded).

c. Access to international auctions

9. The region needs to promote value addition of ASM production by evaluating the

competitive advantages (for the region) in order to locate processing infrastructures

(e.g. availability of electricity, water, access to port, laboratories, technology, etc.).

Promote Regional Inputs and infrastructure sharing in order to derive more shared

value (regionally).

10. Access to technical assistance to the miners and adopt certification (e.g. Miners,

blasters) that is valid for the region,where possible. The Government may provide

technical assistance and charge on cost recovery (non-profit) fee at sales point.

11. Gradually implement Regional and National

Certification mechanisms considering the level

and evolution of the formalization process, and

promote the participation of ASM actors in the

full value chain.

12. Involve the LSM companies in order to

successfully implement the certification

mechanisms and the audit schemes for ASM.

The present Guide will also benefit from

involvement of LSM for its implementation, as it

would result in less conflicts between the two

sectors and promote coexistence between the

two and promote partnership between ASM and LSM. This will encourage the ASM to

follow appropriate mining, health, safety and environmental standards. The LSM can

contribute for formalization of ASM.

13. Ensure transparency, gender equity and fairness

in the formalization of ASM by adopting

internationally accepted principles for licence

attribution (e.g. first come first serve). And

promote the use of local languages and simple

e.g. DRC has passed a Ministerial Decree that

obliges any actor involved in the chain of

custody in the DRC to adopt and respect the

OECD-compliant standards of the ICGLR

RCM, this is in line with contribution to the

respect of the human rights. Article 9 of the

Decree indicate that the third-party audits will

be conducted in accordance with the

standards and procedures of the ICGLR

Certification Manual and annexes I, II and III

and the OECD guidance.

E.g. Associate awareness of ASM

formalization with other national

campaigns that might be related

to other sectors (malaria national

campaigns which could relate

environmental good practices and

clean mining).

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drawings to advocate for ASM formalization among the stakeholders. Communicate

to the right audience.

14. In the medium to long term, Member States to integrate ASM topics in the education

curricula in order to cultivate the minimum standards, good environmental and mining

practices, but also to incubate home grown technologies for miners. Promote

technical education that enables local fabrication of mining tools.

References 1. A. Eftimie et al., Gender Dimensions of Artisanal and Small-Scale Mining: A rapid

Assessment Toolkit

2. Africa Mining Vision adopted by the African Union in 2009

3. AMDC/UNECA Study on ASM in Africa: A Review on the Policies and Profile; 2016

4. AMV Document

5. B. Campbell – Regulation of the Extractive Sector: Issues Raised by the Revision of

Mining Regimes in Africa

6. B. Campbell – Revisiting the Reform Process of African Mining Regimes

7. CASM – Mining Together: Large-scale mining meets Artisanal Mining: A guide for Action

8. Contacts and experiences from the ASGM-PARTNERSHIP, GMP data and AMDC/UNECA

Data

9. Democratic Republic of Congo: Growth with Governance in the Mining Sector

10. ECA – Harmonization of Mining Policies, Standards, Legislative and Regulatory

Frameworks in Southern Africa

11. Ecavarria, C. (2014), Participation as Policy: Time to Formalise Artisanal and Small-Scale

Mining in Colombia. IED, London and Arm, Colombia.

12. H. Besada & P. Martin – Mining Codes in Africa: Emergence of a “Fourth” Generation?

13. ISG Report

14. Kenya: A micro-Finance Scheme for Women

15. Mining Codes of the ICGLR MS (all 12 countries)

16. Mondlane, S. (2015) - ASM Legislation in Africa: A Comparative study from 16 countries;

Presentation to the UNESCO Workshop in Arusha, Tanzania.

17. Recent legal developments in the regulation of the mining sector in some West African

States

18. The CASM resource centre and World Bank

19. The contribution of the Mining Sector to Socioeconomic and Human Development

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20. The Draft Guidance for governments on managing artisanal and small-scale mining,

issued by the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable

Development

21. The OECD Due Diligence Guidance on Responsible Supply Chains of Minerals

22. The World Bank’s Evolutionary Approach to Mining Sector Reform

23. WB – Political Economy of the Mining Sector in Ghana

24. WB – Republic of Congo: Mining Sector Review

25. Villegas, C. et al., 2012: Artisanal and Small-Scale Mining in protected areas and Critical

Ecosystems Programme (ASM-PACE): A Global Solutions Study

Annexes

Annex 1: Terms of reference for the study

Annex 2: General overview of the legislation on the ICGLRMember States (Ethiopia and Ghana as

benchmark countries)

Annex3: Best practices on the strategies to formalize the ASM sector in the ICGLR Member

States (Ethiopia and Ghana as benchmark countries)