Impact of Covid-19: how can the gold industry support ASM?

Impact of Covid-19: how can the gold industry support ASM?

The current global crisis caused by Covid-19 has an impact on all the actors in the gold supply chain, from the artisanal and small-scale miners to refiners, manufacturers, brands and consumers.

By: Conny Havel, Head of Supply Chains and Markets at the Alliance for Responsible Mining (ARM)

The current global crisis caused by Covid-19 has an impact on all the actors in the gold supply chain, from the artisanal and small-scale miners to refiners, manufacturers, brands and consumers. The miners are generally the most vulnerable group in this chain and Covid-19 poses additional challenges to their already complex situation.  Although gold processing companies currently face their own specific challenges due to the impact of Covid-19 on their markets and clients, they are also aware that those who extract the gold need to be supported, now more than ever, to prevent negative long-term impacts in their communities and their environments. Furthermore, to avert setbacks to hard-earned progress towards more responsible mining practices achieved throughout the last years.

Join our fundraising campaign Generosity connects us to support artisanal miners from Colombia and Peru with food baskets. Learn more and donate here.

How does Covid-19 impact artisanal miners and small-scale mining organizations?

Artisanal miners, or subsistence miners

They are mostly people living in rural and mostly remote locations that pan gold or select and process minerals to sustain their families, or as a complementary income for their households. They often have little or no saving capacity and depend on their daily income to make a living. Mostly, they live in situations of extreme vulnerability where alterations in their income can have significant impacts on their livelihoods. Due to Covid-19, many artisanal miners haven’t been able to continue with the mining activity due to lockdowns, prohibition of public gatherings and the closure of mining sites. Some miners were able to continue with mining, but they have been facing difficulties in selling the gold, as many local formal buyers suspended operations. In this case, their only option is to sell their mineral to informal traders at prices that could be up to 50% lower. This isn’t only unfair towards the miners, but also contributes to the black market, does not generate royalties for the states and increases the risk of benefiting illegal groups.

Credit: ANEXPO

No sales mean no income for most of these miners, which can lead to food insecurity in rural communities, especially in those that mainly depend on mining. Furthermore, health care systems in rural areas of many mining countries often are deficient or non-existent, which further aggravates the situation of vulnerability of these communities.

Credit: Manuela Franco

Small-scale mining organizations

They are small businesses with basic infrastructure to mine and process material with a limited production capacity. They often are very important for the local workforce and development. Many of them needed to stop their operations for weeks or months due to lockdowns. As employers, they often are unable to assume the payroll and social security costs of their workers beyond 1 month without operations. Mine workers generally live off a minimum wage and may sustain 2-4 people within their household with this income, therefore when they are laid off, they also face situations of extreme vulnerability as there are hardly any social security nets to support them.

Those mining organizations that were able to continue production at a reduced scale or have some accumulated material to sell, faced the same difficulties as artisanal miners when trying to sell their gold. Apart from local sales being either impossible or under unfair conditions, exportations hardly have been possible as transport routes are either closed or prices to transport the gold have increased exorbitantly. When the lockdowns are lifted, miners will face some new and additional challenges: They will need to comply with new and more stringent health and safety requirements which means additional strain on financial and human capacities. To start their operations again, they need liquidity, therefore a lack of funds will prevent them to be able to hire the staff necessary to start mining at full capacity again.

How can the gold industry support the artisanal and small-scale mining sector?

It is important to raise awareness about the specific needs, challenges and development opportunities with artisanal and small-scale mining groups. We invite the industry to promote the importance of the inclusion of artisanal and small-scale miners in gold supply chains to contribute to the improvement of the sector and support mining communities in developing countries. Refiners that don’t buy from artisanal and small-scale mining yet, should start engaging. Those that already buy, can increase their commitment. Here are some ideas how to support the miners to overcome their specific challenges:
  • Set less stringent trading terms, pre-financing, taking over logistic costs (international and local) and paying the best possible price for the gold.
  • Donate to the mining communities or give them loans with low interest and longer grace periods.
  • If possible, buy higher volumes from artisanal and small-scale mining.
  • Do due diligence that contributes to the further development of the miners and their communities.
  • Financially support those programs that contribute to the transformation of the sector and assure your future responsible gold supply.

You don’t know how to do so or where to start? Don’t worry, you don’t have to do this on your own. Write us to info@fairmined.org to find out how we can support you.

Credit: ARM

Businesses from the jewelry, financial and electronics sector should question where their gold comes from by talking to their suppliers about the sources and the origin of the gold. Here you can see the story of those who have already chosen the path to a better future. They ought to include responsible artisanal and small-scale mining in their sourcing policy and engage with suppliers that buy from responsible artisanal and small-scale mining. They should look out for initiatives such as Fairmined that provide jewelers with easy access to responsibly mined gold from artisanal and small-scale mining and source through them, as soon as their business is up and running again.

Call to action: Reflect and innovate

Credit: ARM

The world won’t be the same after this crisis. Consumers will be more aware of social and environmental topics, about the impact we can have on each other’s lives and the environment. We invite you to innovate and reinvent yourself to go out of this crisis with gold products with an added value for your customers. Provide them with a brand experience that people can connect with. Through your products you have the opportunity to create an emotional connection with customers, improve your corporate social responsibility and contribute to  the Sustainable Development Goals.  
Offering gold products that tell the story of solidarity and support is not only the right thing to do, but will also be a successful business strategy. Position yourselves to be part of that new world. Get in touch with us on info@fairmined.org to find out how to engage (more) with responsible artisanal and small-scale mining through the CRAFT tool (a passport for miners to formal markets) and the Fairmined initiative. For positive solutions that jewelry brands implement during the lockdown measures, visit our blog Together, we are stronger. This analysis was also presented in the webinar “Gold Supply Chains in the Time of Pandemic”, hosted by Jewelry Industry Summit and Initiatives in Art and Culture, the 24th of April. Click here to watch the complete webinar.