Guidance Note on Formalising Artisanal Mining Activity

Guidance Note on Formalising Artisanal Mining Activity

Final report

BRGM/RP-54563-FR November, 2006

Guidance Note on Formalising Artisanal Mining Activity

A global review and comparative analysis of mining codes and policy approaches towards Artisanal and Small-scale Mining

Final report

BRGM/RP-54563-FR November, 2006

Study carried out as part of CASM-BRGM Research Project

R. Pelon, B. Martel-Jantin

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Keywords: Artisanal Mining Activity, Mining Code, Policy approach, Small-scale mining. In bibliography, this report should be cited as follows: Pelon R., Martel-Jantin B. (2006) – Guidance note on Formalizing Informal Artisanal Mining Activity. A global review and comparative analysis of mining codes and policy approaches towards Artisanal and Small-scale Mining. Final report. BRGM/RP-54563-FR. 86 p., 2 fig., 8 tabl., 1 app. © BRGM, 2006. No part of this document may be reproduced without the prior permission of BRGM.

Formalising Informal Artisanal Mining Activity

BRGM/RP-54563-FR – Final report 3

Synopsis

Ce rapport est le résultat d'un projet de recherche réalisé en 2005 et cofinancé par le CASM (Community and Artisanal and Small-scale Mining: www.casmsite.org) et le BRGM.

Pour le BRGM, ce travail se situe dans le prolongement des travaux sur la mine petite et artisanale entrepris depuis 2001. La dimension de recherche dans ce domaine a pour ambition de mettre l'expertise de l'établissement au service du développement durable par: l'identification des bonnes pratiques, la formulation de guides de recommandation et ultimement la conception de modèles de développement du secteur.

Suivant la philosophie actuelle des institutions internationales, les projets de développement de la mine petite et artisanale (MPA), en anglais Artisanal and Smallscale Mining (ASM) doivent désormais prendre en compte non seulement les aspects technico-économiques et socio-économiques mais encore les aspects "gouvernance".

La bonne gouvernance, par définition la "science de l'établissement des règles", fut d'abord prônée, par la Banque Mondiale notamment, dans la perspective d'une meilleure gestion de l'aide internationale et des fonds alloués au développement. Par extension, elle est maintenant recherchée dans la gestion des fonds alloués par les états eux-mêmes au développement. Le concept qui valait pour l'aide internationale vaut désormais pour les politiques nationales.

Dans le secteur des ressources minérales, bon nombre d'échecs en termes de développement sont imputés, souvent de manière schématique, à une "mauvaise gouvernance". Les solutions sont recherchées dans l'étude et la caractérisation de ce que pourrait être la bonne gouvernance dans la gestion des ressources. Pour ce qui est de la MPA, les conclusions de nombreuses études se rejoignent sur cette condition sine qua non d'un développement durable: la définition d'un cadre légal approprié et la formalisation du secteur.

Le partenariat BRGM - CASM avait donc pour but de répondre à la question: peut-on caractériser les composantes d'une loi qui serait favorable à la formalisation de la MPA? L'intention n'est clairement pas de dicter les termes d'un code minier idéal valable partout et universellement favorable à la formalisation. Il est évident que les situations sont extrêmement diverses à travers le monde. Il est évident en outre que les dispositions légales relèvent in fine de l'appréciation et de la responsabilité du législateur. L'idée d'une "guidance note" - c'est-à-dire une note d'orientation, ou un guideline à destination de tous ceux qui sont amenés à étudier, à établir ou à réviser une loi - est plutôt de formuler un ensemble intégré de recommandations qui peuvent servir comme une "boîte à outils".


4 BRGM/RP-54563-FR – Final report

Pour tenter d'identifier comment prendre en compte la MPA dans les lois minières en vue de favoriser la formalisation, nous avons d'abord établi le contexte de ce qu'on appelle l'informa lité. Nous avons ensuite retracé l'évolution historique de la prise en compte légale ou réglementaire de la MPA, avant d'émettre des recommandations. L'analyse comparative des codes miniers dans les pays en développement irrigue l'ensemble du rapport et est résumée en annexe.

Les recommandations finales sont établies suivant deux méthodes opposées. Une approche bottom-up dresse un état des lieux des titres miniers (Iicensing system) - excellents révélateurs de l'esprit de la loi. Une approche top-down établit un modèle théorique de représentation des populations artisanales. Il constitue une approche synthétique et novatrice du processus de formalisation de la MPA basé sur le développement des communautés.



Contents

1. Introduction ............................................................................................................ 9

1.1. BUILDING APPROPRIATE LEGAL AND REGULATORY FRAMEWORKS FOR ASM .......................................................................................................... 9

1.2. FORMALIZING ASM AND MILLENNIUM DEVELOPMENT GOALS ............... 10

1.3. A GUIDANCE NOTE FOR ASM: METHODOLOGY ........................................ 10

2. Background .......................................................................................................... 13

2.1. WHAT IS INFORMAL ECONOMY? ................................................................. 13

2.2. WHY IS ASM SO GENERALLY AN INFORMAL ACTIVITY? ........................... 14

2.3. WHY DOES ASM NOT EVOLVE SPONTANEOUSLY TOWARDS FORMALIZATION? ......................................................................................... 15

2.4. WHAT ARE THE MAIN VIEWS JUSTIFYING ASM FORMALIZATION POLICIES? ...................................................................................................... 16

2.5. WHAT FUNDAMENTAL DILEMMAS ARE INHERENT TO ASM POLICIES? .. 17

3. Trends in and principles behind legal efforts towards ASM formalisation ...... 19

3.1. THE HISTORICAL CONTEXT OF THE LEGAL CONSIDERATION OF ASM .. 19

3.1.1. The 1960's and 1970's: a period of non-recognition......................... 19

3.1.2. The 1980's: a period of segregation ................................................. 20

3.1.3. From 1990 on: a period of integration .............................................. 21

3.2. GENERAL SPECIFICATIONS FOR A MODERN ASM LAW ........................... 25

3.2.1. The environment ............................................................................. 25

3.2.2. Decentralization ............................................................................... 27

3.2.3. Community rights ............................................................................ 28

3.2.4. Marketing ........................................................................................ 29

3.2.5. Taxation .......................................................................................... 30

3.2.6. Conflicts .......................................................................................... 31

3.2.7. Child Labor ...................................................................................... 32

3.2.8. Gender issues ................................................................................. 33

3.2.9. Health and safety ............................................................................ 34

3.2.10. Control............................................................................................. 35

4. Recommendations on ASM licensing with a view to formalization ................. 37

4.1. A TYPOLOGY OF EXISTING ASM LICENSES ............................................... 37



4.1.1. Questions of definition ..................................................................... 38

4.1.2. Research and prospecting licenses ................................................. 39

4.1.3. "Undocumented" licenses ................................................................ 40

4.1.4. Claims ............................................................................................. 41

4.1.5. Artisanal licenses ............................................................................. 42

4.1.6. Small-scale mining licenses ............................................................. 45

4.1.7. Concession ...................................................................................... 50

4.1.8. Designated areas ............................................................................ 51

4.2. A COMMUNITY -DRIVEN APPROACH TO FORMALIZING ASM ................... 54

4.2.1. The three-level scheme ................................................................... 54

4.2.2. The formalization of Level 1: artisans within "communities" ............. 57

4.2.3. The formalization of Level 2: artisans within "settlements" ............... 58

4.2.4. The formalization of level 3: artisans within "enterprises" ................. 60

4.2.5. Conclusion ....................................................................................... 62

5. Conclusions .......................................................................................................... 65

6. References ............................................................................................................ 67

List of figures

Figure 1: The vicious circle of informality (from MMSD, 2002) .................................................... 16

Figure 2: A community-driven approach to ASM formalization: a conceptual diagram .............. 62

List of tables

Table 1: ASM formalization objectives and MDG's (after CASM, 2005 and Priester, 2005). ........................................................................................................................................... 10

Table 2: Evolution of the development community's approach to ASM (after MMSD, 2002). ........................................................................................................................................... 19

Table 3: The main international meetings ................................................................................... 22

Table 4: Reference mining laws for ASM .................................................................................... 23

Table 5: A comparison of different artisanal mining license provisions ....................................... 44

Table 6: Comparison of different small-scale mining license provisions ..................................... 46

Table 7: Characterization of the three levels of ASM .................................................................. 55

Table 8: Recommendations for the three levels of ASM ............................................................. 62



List of appendix

Appendix 1 Countries Reviewed ................................................................................................. 71



1. Introduction

1.1. BUILDING APPROPRIATE LEGAL AND REGULATORY FRAMEWORKS FOR ASM

Most attention in the mining industry has been focused on large companies. But in many parts of the world, particularly in developing countries, minerals are extracted by artisanal and small-scale mining (ASM) - by people working with simple tools and equipment. The vast majority are very poor, exploiting marginal deposits under harsh and often dangerous conditions - and with considerable impact on the environment. A large proportion of them work in the informal sector, outside any legal and regulatory framework.

In some instances (MMSD, 2002), small-scale miners have a legal title to the land that they work that is recognized by the state and others. In others, the artisans work land they have traditionally inhabited, but without any recognition of land rights from the state, and they may be regarded as illegal squatters by local and state authorities. In extreme cases, governments consider the sector illegal and attempt to ban it by different means. In other instances, since ASM falls outside the regulatory framework, this mining population tends to be neglected by governments. In yet others, governments are willing to avoid aggravating the already negative social and environmental impacts and, on the contrary, want the sector to enter a virtuous circle of development which begins with the initiation of a formalization process.

Indeed, there is a real consensus, internationally, over the need to establish regulations and legislation for ASM formalization. The MMSD process identified "building appropriate legal and regulatory frameworks" as a priority action (MMSD, 2002). In the same line, the 1995 International Roundtable on Artisanal Mining concluded that none of the challenges facing the ASM sector could be overcome until a prime need was met: legal titles (Barry, 1996). This is to say that it is increasingly accepted that the first step towards improving ASM situations is to make the legislative framework more appropriate or effective.

ASM formalization policies contribute to four strategic objectives: alleviating poverty and contributing to integrated rural development, avoiding or minimizing environmental and health impacts, achieving a productive business climate, and stabilizing government revenue.

More specific justifications given for the legislative effort include (Bugnosen, 2001):

- curbing illegal mining and illegal trading or smuggling of metals and mineral products;

- stopping the supply of go Id to the black market;



- addressing environ mental destruction generally, or specific environmental concerns such as the erosion and silting up of water courses, as in the case of the Zimbabwe Mining Alluvial Gold Public Streams Legislation;

- developing and exploiting small existing mineral deposits;

- generating more employment opportunities, thereby alleviating living conditions in rural areas; generating additional foreign exchange earnings;

- protecting and rationalizing viable small-scale mining activities;

- providing mechanisms for collecting government revenues from the operations; controlling the miming rights of cultural minorities within their ancestral lands.

1.2. FORMALIZING ASM AND MILLENNIUM DEVELOPMENT GOALS

ASM formalization objectives are not only crossing national reasons but they are also meeting international rationales deriving notably from the United Nations Millennium Development Goals (MDG).

Several of the MDG are closely related to topics and issues relevant for ASM. An analysis during the CASM conference on the Millennium Development Goals and Artisanal Mining held in June 2005 demonstrated that ail eight MDG's possess direct links with the problems and opportunities typical of ASM.

Table 1: ASM formalization objectives and MDG's (after CASM, 2005 and Priester, 2005).

ASM formalization objectives Millennium Development Goals

Break the vicious circle of poverty-driven ASM MDG 1. Eradicate extreme poverty and hunger Allow legal conditions for viable activities

Promote upgrading of ASM activities MDG 8. Develop a global partnership for development Support technical-economic improvements

Management of mineral resources; conservation and/or sustainability

rehabilitation of water, land, fauna & flora resources

MDG 7. Ensure environmental

Fight diseases and accidents in ASM zones

MDG 6. Combat HIV/AIDS, malaria and other diseases

MDG 5. Improve maternai health

Manage conflicts between LSM and ASM MDG 8. Develop a global partnership for

development

Protect traditional communities' MDG 2. Achieve universal rights primary

education

Promote gender equality MDG 3. Promote gender equality and

empower women

Ban child labor on ASM workings MDG 4. Reduce child mortality

1.3. A GUIDANCE NOTE FOR ASM: METHODOLOGY

Although it has been possible to identify international best practices and to formulate precise recommendations regarding LSM, the problem is more complicated for ASM,



as situations are visibly less comparable. Game rules are quite clear for the LSM sector, which has recognized and audible spokesmen: the industry itself, forthright about the ideal conditions for substantial investment in a developing country1. The industry is generally in unison because the private interests of a" of the "majors" converge over the framework of a single mineral law.

Regarding ASM, situations are far more heterogeneous worldwide. Operators are diverse and sometimes incapable of speaking out with one voice. What's more, information on ASM often lacks precision due to the activity's obscure nature. National contexts are accordingly more difficult to benchmark.

However, it is the role of Guidance Notes to contribute to the ability of governments to understand the needs of artisanal miners, who are usually not represented within the governing group of the society. This is actually the ultimate objective of this Guidance Note, to provide reflections, illustrations and recommendations to all those who are involved in legislative reforms devoted to ASM formalization.

We have had to opt in favor of a methodology that takes those limits into account. We will try therefore to bear the following statements in mind:

- Formalization is a process that takes time and effort: no miracles are to be expected, and there are no quick fixes. The reflections, illustrations and recommendations that will be found in this Guidance Note cannot be definitive.

- This Guidance Note does not purport to enter deeply into judicial issues regarding appropriate legal framework for ASM. The purpose of our work is to formulate general recommendations inspired from a global comparative analysis and from experience gained in the field by experts in various areas of specialization.

- The scope of the study is global, and hopefully it will prove useful as a first approach anywhere in the world. But because of the authors' experience and available documentation, particularly in view of the acuteness of the problem in Africa, special focus is on that continent.

- ASM challenges concern many kinds of minerals worldwide. The accent will be put on precious metals and gemstones even if situations concerning industrial minerals or coal are evoked and can be quite similar in terms of formalization.

We have chosen to conserve the unavoidable redundancies that will be found from one chapter to another, so that they retain an independent character.

Chapter 2 furnishes the necessary background material so that an understanding of the stakes and challenges involved in the formalization processes may be obtained. Chapter 3 presents the trends and principles behind legal efforts towards ASM formalization. The general specifications for a modern ASM law will be set forth briefly following a rapid overview of the historical context of legal considerations concerning ASM. A global analysis of mining codes is ever-present in this study, and the review of

1 For instance, Rio Tinto has been publishing notes on what it considers a good mining code.



the countries examined is reported in the Appendix. Each country's case study outlines features of ASM laws with respect to formalization: the importance of ASM in the country, the political and legislative context, the main features of ASM laws, and some issues and successes.

All that material has fed into Chapter 4, which brings together recommendations on ASM Iicensing with a view to formalization. Two complementary steps have been chosen for that purpose: a bottom-up approach, which consists in the critical description of a typology of existing ASM licenses, and a top-down approach based on the principles of Community-Driven Development (COD).



2. Background

Artisanal and Small-scale Mining (ASM) is an economic activity that is very largely informal, notably in Africa, where it concerns a population of millions. The reasons behind this informal character are of an historical, geographical, economic and legal order. For the most part, it is prejudicial, but a certain degree of tolerance is the rule with regard to an activity that is often involved in survival strategies. However, moving on from informal to formal does not just happen spontaneously: it must be stimulated, given impetus to, by the entity that provides the "form" in question, namely the State. Thus formalization is indisputably a political and legislative issue - one extending far beyond the mining sector. Two courses of action may logically contribute to increasing the formal proportion of the small-scale mining activity: either attracting a larger number of economic units into the existing formal framework, or enlarging the framework itself. The pertinence and the chances for success of one or the other of these two orientations depend upon how closely law conforms to reality and on the State's law-enforcement ability. This intersection between the empirical situation and political ambition may coincide with a reform of the mining code that deals with ASM aspects. A thorough examination of the possible and desirable clauses for these mining codes makes it possible progressively to identify the most appropriate practices in the area.

2.1. WHAT IS INFORMAL ECONOMY?

The extent and complexity of the informal part in the economic, social and political life of developing countries are such that it is difficult to characterize it in a simple and general manner. The highly diverse local situations render the analytical categories of legality and informality quite relative. There are those who go so far as to see, in the varied meanings of the term, the reason for its popularity: "the term has really caught on precisely because of its lack of precision" (Lautier, 2004).

Yet the Fifteenth International Conference of labor statisticians had defined the informal sector as "a group of units producing goods and services mainly with a view to generating jobs and revenues for the individuals concerned. They are loosely organized, operate on a small scale, with little if any separation between labor and capital as production factors. (...) The activities are not necessarily conducted with the deliberate intention of evading taxation or of violating labor laws or other administrative provisions" (Maldonado, 1995).

This definition, though generally accepted, is nevertheless theoretical. Empirically, the term is often restricted to a specific sector, labeling more or less as "formal" that portion of the sector directly characterized by statistics and the remainder, what is known to exist and the scale of which can be inferred, but not directly quantified, as "informal".

Over the past ten years, the "hidden side" of the national economy has been observed in a fair number of countries. According to the International Labor Organization (lLO), the informal portion of non-farm labor accounts for some 55% in Latin America,



between 45% and 85% in different regions of Asia and nearly 80% in Africa (ILO, 2002). Thus in most of these countries, the informal economy paradoxically represents the "norm".

Interpretations concerning this phenomenon are varied and even occasionally contradictory. For some, the informal economy is, so to speak, a precursor stage to the formal economy, and it is development that will enable the economic units to move gradually from one status to the other. The informal economy, here, is the invisible part of the iceberg, and politically it must be encouraged to surface.

For others, the informal economy is a logical, even rational, response to a legal situation that is unsuitable, or dysfunctional. Indeed, the proponents of economic neo-Liberalism (De Soto, 1994) insist on the influence of legislation on the level of economic efficiency it governs, suggesting the pre-eminence of legal instruments. Loosely speaking, the economic players deliberately elect to avoid being publicly declared whenever the opportunity cost of the formal sector (taxes and fees, administrative delay and red tape...) exceeds that of the informal one (Iack of access to financing, to training...).

But whether the causes have to do with an unfavorable structural context (a sluggish economy, a hostile environment...) or an unsuitable institutional system (too little information, a negative image of the law...), what does emerge as being central to informality is how the citizenry relates to the State: "Relationship with the State stands behind the very definition of informal economy, since the form that is lacking is the one the State is supposed to impose" (Lautier, 2004). The question is then to discover why it does not impose it, whether because of the internal organization of economic activities (compliance with the labor law, with product standards...), the visibility of these activities (enrolment on the various registers) or their contribution to socialized expenditures (taxes, tees, social contributions).

2.2. WHY IS ASM SO GENERALLY AN INFORMAL ACTIVITY?

The case of the mining sector lends itself particularly well to the formal/informal dichotomy. In most mining countries where the activity of exploiting mineral resources goes significantly beyond the mere use of rocks and industrial minerals for domestic needs, three modes of mining activity are found to coexist. The first, stated simply, is a concentrated, capital-intensive mining industry with a small labor force, demanding in terms of technology and qualifications, having sizeable permanent facilities, legal, visible, and accordingly formal: "large-scale mining" (LSM). The second, conversely, is a dispersed mining activity that is labor-intensive but poor in capital, relying on very basic means, often intermittent, not very official and at times even illegal, in a nutshell, largely informal: artisanal mining. Intermediate between these two extremes lies "small-scale mining" (SSM), more or less well localized and mechanized, and that oscillates between formal and informal according to resources and the country involved. The process of defining and delimiting these two categories is liable to be tricky (and a determining factor) in the analysis and orientation of formalization policies, but we should already bear in mind that there are few sectors for which such clear-cut divisions can be drawn.



The reasons behind informality lie both in the legal framework and the economic sector. The largely informal nature of artisanal and small-scale mining (ASM) can derive from many intrinsic causes. In some instances, informality may be a result of culture. In certain countries like Mali, the artisanal exploitation of mineral resources has remained unchanged for centuries. The activity is actually rural and community-based, often remote from infrastructure centers, hence poorly visible and controllable. With custom sometimes carrying more weight than written law, exploitation is conducted using age-old methods that may be contrary to administrative or legal regulations but have the advantage of precedence.

When artisanal exploitation of mineral resources is not a tradition, it is often an activity engaged in failing ail else. In extreme economic contexts where no other alternative is viable, populations turn to Earth's resources as a last resort. For those who, for land-ownership or climatic reasons, cannot farm, the only remaining option, as a last means of survival before abandoning the land, is the exploitation of subsurface resources. The fact that it is possible to excavate, to crush, to grind, or to transport ore with minimum technical means fosters informality (little training and little investment needed).

Likewise, the migratory nature of this seasonal or transient, low-paying artisanal activity tends to dissuade from official declaration, which would presuppose a modicum of stability and prosperity.

ASM is further broadly subdivided into two categories: the extraction of building materials (aggregates, clay, lime...) and industrial minerals (feldspar, gypsum, salt...) for local use, and the extraction of precious substances (gold, diamonds, gems...), which are generally exported either via national agencies or as contraband. The former are used more or less on the spot because of their low worth per mass unit, while the latter are frequently light-weight or compact: in both cases, they are not very visible when transported.

Lastly, as to potentially more rapidly profitable precious mineral resources, rivalry, haste during rushes, the feverish and superstitious quest for the "salutary nugget," or smuggling, contribute still further the activity's furtive and resolutely underhanded character.

2.3. WHY DOES ASM NOT EVOLVE SPONTANEOUSLY TOWARDS FORMALIZATION?

All this is not conducive to the sector's contributing to Sustainable Development. Artisanal miners, who often brave hazardous health and safety conditions that are a direct threat to them, have other priorities than standing up for environmental protection or other long-term perspectives. They generally receive no state benefits and by the same token pay little tax or royalties. They do not always have legal authorization to operate and are easily at odds with landowners or holders of mining concessions.

The connection between the informal economy and poverty is clear. Most informal workers are confronted with both less opportunity and a higher level of risk than their counterparts in the formal sector. They have less access to the formal sources of



financial support. They are more vulnerable to illness or to material prejudice, since they are covered neither by health care nor by insurance. The miners are subject to more professional risks and are doomed to have no job security.

Furthermore, instead of gradually progressing towards formalization, most of the time ASM remains trapped in a vicious circle of non-development that has often been described.

Figure 1: The vicious circle of informality (from MMSD, 2002)

Rarely does ASM spontaneously abolish this process; left to its own devices, the ASM sector seems to be doomed to remain in poverty. Some are convinced that governmental action is generally ineffective, creating distortions, and that economic growth will bring about the decline of the informal economy, or else that this latter is beyond the reach of the authorities. In the case of ASM, it is nevertheless very unwise to take for granted that the informal economy is something that, given time, will pass away; experience shows henceforth that ASM does not spontaneously go formal. The need for state intervention, if not already demonstrated, would be further justified by ASM's potentially very damaging impacts.

It is increasingly accepted that policies, legislation and regulations must be established for the purpose of correcting existing distortions and setting the economy on the path to Sustainable Development.

2.4. WHAT ARE THE MAIN VIEWS JUSTIFYING ASM FORMALIZATION POLICIES?

In the sixties and seventies, ASM was often perceived as diametrically opposed to the development of LSM and to the industrialization principle as a whole. The newly independent nations, having finally regained control over their natural resources, were fully resolved to take part in international exchanges while playing up their own competitive advantages. Exporting raw materials was in some cases a political priority



that nothing could be allowed to hinder. ASM was accordingly declared illegal, and the political effort consisted in striving to get rid of it.

Progressively it came to be recognized, however, that the resources concerned by LSM were not necessarily the same as those involved in ASM: low-tonnage but high-grade resources may not prove economically viable for an international investor while still representing a resource well suited to small-scale exploitation. The informal economy began to be viewed more optimistically, as a driving force for economic development: it represented a breeding ground for mini-enterprises destined to graduate to a higher, and legal, status in virtue of a process known as formalization.

This notion was based on the postulate that the enterprises would modernize, develop, and eventually become legally registered, maybe with assistance provided from the outside and given concrete expression through financing or training. Formalization policies were therefore going to focus on enhancing productivity by granting funding (the purchase of capital equipment) and raising the technical level by setting up training programs (technology transfer or technical assistance). More pragmatically yet, it was henceforth admitted that seeking to eradicate artisanal mining would be a vain effort. The sector is a fact of life, directly employing vast numbers of workers and supporting millions planet-wide. Without going so far as to encourage its propagation, the approach was thus to place ASM in a proper framework while at the same time controlling it.

Moreover, towards the end of the 1980's, there was a turnabout in thinking concerning the informal economy. Since formal employment declined while informal employment kept rising, the idea of a possible substitution began to be accepted. The informal sector, albeit decidedly not very productive, did nevertheless ensure an essential social function: thus it was above ail up to the informal economy to generate jobs and revenues, even very low and nontaxable ones. With this in mind, formalization policies were expected not only to combat the informal, but also to assist the concerned communities in their development.

2.5. WHAT FUNDAMENTAL DILEMMAS ARE INHERENT TO ASM POLICIES?

Formalization policies must take on the sometimes blatant contradictions between developmental priorities and ones designed to combat poverty. They are in general caught up in the "non-structured sector dilemma" (Hansenne, 1991): should efforts be made to apply the regulations and social protection provisions in force to the informal sector and risk taking restrictive actions, thereby reducing its capacity to sustain a constantly growing work force or, on the contrary, should the sector be encouraged on the pretext that it generates work and revenues?

In the case of ASM, this dilemma shows up in the two main currents that guide the policies seeking to formalize it: a first consisting in attracting a larger number of miners into the formal framework through incentives and repressive provisions and a second in broadening this framework, even if this entails a reform of the mining code, for example.



In the first instance, the results depend on the State's capacity to intervene. Its ability to define and enforce socially acceptable standards governing economic activity goes far beyond the scope of a specific sector such as ASM: it is a fundamental political issue, basic to the State's ambitions of modernity and progress. In the second approach, the results depend on what level of tolerance towards ASM is deemed desirable or acceptable. Whatever the case, the conversion, the structuring, the "formalization" of the informal economy is contingent upon the State's restoring regulation over economic relations as a whole.

But to what extent is this possible? The informal sector has often grown precisely because of the State's inability to control. With respect to taxation, for example, some maintain that the State is structurally incapable of imposing taxation on certain economic activities... This argument, however, is only pertinent to a limited degree: the cost of controlling is always theoretically lower than the revenues it brings in, under one condition - that the taxes taken in do indeed wind up in the coffers of the State. The State's capacity to take charge of the ASM sector to best avail, in this sense, accordingly comes down to the much-debated issue of governance. International institutions, NGO's, but also the major players of the mining industry, have come to realize this and are striving, in a series of studies and initiatives, to define and bring about the conditions for such good governance of mineral resources.

A certain level of tolerance towards the ASM sector is appropriate, but when the informal sector accounts for a preponderant proportion of the activity, the State must assume its responsibilities. It cannot unconcernedly allow a substantial portion of the economy to evolve unsupervised without discrediting itself. The activity as it is should not be developed, but rather be transformed, be made professional, be formalized, in order to fight poverty. Succinctly, a nation that purports to be committed to poverty reduction and that happens to have a substantial portion of its work force engaged in ASM has the obligation to take charge of it policy-wise. It was the ambition of the Yaoundé (Pedro, 2003) meeting in 2002 to establish this relation, and accordingly to put pressure on the concerned nations to include ASM in the poverty Reduction Strategic Papers.



3. Trends in and principles behind legal efforts towards ASM formalisation

Mining law development has always reflected two principal and sometimes contradictory) goals (Williams, 2005): state control over the rent from resources, on the one hand, and control of this rent at the initiative of the free miners, on the other. Reforms of mining law in the post-World War II era were inclined to give more weight to the first goal, tending to focus on bringing the relatively prosperous mining industry under the control of government in order to achieve policy objectives in the areas of fiscal revenue generation, employment, technology transfer, and regional and global development. The results were in most cases disappointing and not sustainable, prompting a shift towards the second of the two competing goals.

These basic trends have determined political and legislative attitudes towards ASM. With variations (in time and degree) between the developing regions, thinking concerning ASM has evolved from a sector to ignore or to ban into an activity to manage in a holistic manner by means of comprehensive legal regimes.

Table 2: Evolution of the development community's approach to ASM (after MMSD, 2002).

Date Period Approach

1960's and 1970's

Non- recognition

period Definitional issues

1980s Segregation

period Technical issues

From1990 Integration

period

Early1990's: Towards integration of technical, on Environmental, legal, social and economic Issues. Mid- to late 1990's:

Relationship between large mining companies and ASM. Gender and chi d labor Issues. 1990's: Special attention given to

legalizing ASM sectors. Since 2000: Community-related issues and sustainable livelihoods.

3.1. THE HISTORICAL CONTEXT OF THE LEGAL CONSIDERATION OF ASM

3.1.1. The 1960's and 1970's: a period of non-recognition

The period prior to the 1960'5 is generally considered as a true artisanal era, when most mining of minerals and metals was carried out by individuals who had no recognition from the relevant authorities. In colonial African for example, artisanal mining, while largely illegal, was at the same time limited to local and traditional activities.

ln 1962, the United Nations General Assembly Resolution 1803 XVIII proclaimed the principle of each country's permanent sovereignty over its own natural resources



(Bastida, 2002). That principle of international law, which began at that time as a political claim on the part of the States formerly designated as "under-developed countries," was soon to become, in the New International Economic Order, an asserted orientation by the new ex-colonial countries demanding recognition of their right to participate in the development of their own natural resources and the benefits accruing from their exploitation. This was reflected through increased control of the states over their natural resources as a means for achieving economic development and a fair apportionment of their profits and powers in partnership with the industrialized world. The development of these resources was indeed intended to provide financial resources for development, and this was considered as a "springboard for industrialization." ln such a model, little room was left for ASM in mining policy. The main effort of the time was to develop public enterprises to run the economy and pervasive regulation for private enterprises.

The United Nations first use of the term "Small-Scale Mining," appearing in a 1972 report, had a rather negative connotation, insisting on skimming and health and safety issues.

3.1.2. The 1980's: a period of segregation

"The pendulum from strongly orientated state-centered policies started to swing back in the 1980's" (Bastida, 2002). The drop in commodity prices combined with high interest rates brought on stagnation or decline in the mining sector. The acknowledgment of disappointing development results coincided with an deterioration in the terms of trade in the early 1980's and prompted a change in direction in mineral policy.

The advent of global liberalism and the shift from government intervention to reliance on market-based systems of resource allocation from the late 1980's on have paved the way for a new generation of mineral laws and agreements aimed at encouraging foreign investment. Although differing widely from country to country, some general trends have been evident in developing countries, with a move towards replacing outdated laws and improving the efficiency of the administrative process through mineral development agreements, the reduction of governments discretional powers, improved title management, strengthened security of tenure and the enhancement of the transferability of mineral rights.

The idea emerged that, despite the drawbacks, the small mine could represent an alternative to large-scale mining development because of the flexibility offered compared to mega-projects. What's more, rising gold prices and the availability of new techniques (notably heap-Ieaching of gold extraction tailings) sparked renewed interest in the development of small industrial mines with a low level of investment. ASM was beginning to be reconsidered, but in a very specific way: this was a so-called "segregation" period (cf. Table 2).

Some international projects with a technical, productivity-linked approach were launched that attempted to support ASM in traditional mining countries, especially in Latin America and Southern Africa; these were often conducted by such institutions as GTZ (Germany), SGAB (Sweden), BGS (Great-Britain) or BRGM (France).



This period, with its skyrocketing gold prices, was marked by a certain number of go Id rushes. These, in turn, triggered disputes between large-scale mining concerns and artisans that arose either because the artisans were extracting gold illegally on concessions belonging to the mining companies or, conversely, because there were companies that sought to obtain permits for zones already occupied by artisans. Most of the countries attempted to cope with the problem by means of "stopgap," emergency measures. Some countries, however, especially in late 1980's, did undertake to reform their mining codes with the intention of improving how gold was managed from the time it was extracted to when it was marketed. The best examples are probably Brazil, in Latin America, which reviewed its constitution and included a special article for "Garimpos" in 1988, Ghana, in Africa, with its 1989 mining law, and the Philippines for the Asia/Pacific region.

3.1.3. From 1990 on: a period of integration

The implementation of the new liberal-economy policies resulted in a major shift in investment interest towards developing countries. These began to compete to attract foreign investment, and mining companies had a much wider choice of countries to invest in. The withdrawal of the state and institutional reforms caused a "mining boom" in certain countries during the years from 1991 to 1998.

In that context, promoting ASM was much less on the agenda. Although there was a growing international consensus that ASM had to be legalized, it came under increasing scrutiny because of its environmental impacts. ASM tended to gain in importance because of increasing economic insecurity, an indirect result of rapid globalization, but the rise of this sector was rarely accompanied by formal development, and damage to the environment worsened due to the informal ASM operations. A number of mining codes were revised at the time that resolutely integrated the environment into the political objectives.

Since 2000, the three pillars of sustainable development have become enshrined in public discourse. The different historical models of mining development have been questioned, and the whole approach to the sector criticized (MMSD, EIR, Publish What You Pay...). The need for integration has been expressed in many forms and extended to ASM. The new slogans about institutional reform, capacity building, governance, gender and community participation convey that new philosophy devoted to alleviating poverty and eventually allowing sustainable livelihoods under a sort of "new social contract for mining" (Bastida, 2005).

Political attitudes, nationally and internationally, on ASM have thus evolved over 40 years, passing from "non-recognition" to "integration" with varying intensity and tone. Enthusiasm to promote ASM is likely to continue to swing back and forth as the sector's political image seems related to commodity price cycles. When energy costs rise or metal prices drop, it promotes the development of small-scale mining, and such seemingly rich operations are able to provide job opportunities under unfavorable economic contexts. Conversely, when precious metal prices are high, ASM becomes a preferred alternative for livelihoods. Between times, governments tend to plan "more



ambitious" policies and dream of rapid industrialization. A suitable mining code for ASM would avoid such changeable policies.

Table 3: The main international meetings

Year Meeting

1972 The UN Committee on National Resources report, "Small-Scale Mining in developing countries"

1978 UNITAR International Conference on the Future of Small-Scale Mining, Jurica, Mexico

1980 Regional Seminar, Mombassa, Kenya 1981 Conference, Taxco, Mexico

1983 Congress, Helsinki, Finland 1984 Workshop on mineral policy for SSM, India 1987 London, U.K.

1988 Meeting in Ankara, Turkey

1990 UNECA Workshop on the enhancement of the contributions of the African non-fuel mineral sectors towards the region's economic advancement, Harare, Zimbabwe

1991 International Conference on Small-Scale Mining, SMI, Calcutta

1992 Situation of SSM in Africa and development, UNECA, Addis Ababa, Ethiopia 1993 UN Conference "Guidelines for the Development of Small- & Medium-Scale Mining," Harare, Zimbabwe

1995 International Roundtable on artisanal Mining, World Bank; Washington, D. C.,USA

1996 Global Conference on small-scale mining SMI, Calcutta, India

1997 Southern African Development Community Mining Sector - Five-Year Strategy 1997-2001

1997 Expert group meeting on the UNIDO high-impact project: "Introducing new technologies for abatement of global mercury pollution," Vienna, Austria

1999 Tripartite Meeting on Social and Labor Issues in Small-Scale Mines (lLO), Geneva, Swiss

2002 UNECA and UNDESA seminar on "Artisanal and Small-Scale Mining in Africa: Identifying Best Practices and Building the Sustainable Livelihoods of Communities," Yaoundé, Cameroon, 19- 22 November 2002

2002 CASM Annual General Meeting and Regional Learning Event, Ica, Peru

2003 ASM in Western Africa, Ouagadougou, Burkina Faso

2003 CASM Annual General Meeting and Regional Learning Event, Elmina, Ghana 2004 Small-Scale Mining Johannesburg, South Africa

2004 CASM Learning Event, Lusaka, Zambia

2004 Fourth Annual CASM AGM and Learning Event, Colombo, Sri Lanka

2005 CASM-Asia Inaugural Meeting, Bangkok, Thailand

2005 CASM-Africa Addis-Ababa, Ethiopia

2005 CASM Annual General Meeting, Salvador de Bahia, Brazil



Table 4: Reference mining laws for ASM

Country Reference Mining Laws for ASM Date of last major

reform impacting ASM

China Mineral Resources Law of The People's Republic of China

2005 (in rev. In)

Nigeria Mining law 2005 (before the

parliament in)

Zimbabwe

Mines and Minerals Act of 1961 and a number of amendments: Statutory Instrument 275, Mining (Alluvial Gold)(Public streams) Regulations, 1991

2004(in rev. In)

Malawi Mines and Minerals Act 1982 (Cap 61.01) 2003 (in rev. In)

Cambodia Draft Mining Law of 2000 2001 (in rev. in)

Congo Draft Mining Code of 2001 2001 (in rev. in)

Congo Draft Mining Code of 2000 2000 (in rev. in)

Thailand Mineral Act 2510, 2509, 2516, 2520 and 2522, 1 2001 August 1971, revised Act 3 BE 2522,12 May

1979 (in rev. in)

Burkina Faso Mining Code, law W 031-2003 2003

Senegal Mining Code law W 2003-36 2003

South Africa Mining Titles Registration Amendment Act No. 24 of 2003

2003

Uganda Mining Act of 2003 2003

ORC Mining Code Law No. 007/2002 of 11 July 2002 2002

Mozambique Mining Law n014/2002 2002

Peru Ley de Minerla N°126 RO/Sup 695 – 1991 Ley de formalizacon y promocion de la pequana 2002 mineria artesanal No. 27451-2002

2002

ALgeria Mining Law No. 01-10 of 3 July 2001 2001

Cameroon Mining Code of 16 April 2001 2001

Colombia Mining Code, Law 685 of 15 August 2001 2001

Gabon Mining Code Law No. 51/2000 of 12 October 2000

2000

Madagascar Mining code law 99-022 1999

Mali Mining Code ordinance No. 99-032/P-RM 1999

Mauritania Mining Code law 99/013 1999

Namibia Oiamonds Act No. 13 of 1999Minerais (Prospecting & Mining) Act No. 33 of 1992

1999

Nigeria Minerals and Mining Decree of 1999 (after Mineral Act, 1946)

1999

Tanzania Mining Act of 1998 1998

Bolivia Codigo de Mineria, 17 March 1997 1997

Lao Mining Law of 12 April 1997 1997

Mongolia Mining law of 1997 1997

Philippines

PD 1150 - Gold panning and sluicing permits PD 1899 (1989) - Development of small mineral deposits (SSM permits) RA 7076 (1991) -Identification and segregation of peoples SSM mining areas (SSM mineral 1997 production sharing contract) RA 7942 (1995) - Mining Act

1997



Country Reference Mining Laws for ASM Date of last major

reform impacting ASM

AO No. 97-30 (1997) - Small-scale mine safety rules

CAR Draft Mining Law of 1997 1997

Vietnam Mineral Law of 1996 1996

Ivory Cost Mining Code, law 95-533 of 17 July 1995 1995

Guinea Mining Code, Law 95-036, 30 June 1995 1995

Myanmar Mining law No. 8/94 Gemstones Law of 1995 1995

Myanmar Mining law No. 8/94 Gemstones Law of 1995 1995

Chad Mining Code law No. 011/PRl95 1995

Zambia The Mines & Minerals Act 1995 1995

Malaysia Mining Law Act 525 29 August 1994, application 08 September 1994

1994

Sierra Leone The Mines and Minerals Act, May 1994, Statutory Instrument No. 14, 2003

1994

Ethiopia Mining Proclamation No. 52/1993 1993

Niger Mining Code Ordinance No. 93-16 1993

India Mines and minerals (Regulation and development) Act 1957 W 67, 1992 incorporating Amendment Act, 1986 Published June 1992

1992

Papua New Guinea

Mining Act 1992 1992

Sri Lanka Mines and Minerals Act No. 33 of 1992 1992

Angola Mining Law n091-24 of 6 December 1991 1991

Venezuela Mining Law of 1945 as amended on 16 April 1990

1990

Brazil

Codigo de Mineraçao, Decreto-Lei 227 de 1967, upgraded by Lei 9,314 of 1996 Constitution of 1988 (garimpos mentioned) Law No. 7805 of 1989, July 18 (for garimpos also).

1989

Guyana Mining Code Law 20-1989 1989 1989

Ghana Mineral and Mining Law of 17 July 1986 Small Scale Gold Mining Law P.N.D.C. L 218 of 1989

1989

Kenya The Mining Act CAP. 306 1972 as revised in 1987

1987

Surinam Mining Code Decree E-58 of 1986 1986

Chile Codigo de mineria Ley 18.248 of 14 October 1983

1983

Sudan Mining and oil exploration laws of Sudan, 1980 1980

Togo Mines and Career Regime Ordinance No. 35 of 18 October 1973

1973

Indonesia Mining Law No. 11 1967 Law W11/1967, Government Decree No. 32/1969

1967



3.2. GENERAL SPECIFICATIONS FOR A MODERN ASM LAW

A mineral law is generally considered "good" when it creates a climate of stability and predictability sufficient to encourage economic and commercial activity and stimulate investment. International competition amongst developing nations for the limited number of major investors in prospecting for and exploiting mineral resources has led them to "align" their legislations in order to remain competitive. Indeed, the major players are always in a position to choose one zone over another to invest in, and their selection criteria are, of course, first geological, but also economic and legal. Ali this has given rise to an abundant literature on the question, "What constitutes a good law on minerals?", including on the part of international institutions (Naito, 2001). The criteria typically considered to be favorable are, among others, job security, clear and transparent procedures, access to resources and to currency, a stable and fair tax regime, but ail these conditions essentially concern LSM.

The situation for ASM is far more complicated. It is clearly harder to characterize what goes into the ma king of a good law for this sector because circumstances are more variable, the actors being local and very dissimilar from one country to another. Hopefully, thanks to an effort of reflection and awareness spanning many years, a general consensus can be outlined.

Thus specific ASM legislation is needed first because conventional mining codes do not deal adequately with the sector, and secondly because a reform of the code turning it into a legal framework suited to ASM represents the first step towards formalization.

Some of the main specifications for a modern ASM legislative framework are discussed below, by topic. The mining code and corresponding procedures must remain simple to ensure they work in practice, but a comprehensive law would ideally make reference to ail these aspects.

3.2.1. The environment

From the stand point of the environment, ASM-specific legislation has long been neglected owing to its impact, regarded as insignificant compared with that of LSM. But opinions have changed, and it is henceforth widely admitted that pollution due to ASM can be disastrous.

Given the scattered and informal nature of the activity, governments are unlikely to be able to raise standards immediately simply through legislation and enforcement. A realistic approach will promote awareness of the risks involved and make a case for less dangerous alternatives.

The law, in particular, should be thoroughly clear regarding the main cause to blame: mercury. If amalgamation can still not be eliminated, the regulation should optimize it, for example by restricting it to closed circuits.



The Mercury Law in Ghana

The Mercury Law was enacted in 1989 with the aim of regulating the distribution, use, storage and trading of mercury. According to this law, it is a punishable offence to import, possess, buy, sell or transfer any mercury without a license, which can be obtained from the Minister of Trade. Buying knowingly from a person who is not licensed is also a punishable offence. Small-scale miners are allowed, under the law, to buy mercury from licensed mercury dealers in such reasonable amounts as are necessary for their mining operations. A gold miner will also have committed an offence if found selling or dealing in mercury; in possession of more mercury than he needs; heating an amalgam without a retort; or if he does not observe good mining practices in the use of mercury.

Similarly, goldsmiths and gold dealers will have committed an offence if found processing mercury containing gold-sponge or metals without using a retort or if they do not observe best practices in the handling of mercury. Any person found guilty under this law shall on conviction be liable to a fine not exceeding 1000 USD or to imprisonment for a term not exceeding two years or both.

However, governments have still to develop appropriate and enforced legislation that will draw ASM into national programs for environment protection.

Specific environmental legislation regulations

In Tanzania, environmental issues involved in mining are regulated by the Mining (Environ mental Protection and Conservation) Regulations, 1999, which form part of the 1998 Mining Act. As in the principle act, the regulations apply to both small- and large-scale mining operations. However, the provisions specific to SSM are addressed separately:

1. The holder of a Primary Mining License shall ensure that washing or settling ponds are constructed in his Primary Mining License area to provide for washing and sluicing, and no such washing and sluicing shall be done along or close to rivers, streams or any other water sources. Where a settling pond is used as part of the mine drainage system, ail channels discharging into the river system must be covered and the slopes protected from erosion.

2. Vegetation clearing will NOT be undertaken within twenty meters (20 m) from any stream or riverbank.

3. The holder of a Primary Mining License shall NOT heat mercury amalgam to recover the gold without using a retort.

4. The holder of a Primary Mining License shall NOT use cyanide leaching without the written approval of the Chief Inspector.

5. No holder of a Primary Mining License shall commence development of new workings in his primary mining license area without backfilling or fencing the abandoned previous workings developed by himself or his agent.



6. Prior to the commencement of mining in any area that may have been environmentally damaged, the Primary Mining License holder shall request an inspection of said area by an inspector to confirm environmental disturbance. Any area for which the authorities have not received a request for an inspection shall be considered as normal.

7. The holder of a Primary Mining License shall ensure that tailings are disposed of at a proper place in a manner approved by the inspector.

8. No holder of a Primary Mining License shall allow children below the age of 16 to be employed or be engaged in any mining or processing operations in his primary mining license area.

9. Every Primary Mining License holder shall ensure that pit latrines are constructed and maintained at a distance of not less than one hundred meters (100 m) inland from any water source other than washing or settling ponds.

10. Every Primary Mining License holder shall ensure that each employee is provided with protective gear, and no person shall handle any toxic substance without using appropriate gear.

11. Any person who contravenes any provision under this part shall be guilty of an offence and shall be liable, on conviction, to a fine not exceeding Tshs. 50,000/= (62.50 USD) or imprisonment not exceeding three months, or both.

When governments deal with large-scale enterprises, one of the first requirements is an environmental impact assessment (ElA) and a corresponding environmental management plan. But this is expensive and far beyond the reach of most small-scale miners, who at best will try to comply by contracting low-quality environ mental consultants or, more likely, will continue to operate illegally. Under these circumstances, one solution is to bring small- scale miners together to produce a collective ElA - on the assumption that small-scale mining enterprises in an ecologically homogenous zone will have similar environmental impacts and therefore could use identical environmental management plans.

3.2.2. Decentralization

Decentralization is increasingly regarded as a priority for the governance of ASM. The reasons for this lie in the political context of globalization, which tends to promote a liberal economy, a less interventionist State and better distribution of power to local authorities.

The decentralization of ASM management consists notably in delegating the right to grant permits, inspection, etc. to institutions closer to the activity. This is especially pertinent for the actual work sites, which are often isolated, far from infrastructures and also sometimes very scattered. It allows an on-the-spot supervision.

From a fiscal stand point, the postulate here is that by shortening the distance between where the funds are collected and where they are allocated, their chances of being "dissipated" are reduced.



The risk is that the constraining authority, now no longer the State but the Province or the Municipality, and the players in the profession (LSM and ASM, alike) will turn to the advantage of the latter. Another drawback is that it may fuel inter-regional rivalries.

3.2.3. Community rights

State law versus community custom

In most mining legislation, it is clearly stipulated that ail mining resources belong exclusively to the State. The problem with this is that it can be at variance with local custom. In some countries, mineral resources have been appropriated by traditional communities for centuries, and it is simply not possible for a mining legislation to disregard such a reality.

The consensus currently is that "some" right should be granted to communities, but it is not possible to be more normative than to impose negotiations between parties.

The respect of community rights in different countries

In Mali for example, the first regulation of customary right during the French colonization in 1899 stipulated that the indigenous populations kept their customary right to exploit salt and gold deposits with the technical means at their disposal at the time, and that no prospecting, exploration or exploitation permit could hinder their activities. But such articles were sources of conflict and appear to have prevented any mining development.

In Madagascar, on the other hand, the Mining Code is a good example of respect for communities because rights established by custom are recognized by the Administration, and people who commonly have the use of a territory may ask for compensation even if they are not landowners.

ln Bolivia, the relationship between the mining operation and the community is complex. In principle, the resource belongs to the state, which grants a concession to it and charges for its use. Because of the rise of an organized indigenous movement and the acknowledgement of indigenous rights, however, the indigenous population is beginning to claim a share of the benefits of the exploitation of natural resources. Up to now, the benefits of mining that accrued to the indigenous population took the form of employment and compensation granted by mining.

The consultative approach

Any legislation applying to the use of natural resources should be prepared with the real and meaningful participation of the indigenous communities. The aim is not simply to prohibit mining exploration and exploitation in indigenous territories; neither must the law confer unlimited rights on the State to expropriate any territory with the aim of exploration and exploitation of mining resources.



In Peru (Hruschka, 2003), representatives of communities were invited to express their opinion in defining the rules during the 2000-2002 formalization process, and this was an example of note. It would be too easy to write a logical and comprehensive piece of legislation and complain afterwards about the fact that the Administration lacks funds or the capabilities to enforce it. The local context has to be taken into account from the beginning, and the consultative approach is the only one li able to lead to success.

The counter-example of Colombia (Valbuena Wouriyu, 2003)

A good counter-example is the Colombian mining code approved in 2001 in violation of the protected rights of the indigenous population consecrated in the Constitution and in international legal instruments according to the Organizacion National Indigena de Colombia.

Chapter XVI takes no account of the differences between small, medium and large scale mining. This distinction used to allow the state to control each such mining activity, with the tons of material moved and the number of persons involved being taken into consideration. By eliminating this distinction, the law places the small- and medium-scale miners on a par with the large-scale mining corporations, with which they are obliged to compete in an unequal battle.

Chapter XVII refers to "illegal" mining exploration and exploitation. This illegality, however, is defined by the lack of formality (Le. not having a mining title) and it does not recognize the economic conditions in which some people perform mining activities. The law is thus defining these small-scale or artisanal miners' activities as "illegal" if they do not have a mining title, which means they can be subject to criminal prosecution. In the context of the current political situation of Colombia, with the problem of violent conflict in the country, this is extremely dangerous. Before this Mining Code was enacted, these small-scale activities carried out by people without mining titles was not illegal.

3.2.4. Marketing

Co-operatives

One time-honored but still valid policy that can help formalization consists in promoting the creation of cooperatives, which, for instance, might be the only entities eligible to obtain mining titles. Those refusing to join such cooperatives would thereby place themselves outside the law. The idea was that structures of this type would give both miners the opportunity to organize and the 8tate, the possibility to distinguish between legal and illegal miners. It could also provide training and a better control over the flow of substances and revenues.

Many countries have attempted to streamline regulation of the sector by encouraging the artisans to band together into cooperatives. One condition for the cooperatives' success is the relationship they maintain with local and governmental agencies. The management of these cooperatives does require considerable commitment on the part not only of its directing members, but also of the tutelary institutions. That kind of



management is to be preferred in the case of countries that can count on an efficient institutional system.

Certification

Many international initiatives have made it a priority to combat the iIIegal exploitation of precious mineral resources. Indeed, it is a proven fact that, notably in Africa, gold or diamond mining has financed, and therefore prolonged, several major wars. The poor controllability of the transport and export of these substances, which concentrate a very considerable value in a very small volume (gold) or a very small weight (diamonds), renders the existence of informal exploitation singularly conducive to all sorts of trafficking. The Kimberley process (http://www.kimberleyprocess.com). devoted to restricting the marketing of "blood diamonds" by instituting a certification and traceability system for gems, is a good example of an international initiative to promote the formalization of A8M. Policies designed to formalize artisanal mining thus converge to a certain extent with combating money-laundering and all forms of terrorism.

Certifying the mineral production at the processing stage

One means to certify the mineral production for gold would be to centralize the processing stage. If the artisanal miners are encouraged to sell their production to a centralized treatment unit, an easier means can be implemented to certify the mineral products and to control the rest of the downstream marketing chain. In Peru for example, artisanal gold miners are not allowed to treat the ore. The advantage is that it fosters better protection of the environment: a strict Environment Impact Assessment Report can be made mandatory when granting a processing license. What's more, an industrial or at least a professional concentrated treatment facility can achieve a higher recovery rate, which is better in both environmental and economic terms. The disadvantage is that the miner, as a captive client, may be placed in a weak position with respect to this service provider. If the competition between processors is not keen or effective enough, these might end up by neglecting part of the artisans' production on the basis of qualitative or quantitative arguments and thus do away with their livelihood. In such cases, the Administration must ensure a fair retribution of the miners' production, for example by guaranteeing a minimum purchasing price.

3.2.5. Taxation

Because in most countries subsurface resources represent a national heritage, it seems legitimate for the State to tax the activity, and the mining legislation must stipulate which conditions are to apply to ASM. Be that as it may, the administration must understand, and make it understood, that increasing tax revenues is not the sole purpose of formalization. Any attempt at taxation that is not well thought out is liable, at the very least, to be ineffective and, at worst, to suffocate the most fragile elements of the sector. Recognition of the artisanal mining activity must inescapably imply respect for the profession and accordingly a framework scaled to its realities.

If, therefore, a taxation regime must be set up concerning it, ASM needs to be treated less rigorously than other sectors because of the uncertainties to which it is subject



(international priees, imperfect knowledge of the resource) and because it is often a survival strategy (a last resort, no alternative). It is true that from a theoretical standpoint ASM, like ail mining activities, generates differential proceeds, but the revenues in question are rarely substantial. On occasion, due to a supply crisis, prices may skyrocket, and at the other end of the chain, this rise impacts the small miner's earnings positively, but the situation is never long-lived and never compensates for the periods when the opposite was true.

Ad valorem taxes

Ad valorem taxes on output can be envisaged in some cases because they are generally relatively easy to administer and yield the State stable revenues, but they do raise the cut-off. They may be envisaged for small-scale mining concerns which are already at an advanced stage and should not exceed 5%.

Generally speaking, however, ASM "yields" little, either because the tax system is poorly adapted or because it is simply not applied. Many countries prefer to resort to forms other than taxing output to raise revenue. A widespread method is to charge a fee for the mining title (permit or license). The artisanal miner is often a "loner," less inclined than anyone to pay tax. Incentives need to be significant and tangible if the miner is to be convinced to file a declaration and accept to pay tax. Where precious substances are concerned, he furthermore must be incited to sell his output to the national agency instead of channeling it through contraband.

If really demanded, taxes can be levied at the purchasing office instead of the producer level. For example, the refined metal can be taxed instead of the ore, or an export tax can be imposed.

Finally, the tax system must be simple from an administrative standpoint, and transparent and functional for the taxpayers. And in any case, the granting of titles should always be used as a political instrument rather than a means for the administration to procure revenues.

3.2.6. Conflicts

Insofar as possible, mineral legislation has to prevent all kinds of conflict that ASM is liable to generate. It is assumed that a particular piece of land will produce more value if mined than if used for other purposes, and thus it should be developed independently from the landowner's will. Public interest motives justify separating land ownership from mineral ownership, which is generally vested in the State, and the traditional precedence of mining over other land uses. But separation between land and mineral ownership gives rise to serious and endemic conflicts in the use of mineral resources. The State, the mine holder (or investor) and the landowner form the traditional equation of interests that mineral law intends to reconcile. A major challenge to contemporary mineral law lies in accommodating the interests of third parties that are also affected by mining projects, such as local communities. Separation between land and mineral ownership requires a legal definition of who owns the minerals in the ground, and hence, who has access to their use, how and under what conditions.



The case in French Guyana

Gold washers in French Guyana are allowed to exploit gold on land tracts covered by a mining title (prospecting or exploitation). Responsibility, notably for environmental protection, still lies with the holder of the mining title. This type of approach may seem surprising: indeed, is it not dissuasive for a prospective investor to know that his concession can be legally overrun by hoards of artisan miners? True, these measures are sometimes the result of a vigorous lobby of traditional gold washers2, which might tend to scare off investors, but the underlying policy is pragmatic and may effectively contribute to formalization.

The positive idea would be to foster a win-win relationship between the mine operators and the artisans by "forcing" their cooperation rather than allowing them to ignore each other mutually. When artisans are present on their concession, the mine operators find themselves obliged to establish a relationship with them and to arrive at agreements and a modus vivendi. Such agreements may, for example, consist in allocating special zones or particular resources (reprocessing, exploitation of resources that are not profitable by industrial means, on the edges of quarries, etc.). In exchange, the artisans may have the possibility, or even the obligation, to sell their output to the mine operator in place. The artisan becomes then a sort of sub-contractor.

The point is to move on from a conflict of interests to the search for a common interest. The overlap is a governmental incentive mechanism to obtain that LSM players deal in a responsible manner with both the environment and society. In a perspective that is both free market oriented and mindful of sustainable development, the State is thus, as it were, contracting out the formalization of these artisanal miners to industry.

This type of policy is only applicable if the quality of the reserves is high enough so that the State can impose such conditions on investors. The balance of power between the State and the investor always depends on the ascertained attractiveness of the reserves.

3.2.7. Child Labor

In a mining code, it is naturally always possible to refer to a group of preexisting laws: certain countries, for example, have a total ban on child labor. However, there again, specific articles may be required to insist particularly on this point.

ILO, aware that children are used intensively in mines owing to their small size, suppleness and ignorance of danger, and that they are particularly exposed to risk (physical danger, drugs and pollution), recommends a blanket ban on child labor in mines, including in ASM. The mining code must accordingly contain articles to this effect or make reference to corresponding pre-existent legislation.

2 Who, in French Guyana, freely proclaim in Creole: "L'or à nous-mêmes, qué nous-mêmes," the gold is

ours, and ours alone...



The case in Bolivia (Pasco-Font, 1999)

Many children in Bolivia are put to work from an early age. According to the National Institute of Statistics (NIS), there are approximately 800,000 child and adolescent workers in Bolivia. Of these, NIS estimates that 29 percent live and work in urban areas, while 71 percent work in rural areas, mainly in mining.

Although the Children's and Adolescents' Code (1999) specifically prohibits them from working in dangerous and unhealthy occupations (such as in quarries, underground, mine tunnels and other hazardous places), child and adolescent laborers are becoming more rather than less common in the mining industry. Child labor in mines is primarily a response to extreme poverty. Families must increase their income if they are to meet even the basic needs of subsistence. This situation is exacerbated by the economic depression in the mining industry and high unemployment levels, as well as the depressed state of the Bolivian economy as a whole. Children who leave school in order to work are condemned to low wages for the rest of their lives. The following lists the types of work most commonly undertaken by children in mines: Work-area occupation; Underground gathering and transport of ore after blasting; Handling, preparation and use of explosives; Ore-concentration processing, sometimes using chemical reagents without adequate protection; Grinding the ore extracted from the mine with primitive equipment (rocker mills); Tourist guides, showing groups of tourists around underground to explain mining work.

3.2.8. Gender issues

In many countries women are, by tradition, excluded from work in the mine, or at least in shaft mines. The reasons behind this are sometimes mythological, at others, psychological, but the fact is that women are rarely welcome on a mine site. When present, they are therefore often relegated either to parallel activities such as marketing and handling water or the processing or conveyance of ore.

This positive discrimination should not mask a hard truth concerning mine sites: women are not always treated with equity or dignity, and prostitution is rife in this environment.

Caution will be exercised, on such sensitive issues, not to challenge the society's core equilibrium brutally. Changes are often desirable and are sometimes possible, but only over time. Discrimination must be rejected, but without falling into the trap of counter-productive interventionism.

Addressing women's issues in mining policies (Pedro, 2003)

The Mineral Policy of Tanzania - Women and Children Issues: "The Mineral Policy of Tanzania, 1997" recognized the social problems that arise in the process of developing mining projects, especially those that limit effective participation of women and those that lead to the premature introduction of children to the harsh conditions of mining. In the case of women, the policy aims to alleviate barriers that limit their participation in mining by encouraging their employment and making other participants aware of the need to provide them with equal opportunities.



SADC Women in Mining Trust - Zambia: The Trust was formed in 1997 as a regional association in order to promote networking at a regional level. The Trust has been instrumental in the formation of a number of women miners' associations in the region and in mainstreaming gender.

Due to their importance in terms of mineral production and the provision of vital community services, in conjunction with their susceptibility to poverty, enhancing the role of women in ASM may be an effective means to facilitate positive change in ASM communities.

3.2.9. Health and safety

Specific legislation addressing health and safety issues for small-scale mines is rare. Most countries have health and safety issues covered under general regulations addressing the entire mining industry.

Working conditions, however, even when the activity is official and recognized, are often deplorable, and accidents, including fatal ones, are not infrequent. There must accordingly be legislation that is strict on health and safety.

Summary guidelines on health and safety legislation can be then distributed to applicants for mining permits and detailed guidelines to fully inform employers of health and safety-related legislation.

From a safety standpoint, legislation must, for instance, be explicit on the use of explosives, on work conducted underground, on support systems, etc.

Health and safety regulations in Zambia

As in many other African countries, SSM mining health and safety issues in Zambia are regulated as part of the overall mining-sector regulations. However, the Zambian regulations include specific sections addressing the needs of small-scale mining. Health and safety issues are regulated according to "The Mining Regulations (1971)". Section IX of the regulations is specific to SSM and addresses issues of ventilation and air pollution arising from dust, fumes and other toxic gases. It provides measures for determining concentrations of such pollutants, sets standards for air quality and defines measures for minimizing their generation.

Section VI covers the hazards from dangerous surface excavations such as large cracks, subsidence, pits and protection of surface features. Safety in working areas is covered under Section VII of the regulations. Given the changes in the SSM sector, especially the expansion of operations in small-scale gemstone mining in the country, these regulations need to be reviewed in order to address the current situation on the spot.



3.2.10. Control

The code must not stop at merely laying down restrictions: in a perspective of formalizing the activity, it must also integrate incentives. The mediocre success encountered by the various policies relative to artisanal mining activities may partially be ascribed to the fact that the legal framework was overly control oriented. The miners will not line up and march towards formalization, and will not officially register their activity, unless they are convinced it is to their advantage to do so. Measures must accordingly be instituted that will encourage their move towards professionalism, which may include educational and training measures, but also the structuring of the profession through operating rules at each stage of product marketing. Lastly, it will be necessary to foster the leap in scale from artisanal to small-scale mining.

Obviously the code still needs to include strict repressive measures. A system of dissuasion must be set up that is commensurate with what is at stake.

The code needs not only to head off the negative impacts of ASM itself, ranging from child labor to environmental damage, it must also deter indirect impacts that are more serious yet. Typically, one of the objectives of formalization is assuredly to cut back on illegal markets, contraband, and ail their respective derivatives: the use of ASM revenues to fund war, the disruption of law and order caused by a rush, the incidence of prostitution on the spread of AIDS, etc.

The police and the army

Intervention by the armed forces must be a possibility, but limited in scope and duration. The State's ultimate means of action, it must be set aside for exceptional cases, to fill in for the mining police when in difficulty. Experience shows that military intervention, over the long term, is an ineffective approach with regard to formalization. Military interventions can only be a last resort, and a short-term policy. Actually, it is empirically impossible to discourage individual miners over the long term by using force. Moreover, the cost of such unwieldy operations further contributes to their ineffectiveness.

The mining police force must retain the capacity to act on its own, however, without systematically needing to have recourse to the armed forces in order to maintain authority and credibility at all times. The mining police's power to sanction must be genuine and tough. The punishments to which offenders expose themselves must be dissuasive (fines, confiscation of goods...). Members of the force must be properly paid to avoid having them "help themselves," thereby discrediting the entire legal system.

Attention must thus be given to different levels of police and to auditing on a regular basis.



4. Recommendations on ASM licensing with a view to formalization

A good way to highlight best practices in a synthetic manner while approaching ail the topics related to ASM formalization is to discuss the ASM licensing systems. Indeed, a mining title is most of the time the sensitive spot that concentrates ail the previously described general specifications either directly or indirectly. The whole exercise of drafting a mineral law is not reduced to the design of a proper licensing system, but the distribution of the mining titles are indubitably the best illustration of a given legislation.

This is the main reason why, in the first part of this chapter, we have chosen to focus our recommendations on the licensing system and on how the mineral law establishes rules for the allocation, maintenance, transfer and cancellation of mineral rights.

But, if a typology of licenses can be useful for the legislator as well as for the expert-adviser because it can contribute understanding and inspiration from other countries, it is clear that in the matter of formalizing ASM, there is no recipe applicable in all cases - one cannot simply copy a law from one country to another. Any attempt at generalization must be circumspect.

That is why we propose, in the second part of this chapter, a framework of recommendations based on a community-driven approach, with the hope that it can be precise enough to afford valuable orientations and generic enough to be adapted in a given country if the need arises. Again, the intention is clearly not to dictate a mining code but rather to offer a set of integrated principles that can serve as a tool to draw up national legislation, which of course ultimately remains under the legislator's responsibility.

4.1. A TYPOLOGY OF EXISTING ASM LICENSES

After dealing with the unavoidable questions of definition, this part tries to classify the most typical licenses appropriate for ASM and to discuss the main points that a mineral law or a mining code covering ASM aspects will have to consider:

- the recognition of ASM's existence: questions of definition and administrative responsibilities;

- the recognition of ASM's actors: questions of registering and eligibility;

- the recognition of ASM zones: questions of designated areas, surface and duration;

- the recognition of ASM's operations: questions of prospecting, extracting, processing and other producing;

- the allocation of rights: provisions regarding the mining titles;

- the allocation of obligations: provisions regarding health and safety, the environment, taxation, conflicts...



4.1.1. Questions of definition

The limit between artisanal and small-scale mining is vague and variable, but we will need to distinguish them theoretically in order to formulate appropriate and separate recommendations.

Artisanal mining is the exploitation of mineral resources by individuals or groups by means of rudimentary equipment. Most of the time, it is informal and typically "poverty- and opportunity-driven." Artisanal mining ranges from simple individual "picking" to widespread and organized settlements, depending on geographic and socio-economic context.

Many mining laws define artisanal mine workings as those where rudimentary techniques are applied. The corresponding rights granted to artisanal miners are hence coupled with the condition that they do indeed work by hand.

The underlying political purpose

ASM, which is only tolerated, should not receive too much encouragement, and the environment must be preserved, since technical means (explosives...) would increase its production capacity and by the same token increase impact on the resource and on the environment.

ln Western Africa a consensus seems to have been adopted in that sense with the definition of artisanal exploitation proposed by UEMOA for a draft Community Mining Code: the extraction and concentration of mineral substances with manual and traditional methods and processes3.

But artisanal status should not be contingent upon non-mechanization. Genuine small-scale mines do exist where only rudimentary means are used (when labor costs are at rock bottom, for example) and so do artisanal mines that occasionally make use of mechanized equipment.

Further, this definition necessarily leads to "prohibiting" mechanization for the artisan who, if he hopes to improve his technique and his revenues, must change his status and adopt the far more constraining regime of small-scale mining. Such rules are often too dissuasive in terms of technological advances: they are at variance with the very notion of development.

The notion of small-scale mining resides more in the size of the activity's "enterprise" structure than in its technological aspects. UNCTAD (1997) characterized it as producing less than 200 t of ore per day, with an investment of less than 1 million USD, a workforce of under 40 individuals, an annual revenue of less than 1.5 million USD and a lifespan of around five years. This is probably too precise to hold true

3 http://www.izf.neUizf/Documentation/JournaIOfficiel/AfriqueOuesU2003/REG18_2003_cm.htm.



everywhere, but that kind of characterization is used in some mining laws to define SSM.

Discussion over the right definition is probably unending. In our opinion, a good mining code recognizes that there is a difference in degree between large-scale and small-scale mining and a difference in nature between small-scale and artisanal mining.

The distinction between LSM and SSM is a matter of scale, while that between SSM and ASM is a matter of planning. It is true that this type of distinction is hard to put into practice. An acceptable definition will then need to be proposed according to the country's realities and adapted as well as may be.

Actually, nuances can be introduced. Gabon's mining code, for example, declares: "By artisanal mining, we mean any non-mechanized exploitation process. However, the direct use of water power harnessed on the spot and not converted into hydroelectricity or that of a motor-pump having characteristics specified by order of the minister in charge of mining is not assimilated to a mechanized process."

ln some other countries, the legislation does not venture to introduce any distinction. In Bolivia, for example, neither the Mining Code nor the "Environmental Regulations for Mining Activities" take different types of small scale mining into account. They make reference to concession owners and mine operators but do not classify the scale of mining operations in relation to the type of technology employed. The only distinction made by the Environmental Regulations is that operations that extract less than 300 tons per month have fewer environ mental requirements.

Many kinds of ASM licensing systems do exist around the world, but they can be regrouped into a few general categories: Undocumented licenses; Claims; Artisanal licenses; Small-scale licenses; Concessions.

Amongst those, the most common are the artisanal and the small-scale mining license. Very schematically, the claim is a precursor stage of the artisanal license, and the concession is a more extended mining title than the small-scale mining license. To those families of licenses, we will add the "designated areas" which are often superimposed on a licensing system, but which, in themselves, also represent a real political tool.

Although some licenses will not fit into any of the above categories, they are the main ones to describe in connection with the formalization process. Research and prospecting licenses could be counted among them.

4.1.2. Research and prospecting licenses

Usually those types of licenses are not relevant for ASM because the miners simply do not prospect before exploiting. But there can be a risk in mixing the imperatives of developing small-scale mining in the country with the one of attracting prospecting actors of whatever origin. In other words, it may be not adequate for foreign juniors to claim a small-scale mining license to undertake exploration activities even if they are,



at the beginning, still modest. In Burkina Faso for example, the law has differentiated the "semi-mechanized artisanal authorization" from the "small mine permit," which must be preceded by a prospecting authorization. That prospecting license provides a non-exclusive right ta prospect and is valid for a short period of time. It is still different from an exploration permit.

In Madagascar for example, the "PRE" (Permit of Research and Exploitation), devoted to small-scale mining is a mix of the Exploration permit and the Exploitation permit, attributed to small operations. It probably reflects more a "downsizing" of the large-scale mining system than a formalization objective.

4.1.3. "Undocumented" licenses

Nearly all legislations have recognized and considered the difference between the extraction of mineral resources for commercial motives and their extraction for personal use (Bugnosen, 2002). Consequently, appropriate provisions are incorporated to allow free access to mineral substances by landowners, when extracted for their own use, through informal licensing or no-charge permits.

This kind of ASM "license" does not provide a written document as such; nor does it involve any formal procedures of application and processing. It is generally in the form of pronouncements or specific provisions in the relevant general mining legislation. Apparently, these are provided to accommodate specific groups, particularly indigenous members of the community and landowners. An example of this type of "license" is specified in the Mining Act 1992 of Papua New Guinea, which states that:"

“Any natural person who is a citizen may carry out non-mechanized mining of alluvial minerals on land owned by that natural person, provided that the mining is carried out safely and in accordance with the Mining (Safety) Act and that the land is not the subject of a tenement (other than an exploration license)."

A similar strategy under the right of libre approvechamiento, or free digging, is also adopted in Venezuela, where the exploitation of alluvial minerals on un-owned land or in rivers is allowed without formal licensing, provided only panning or other primitive procedures are used.

This principle of "undocumented" licensing has been embraced by other countries (Zambia, Uganda, Philippines) to legalize extraction of mineral products by landowners and government agencies for their own use, particularly in the extraction of non-metallic and buildings materials.

It is clear, though, that that kind of legislative tolerance does not provide any incentive towards formalization.



4.1.4. Claims

The historical model

A claim is a portion of public or private mineral lands which a party has staked or marked out in accordance with federal, provincial or state mining laws to acquire the right to explore for and exploit the minerals under its surface. In the United States, the Mining Law of 1872 grants both citizens and companies the right to explore for hard-rock minerals and establish rights to federal lands without authorization from any government agency. This standard of free access is the basis for the Mining Law, which remains the law of the land today.

Once a site is identified, the claimant must stake his claim by erecting corner posts or monuments and posting a notice of location on a post or monument in a conspicuous place, normally the site of discovery. In addition to filing with the individual state, ail claims must be recorded with the Bureau of Land Management state office. There are no official forms, and the claim must simply describe the parcel of ground, indicate ownership, identify the location and type of claim and be dated. The total initial and annual fees are both usually low.

Once a mining claim has been approved, the claimant gains the right to develop and extract minerals. No other use of the land is permissible. In the pursuit of minerals, the claimant can construct fences, build houses for full-time employees, and use as much timber as is necessary for the mining operation. Mining claims are considered real property and as such can be bought, sold, transferred, leased, rented, willed or inherited.

The situation in other parts of the world

This system used to be employed without distinction for potential small- or large-scale miners. In developing countries, the claim system tends to disappear. It was typically used in Eastern Africa, but in Tanzania, for instance, it was abandoned with the Mineral Act of 1998, which established two categories of mineral rights issued to ASM: the Primary Prospecting License and the Primary Mining License. These two categories do not differentiate between the artisanal and small-scale miner, nor do they distinguish mineral types.

Claim system in Tanzania before the Mineral Act of 1998

A citizen of Tanzania could acquire a prospecting right from the Zonal Mining Officer. Prospecting rights were to be granted for a term of one year and are renewable, based on an interview with the prospector and the payment of fees. Conditions could be imposed on the right, and the right could be suspended or cancelled for violation of the Act, of regulations or of conditions.

Secondly, claim titles could be granted to those holding prospecting rights. Where a prospecting right leads to a discovery of minerals, the prospector could "peg" a claim, and then the validity of the prospecting right became void. Prospectors had 30 days



within which to register a claim after the claim was pegged. Claim titles were limited and dependent upon type of minerals and mode of occurrence.

In Australia (New South Wales), the maximum area for a mineral claim outside a Mineral Claims District is 2 hectares. The area marked out must, as far as practicable, be square or rectangular in shape, but no side may exceed 200 meters in length. Within a Mineral Claims District, the shape and size are determined by the special rules under which the particular district was constituted. If you intend to seek a mineral claim within these Divisions, you should check with the Mining Registrar to determine whether or not the area you wish to apply for is within a Mineral Claims District and for advice as to any special rules applicable.

A Mineral claim as in the 1992 Mining Act of New South Wales

Purpose: For mining and prospecting operations on small areas and for minerals other than coal.

Area: Maximum of two hectares (smaller areas may be specified in Mineral Claims Districts).

Duration: Maximum of five years (shorter periods may be specified in Mineral Claim Districts) and may be renewed for further periods not exceeding five years.

Compensation: Landholders are entitled to compensation. Operations may not commence until compensation has been paid.

Expenditure: The condition may specify the amount of money required to be expended on prospecting or mining operations during the term of the claim.

Reporting: The conditions may require an annual report on prospecting or mining operations.

Royalty: The conditions may require the payment of royalty.

Security: A security deposit in the amount determined by the Mining Registrar must be lodged A current Mineral Claim confers on the holder the exclusive right to prospect and mine for the mineral or minerals specified in the claim.

4.1.5. Artisanal licenses

Purpose

In terms of formalization in today's developing countries, the c1aim system does not seem to be really efficient, and the artisanal license tends to be preferred. The basic difference between a claim and such a license is historical and lies above ail in the allocation procedure.



The artisanal license tolerates and officially grants authorization for exploitation, but offers few guarantees. It only takes on meaning when an obstacle exists in principle and when the conditions of that obstacle may be able to be controlled.

It is usually a "weak" right and can quite easily be challenged. In Ghana for instance, the Secretary may at any time revoke a license granted under this Law provided:

- he is satisfied that the licensee has contravened or failed to comply with any of the terms and conditions of the license or any requirement of this Law or of the Minerals and Mining Law, 1986 (P.N.D.C.L. 153) applicable to him;

- the licensee is convicted of any offence relating to smuggling or illegal sale or dealing in gold,

- or he is satisfied that it is in the public interest to do so.

Eligibility / registration

The first condition that should be imposed on applicants is registration. They have to identify themselves and accordingly possess a birth certificate, degree one of "formalization".

This type of license rarely imposes conditionality, whether on technical (professional training), financial (minimum assets), or even sanitary grounds (physical ability). This reflects pragmatically that the activity is often a last resort, and it would be wrong to deny persons having no other alternatives legal access to this activity. On the other hand, there is no limitation, and no guarantee that the work will be done with a minimum of investment or competence.

That kind of license is in many mining codes or laws restricted to nationals. The first reason, of course, is the "nationalistic" argument: the ground belongs above ail to those having a natural bond with it ("blood right" - parentage, "soil right" - birthplace). But, this condition should not be viewed as just discriminatory. It may, for example, be intended as a preventive measure to combat rushes: the State is protecting itself against too massive an arrival of population, with its potential for disrupting law and order.

In the same perspective, there are also indications in some countries that preferential access to certain mineral lands will be provided to artisanal miners who are citizens (the Philippines for instance).

That license can most of the time be allocated either to natural persons or to legal entities such as co-operatives, companies or other groups. This system, which is applied under the Zimbabwe Alluvial Gold Mining Act and the Philippines People's Small-scale Mining Law, provides a permit over a specific area for a group of individuals. It simplifies the procedures, makes monitoring much easier and at the same time encourages the grouping of small-scale miners into co-operatives or other associative structures.



Area / duration

Most countries provide short-term artisanal licenses, renewable one or two years. The notable exceptions are Algeria for the "picking" license, but this is not valid for metals, and the gold panning & sluicing permit of the Philippines, which is only granted for three months. Sometimes, the duration is not specified, as in DRC, but this is not always in the interest of ASM workers whose activities are then more uncertain.

Table 5: A comparison of different artisanal mining license provisions

Country Title Area (max) Duration (initial)

Burkina Faso

Traditional artisanal exploitation license /

100 ha

2 years renewable (traditional)

Semi-mechanized artisanal renewable exploitation permit

5 years, 3 years (semi-mechanised)

Senegal Artisanal license, 50 ha 2 years renewable 3 years

Zambia Artisanal mining right 5 ha 2 years

Papua New Guinea Alluvial license 5 ha 5 years

Philippines Guano extraction permit

5 ha 1 year

Ethiopia Artisanal license 0.5 ha 1 year

Philippines Gold panning & sluicing permit

0.2 ha 0.25 (3 months renewable)

Madagascar Artisanal license

Valid on the circumscription of the municipality and outside mining titles

1 year renewable

Mozambique Mining Pass Specified a priori 1 year renewable

Algeria Artisanal license of mining exploitation

Not specified 5 years renewable

DRC Artisanal license Not specified Not specified (can be abridged by the Ministry)

Malawi Claim Not specified 1 year

Myanmar Subsistence-Mining Permit

n.a. 1 year renewable

Namibia Mining claim n.a. 2 years

Philippines Gemstone gathering permit

n.a.

1 (not more than 1 year, renewable for the same period, or upon extraction of the imposed volume)

Lao Artisanal license Indefinite 1 year

Kenya Location or lease Dependent on type and occurrence of deposit

1 year

Congo Artisanal license Case by case 3 years renewable

The maximum area allocated by such licenses is quite variable. It is often between 5 and 10 hectares. Burkina Faso represents a noticeable exception here, but it has



actually two levels of artisanal license: the first one is granted for an indefinite surface, and the second, which more closely resembles the small scale mining license, for 100 ha.

The area is actually often not specified in the law, in which case it should either and be checked in the regulations that apply or determined by custom.

Rights / obligations

The license is most often exclusive but very rarely can be transferred or leased, subject to approval by the administration. It provides general mining rights with various types of restrictions.

- It can be restricted to a given area (cf. below).

- Most countries seem inclined to limit the technological level of artisanal mining operations. This is reflected in common license provisions, such as:

· workings limited to a certain depth: Ethiopia (15 m), Indonesia, Papua New Guinea, Guinea and the Philippines (50 m). This should be decided on a case-by-case basis.

· The use of explosives is prohibited.

· The use of mechanized equipment is not allowed.

· Advanced processing technologies are excluded.

- It can be restricted as to substances. This appears to be the most common case. Apart from separate licenses for quarry resources and building materials, specific minerals such as gold, diamonds and other gemstones are often licensed separately. It has the advantage of being beUer customized, but it may have drawbacks as in Madagascar, where the 1999 mining code specifically mentioned gold and special minerals like aragonite, but failed to cite gemstones. Consequently it did not anticipate the massive rush that occurred just after on sapphire and ruby.

- It can also be restricted in the operations it permits. Single licensing is a system that provides one overall license to cover all related activities including exploration, development, mining extraction, processing and marketing of mineral products. It is a simple process and is an appropriate licensing method for SSM operations, practiced in most countries. At the opposite end of the scale, a "staggered licensing system," provides separate licenses for each stage of mining operations, i.e., a separate license or permit for prospecting, one for exploration, and one for mining extraction. This is normally adopted in licensing large-scale mining operations, but it is also adopted by some countries (Zambia, the Philippines, Namibia) for licensing small-scale mining with some variations.

4.1.6. Small-scale mining licenses

Purpose

The small-scale mining license lies midway between the artisanal license and the large-scale mining title. Its spectrum is very wide, however: it sometimes appears



closer to the "artisanal" pole, when it is designed as a "leap in scale," and other times closer to the "industrial" one, when it is conceived more as a sub-category or a "scaled-down model" of mining permit.

Eligibility / registration

Contrary to the artisanal mining regime, it seems important here not to restrict access to citizens alone. Requiring a local corporate name is an acceptable demand from a practical standpoint, but opening one's capital to foreign investment remains a necessity. The object is no longer to allocate the products garnered according to national preference, but rather already to stimulate prospecting and exploitation in an optimal manner. To succeed in so doing, capital and competencies may need to be brought in from outside the country.

As in the case of large-scale mining, there is still the possibility of placing a cap on foreign participation, but this reduces the incentive for investment by that much, particularly if the threshold is below 50%.

Area / duration

Most countries offer intermediate-term SSM licenses: two to five years, renewable. Notable exceptions are Papua New Guinea, with 20 years, or Ethiopia and Zambia, where a 10-year license is provided. These countries also have separate provisions for a shorter-term, artisanal mining license.

The area is quite variable, but usually between 50 and 500 ha. Mali is a notable exception here, with 1000 ha. In Ghana, the maximum surface depends on the legal status of the applicant.

Usually the SSM license grants a larger surface area than the Artisanal license, but that is not always the case. In Senegal for example, the first one is offered a maximum 0.5 ha and the second, 50 ha.

Table 6: Comparison of different small-scale mining license provisions


Definitions Provisions

Ma

li Small-scale mining license

1000 ha 4 years

renewable

Small-scale mining: permanent exploitation with minimum amount of fixed installation; daily capacity < 150 t of ore

Can be transferred, inherited mortgaged, and, leased

Za

mbia

Prospecting permits

1000 ha 2 years non- renewable

Professional reconnaissance and basic requirement for right to prospect Right exclusive No gemstones Small-scale





La

os

Small-scale license

500 ha 5 years Transferable

Mo

za

mbiq

ue

Mining Certificate

500 ha (500 ha per title and

not more than 4 titles

adjoining. areas)

2 years renewable

Small-scale mining is not defined in the mining law and to should be distinguished from other mining trough regulations

Exclusive right to mine. Right to apply for mining license transferable

Za

mbia

Small-scale mining license

400 ha 10 years

renewable up 10 years

Exclusive and transferable right holder is to, upgrade (to large-scale license) when operation becomes substantial.

Za

mbia

Gemstone license

400 ha 10 years,

renewable up 10 years

Exclusive and transferable to right; holder is to upgrade (to large-scale license) when operation becomes substantial. License holder is limited to gemstone extraction and must report other mineral findings in the area. Certificate of sales is an obligation for gemstones

Papua New

Guinea Mining lease 60 ha 20 years Transferable

Bra

zil

Small-scale permit

50 ha 5 years

Garimpeiro exploitation of minerals that by nature can be exploited by artisanal or small-scale means and with no prior prospecting.

Granted to Brazilian nationals only. When garimpeiros are constituted into co-operatives: they have priority for working in reserved zones. Operations must start within 90 days after issuance of permit; 120 days stoppage of operation is grounds for revoking permit; applicable only in garimpeiro reservations.

Ind

one

sia

People's mining permit

25 ha (1 ha for individuals and

up to 25 hectares for

cooperatives)

5 years

Granted to Indonesian nationals who reside in the area working not more than 25 meters deep; use of heavy equipment and explosives not allowed; cyanidation process not allowed; designated areas.





Ph

ilip

pin

es

SSM CONTRACT be

(RA 7076) 20 ha

2 years renewable

Extraction of minerals in declared SSM areas

Filipino cooperatives or associations; local residents have priority. Non-transferable right. Limited extent of working (to indicated in the contract) Permit to mine only, separate permit to process ore needed

Myan

ma

r Small Scale Mineral

Production Permit

18.45 ha (50 acres) in case

of metallic minerals and, 247 acres, or1

square kilometer for

industrial minerais and

stones)

5 years renewable to 4

years

Investment shall be less up than 10 million, kyat

Uga

nd

a

Locations(class 1 to VI)

16 ha (8-16 ha depending on

class) 1 year

Granted to Ugandan nationals.; holder to start operation within 2 months; separate export license required

Gh

an

a

Small-scale mining

9.22 ha (3-25 acres

depending on legal entity)

3-5 years renewable

depending on legal entity

Small-scale mining definition based above ail upon concession size

Non-transferable. Applicable only in designated license areas; use of explosives not allowed, but mercury allowed; exempted from payment of taxes and royalties but not from local imposts.

Ph

ilip

pin

es

Sand & gravel permit

5 ha (commercial);

up to 20 ha(industrial)

1 year renewable

(commercial); 5 years,

renewable no more than 5

times(industrial)

Filipino citizens and companies with at least 60% Filipino ownership. Transferable. Suret y bond required to cover potential damage.

Se

ne

gal


0.5 ha 3 years

renewable

Small mine: a set of criteria(gold: daily capacity < 250 t ore)

Granted to legal entities, national or otherwise. Exclusive right (for listed substances). No depth restriction Can be transformed into Permit

Ma

dag

asca

r

PRE permit (Research and Exploitation for

the small operator)

0.25 ha 8 years,

renewable 4 years

Small to operator: exploitation (up to 20 m) working with artisanal (essentially traditional and manual) techniques fewer than 20 employees and without processing the minerals

Granted nationals, exclusive right which can be transferred, inherited, mortgaged, and leased; the use of means other , than artisanal places under the obligation to apply for a standard mining permit





Ma

law

i

Mineral permit To be

specified Not specified

No restriction to nationals; specific deposits can be reserved for small-scale mining; limited surface extraction; use of explosive prohibited; use of power machinery limited to transport of mineral products.

Bu

rkin

a F

aso

Industrial exploitation

permit (of small mines)

Not specified: de pends on the deposit

10 years, renewable 5

years

Small mine: small mining exploitation, permanent, based on the proven existence of a deposit, using semi-industrial or industrial means, the capacity of which is capped by regulation.

Same provisions as the industrial mining permit.

Aig

eria

Small- and Medium- Scale Mining Permit

Not specified 10 years, unlimited renewal

Small or medium operation: has minimum permanent installations and uses industrial or semi-industrial means. The daily capacity should be less than 3000 t.

Granted to companies of Algerian jurisdiction; Granted to the holder of an exploration permit or to the successful bidder. Same rights & obligations as the holder of a mining concession. Beneficiary granted 30% exoneration of royalties.

DR

C

Small-scale Permit

Not specified

Variable (a priori inferior to 10

years counting renewals)

Small-scale mine: exploitation with industrial or semi- industrial means after proof of a deposit. Mining regulation to specify max. investment, number of employees, etc.

Non Congolese must create a Congolese ORC company with a 25% national participation. Must follow up on a Research Permit or a State Bid. Real exclusive right that can be inherited, transferred, and leased. Two possible fiscal regimes: either like large-scale mining or single tax of 10% on sales.

Eth

iopia


Depends on mineral type

10 years, or lifespan of the

deposit

Transferable; 90 days stoppage of operation is grounds for revoking the permit.

Gu

ine

a

Small-scale mining permit

Depends on the substance

1 year

Granted to Guinea nationals. Suret y bond for environmental protection required.




The small-scale mining license must confer an exclusive right to prospecting and exploitation. It constitutes the condition sine qua non for the success of this type of title. This is actually the case in most countries that have chosen that instrument.

Most of the SSM licenses are treated as transferable assets. The notable exception is the SSM gold license of Ghana.

The obligations, especially in terms of health and safety and the environment, can be considerable here. In several Latin American countries, an environmental license is prerequisite to starting operation, even for a small scale mine.

It is important to stipulate suspensive provisions, to avoid having zones that stay frozen, or "paralyzed," over long periods of time because of companies ("juniors") whose interests, due to context, may, for speculative reasons, be to delay work. Reporting, even if only on an elementary level (personnel, production, accounting, environment...), must be made mandatory.

Lastly, such a license can include the right to use water and timber as required for operation. It may confer eligibility for compensations (expropriation, large scale mining...)

4.1.7. Concession

Purpose

It is the most extensive right that has no restriction. The Bolivian example is emblematic: it only defines one mining title, the concession, for all kinds of operators and all kinds of activities.

The problem is, on the contrary, that these titles are not "tailored" to ASM workers. Typically, in Bolivia, ail beneficiaries are subject to the same level of taxation (125 Bs/year square for the surface tax corresponding to the first five years). Area / duration Thus in Bolivia, there is no legal distinction between artisanal, small-scale or large-scale mining: each can claim for a concession for a surface counted in 500 m squares.


The concession title is a real, exclusive right which can be transferred, inherited, leased. It is granted to a natural person or legal entity, Bolivian or not, and for an undetermined period of time.

The rights of the concessionaire take precedence over those of the landowner, who can be expropriated in case of conflict, albeit with compensation.



Security

That kind of title is clearly the one which offers the most security. The unified concession for exploration and exploitation introduced in the Peruvian Mining Investment Law of 1991 eliminated the need to apply for a mining title following completion of a successful exploration program, thereby eliminating the risk of not obtaining the necessary mining title. In its place, the unified concession imposes on title-holders higher annual surface fees and an obligation to meet specific production levels within a specific time frame or else pay financial penalties. Subject to those constraints it imposes no timeframe within which an exploration program must progress to feasibility analysis, development and production. This innovation has been adopted in Bolivia and Venezuela and has been considered for adoption in Brazil, but has not been copied outside Latin America.

4.1.8. Designated areas

Purpose

Defining areas gives the possibility of recognizing the right for artisanal miners to engage in their activity within zones set aside for them. The principle of legally designating areas for artisanal mining turns up in the mining codes of a good number of countries (Tanzania, Guinea, Brazil, Mozambique, the Philippines, Zimbabwe, Burkina Faso, Mali, DRC among others).

Designation of the area

Those areas can be defined by the Administration, which allows miners to operate on pre-reserved areas. The advantage is that the miner is spared the time-investment of identification and authorization. The risk, on the other hand, is that the Administration will not open up zones that are really attractive.

There are different kinds of designated areas that can coexist:

- Areas prohibited to artisanal mining: the State can authorize ASM activities in principle, provided a license is obtained, but forbid it in some special zones for cultural (agriculture communities), economical (other privileged development) or environmental (natural reserves) reasons. This is actually the case in most mining laws.

- Areas dedicated exclusively to artisanal mining: the artisans are authorized to work within their boundaries, and no mining title can overlap them. An example of this are the "couloirs d'orpaillage" in Mali, where artisans can also mine outside those bounds, typically on allocated mining titles, provided they obtain permission from the holders. Inside those areas, the miners may be authorized through an administrative licensing system (artisanal license) in or through a community recognition system. Typically in Zimbabwe, the villages are in charge of organizing the exploitations of gold in riverbeds located on their territories.



- Areas not exclusively dedicated to artisanal mining: the authorized miners cannot prevent some research or prospecting activities, and the area can later be closed to artisans. This is the case with traditional artisanal mining in Burkina Faso, where the displaced artisans would have the right to ask for compensation.

- Areas restrictively allocated to artisanal mining: this would be the case where artisans are not allowed except on certain pre-determined zones that can be defined at the central administration or at the village javel. This is the case for instance in DRC, but also in the Philippines, where the concept of segregating and declaring specific locations as small-scale mining areas did not actually work.

Pros and cons

It is clear that the mining administration can more readily safeguard and control ASM activities if they are exercised within limits it itself has prescribed. Moreover, these zones may be made off-limits to prospectors so as to guarantee the artisans a certain measure of stability: if no mining permit to prospect or to work can be issued within these zones, LSM/ASM usage disputes will be avoided.

However, it is not always realistic to seek to maintain artisanal mining activity inside these zones, as it is intrinsically changeable, not very sedentary, or even frankly migratory. Furthermore, the artisans are often "feeling their way" when they move on, from site to site, from shaft to shaft: disregarding both legal and geological boundaries, the gold washer "follows his vein." It can be completely against their nature, and therefore ineffective, to try to prevent artisanal miners from searching outside a cadastral limit which is often quite theoretical.

Moreover, the legal delimiting of artisanal mining zones derives from a decision by the mining administration which is fraught with very real risks of abuses or discriminations. Unlike when a mining concession is applied for, where the mechanism is "bottom up", the declaration of a gold-washing zone involves a "top down" mechanism. A process must imperatively be instituted where the artisans are consulted to counterbalance the excessive liberties enjoyed by the State when delimiting these zones, and the way must be opened to negotiation, which alone affords a chance for success in the application.

The clause authorizing the State to close the artisanal mining zones at its own discretion may seem scandalous from the point of view of the artisans, but the matter is subject to debate. By keeping this option open, the State retains the power, when opportune, to promote "entrepreneur-based" as opposed "community-based" mining. Now, this option is politically fundamental, for it governs how mining revenues are redistributed. Artisanal mining involves what, seemingly at least, is a more equitable redistribution, one marked by greater solidarity, one might be tempted to say, although, as individuals, the players often display individualistic behaviors. As to "entrepreneur" mining, it involves a mode of distribution of revenues that is far more primitive, and even exclusive, but that is liable to generate flourishing activity and an array of positive indirect consequences. Unjust in appearance, this option is the root of development, which is founded upon personal enrichment, the accumulation of capital and its reinvestment in the mining economy or in other assets.



Discussion during the 5th AGM of CASM in Salvador de Bahia, and especially during the related workshop on September 21, 005.

Should the government designate specific areas for ASM in order to formalize the activity? Some countries prefer not to do so and allow "market" mechanisms to govern the sector. Here, the artisans, left to their own devices, may end up with a claim to a piece of land that turns out to be poor in mineral resources. They may also easily find themselves in conflict with the holders of pre-existent mining or with other of actors using the land.

Conversely, some countries do prefer to designate areas, but this, too, carries risks for the artisans. Firstly, too much discretionary power may lie in the hands of the government. Secondly, if the government proceeds to conduct prospecting campaigns in order to identify the best zones for ASM, this policy, far more than one of formalization, becomes promotional.

The need to declare and set aside specific areas for ASM is typically hailed as necessary in promoting of the sector (UNECA, 2002). However, in order to undertake such an exercise effectively, detailed geological data must be available that will enable the mineral reserves to be classified accordingly. Such data can only be obtained by conducting detailed geological exploration, the costs of which would exceed the Tanzanian government's total allocation to the Ministry responsible for mines. Because of budgetary limitations, for example, in Tanzania the setting aside of dedicated ASM zones is being used as a means for dealing with rush areas, i.e., ones where large numbers of unlicensed miners turn up at once.

Issues and successes invoked during CASM's 5th AGM in Salvador de Bahia, and especial/y during the related workshop on September 21, 2005.

Issues Country

Reporting (difficulty for ASM workers to report on a regular base)

Surinam (Small-scale mining Right)

Entry barriers (difficulty for ASM workers to have access to the licensing system)

Peru, Uganda (price of the location license)

Decentralization (lack of decentralization or conflict between the local and central administrations)

Zambia, Honduras

Complication (of the licensing system) or bureaucracy

Uganda, Zimbabwe, Tanzania

Demarcation or allocation of viable concessions

Ghana, DRC

Conflicts between LSM and SSM Ghana

Successes Country

Registration (success of the process of) Surinam

Cooperatives (success of the or incentives to form)

Mozambique, Peru (1000 miners groups formalized since 2002)

Community integration Zambia (a good number of indigenous Zambians own an Artisanal Mining License),



Madagascar, Mali (gold mining gullies)

Existence of a specifie license

Philippines (the sand & gravel licensing scheme have allowed the legalization of ail operations), Uganda, Nigeria (draft mining code)

One-stop centre Tanzania (one stop center for processing and exports)

Decentralization Madagascar

Tax exemptions Ghana

Simple system (to enforce, to manage) Ecuador (one license for LSM and SSM), Ghana (only 21 articles in law but difficulties in practice)

4.2. A COMMUNITY -DRIVEN APPROACH TO FORMALIZING ASM

Community-Driven Development (CDD) - in the World Bank's connotation - is "an approach that gives control over planning decisions and investment resources to community groups and local governments., 44 www.worldbank.org (search COD) The watchwords are basically local empowerment, participatory governance, demand-responsiveness, administrative autonomy, greater downward accountability, and enhanced local capacity.

With respect to formalizing ASM, too many licensing systems that "look good on paper" turned out to be inapplicable once the law went into effect either for want of institutional capacities or because of a lack of appropriation by local stakeholders. It is consequently essential that the government "bet we"" and enforce legal measures tailored both to its formalization ambition and the realities in the field. A community-driven approach is necessary to implement realistic and customized legislative measures.

Our approach is based on designating an "ASM community representative," who is to play a key role. This representative will vary depending on the situation. At the most basic level, the ASM community may be represented simply by the municipality representative ("the mayor"), when there is a no true organization of the mining activity. Once the mining activity's work organization has achieved an intermediate level, it may be represented by the "chief," the person responsible for the mining activity on an identified territory. Lastly, the representative may be the "entrepreneur," the person in charge of the mining business on demarcated territory, when the mining activity is taking on an entrepreneurial character.

4.2.1. The three-level scheme

Our hypothesis is that in each country the artisanal mining activity can be divided schematically into three levels. For a given country, a proper diagnostic of the national context would certainly be necessary to define those three levels, to become three different targets for the formalization policy. That diagnostic is a crucial step and should be performed on a consultative basis prior to any further step in determining the formalization process. This process cannot hope to succeed if it is simply imposed from



the outside: it must be initiated and implemented in cooperation with stakeholders. The table below lists a set of criteria that can be used to describe the three levels.

Table 7: Characterization of the three levels of ASM

Characterisation Level1:

Communities Level2: Settlements Level3: Enterprises

Mining locations sporadic Pit (typically alluvial) Mining site (possibly

hard roc )

Mining operations Picking Digging Mining

Working unit Individual or little

group team Group of teams

Economic unit Income Generating

Activity (IG ) Mini-enterprise Small enterprise

Technical means manual basic mechanized

Representative mayor chief entrepreneur

Revenue Subsistence /

complementary meet the needs

Limited investment possible

Level of organization X XX XXX

Depending on the country, those three schematic levels can coexist either in the same production chain or in different extraction channels. Ali are considered here as "artisans," even if we tend to call some of them "small miners," because we are focusing on the most informal layers of the population. In some countries, only Level 1 will represent a significant part of the mining sector. In others, ASM activities will not present existing levels of organization that go beyond Level 2. The social structure here refers to the local level of organization that could be able to represent the artisanal population and consequently to be the "target" of a formalization process. This classification calls for further explanation.

The characterization of level1

• In technical terms

The artisanal activity at that level is typically temporary or seasonal picking (gold), but it can go as far as small groups working in placers. The scale of this activity is termed "sporadic" because the artisans tend to move rapidly from place to place. They exploit mainly gold or gemstones ("orpailleur" in Western Africa, Garimpo in Brazil...) in alluvial ores or materials and other non-precious substances (clay for bricks...).

• In socio-economic terms

• This level of ASM activity is the very first one in terms of organization. It is similar to an Income Generating Activity (IGA). Those engaged therein indeed aim to acquire a complementary or a subsistence-level revenue. They have no specific competence and are self-employed. Often they have no legal status even if they sometimes pay for commercial patents.

At that level, artisans are working on their own and are not especially linked with each other. Nobody can represent them except the representative of the territory where they



exploit mineral resources. This person may be a village mayor or an indigenous chief, and we call him a "community" representative or mayor.

The characterization of Level 2


The artisanal activity at that level is typically the working of a rich vein (in a go Id example), and a small team has formed around what was just an individual. The scale of the activity is the pit, and shovels are among his typical tools and can go as far as the motor pump.


This level of ASM activity is to close to a mini-enterprise. Leaders work with basic techniques and are often assisted by relatives or community members. The very small size of the activity just allows the group to meet their needs. Their legal status is often not clear, but they often pay some tax. Indeed, they have a modest working capital that allows them to purchase some consumables or small equipment.

At that level, artisans work on a given site for some time. They commonly stick together, and a certain degree of organization has to occur between them: we call it a "settlement," knowing that the spectrum can range from one modest team native to the vicinity to a massive rush luring foreigners in some cases.

The characterization of Level 3


The artisanal activity at that level is typically a 10-meter pit in alluvial or even hard-rock ores. The group of people involved can be sizeable, and the exploitation continue over a long interval. Some mechanical tools or even semi-industrial means are used.


This level of ASM activity is approaching that of a small enterprise. Its "head" is identified, and he possesses some entrepreneurial strategy that mobilizes a certain degree of know-how. The activity is well defined and the entrepreneur is assisted not only by his close family or community but also by wage-earning employees. The enterprise is often registered and can pay some tax. In some countries, it may belong to a professional union. The technology used is still simple but calls for some investment for permanent equipment. It requires some initial capital. It is difficult to quantify it numerically: the group of teams can represent between 10 to 100 individuals.

At that level, artisans are more professional, and we can term the social organization an "enterprise," even if again the spectrum can be very wide.



4.2.2. The formalization of Level 1: artisans within "communities"

Principles

The formalization of that level should be managed at a local level and through a simple Iicensing system. Given its characteristics, the formalization process should not be too ambitious, as it is more a matter of legalization.

The relationship between artisans and other community members should be managed by the leader of the municipality (the mayor), who has a key role to play in terms of ASM governance.

Regarding the artisanal mining population, the mayor should organize the allocation of artisanal mining patents and collect the related fees. He should also be empowered to declare legal the activities of the license holders and illegal those of workers who don't have it.

Regarding the central government, the mayor should publish a list of existing operations, including the number of known artisans (men and women) who are authorized to mine on the territory. He should (if possible) declare an annual production figure (or estimate thereof) that will serve as a basis for a statistical monitoring, allow unannounced controls from the central administration, help in defining fair taxation policies and support assistance.

The granting of patent could be conditional upon signing a code of conduct that, depending on the situation, has environmental, health or safety provisions. In some countries, this commitment could even be subjected to an examination: passing the (practical or theoretical) examination would confer the "official capability" to conduct artisanal mining, and registering and paying the patent would give the official and effective right to mine on the community territory.

Licensing

A special patent (stamp duty) should be defined and enforced; its cost should be minimal.

It should be annual to allow a modicum of control and registration.

Renewability should not be systematic (it can be conditioned by respect for the community).

It should be granted only to nationals and to people over 18 years of age or having reached civil majority.

The restriction should concern the means of extracting (no mechanization, no investment) and/or the tonnage allowed in a given place.



Rights & obligations

This license is a tolerance or an authorization. It is consequently not exclusive. Miners are to respect each other and with the other actors (agriculture) under the auspices of the mayor. This license should not be transferable. No other tax than the patent should be imposed on the holder of such an authorization.

Interactions

It gives no rights with respect to the landowner, whose agreement must be obtained and who is entitled to ask for compensation. If the central administration, for mining development reasons, is willing to grant to a large company a (prospecting) permit that concerns part of a community territory, this should be possible. In that case, security of tenure (like obtaining an exploitation permit subsequent to the prospecting one) should be conditional upon the community's agreement. In cases of conflict, the Ministry should still have the power to order the displacement of a village.

Designated area

The state (the central administration) could opportunely reserve dedicated areas inside which the local authorities (the mayor) would be empowered to allocate the patents.

To that effect, the designated area for community artisanal mining needs to be compatible with the administrative and cadastral breakdown.

The mayor should be attentive to density (the number of artisans on the territory). It is up to him to ensure a proper balance, taking into account impacts and the admissible level of exploitation.

Environment

The law should forbid the use mercury and explosives by such artisans. • No earthworks should be allowed at this stage.

Upgrading

If the number of concerned people grows (as during a rush), the activity will unavoidably need to be organized at a local level, and the formalization process should refer to Level 2.

4.2.3. The formalization of Level 2: artisans within "settlements"

Principles

The formalization process at that level goes further, but still takes into account the one in place at Level 1 because the two can coexist. Licensing should still be under local control but in closer relationship with the central administration.



Individual licenses should still be attributed by the mayor, but the group of artisans should also be able to apply for a more extended title. For that, he should name someone to be in charge, who will request it from the central administration.

This other kind of license will formally devote a designated perimeter to mining exploitation, one that is recognized by the administration. The mayor will still be able to distinguish between legal and illegal miners working on that surface with the same patent as in Level1.

The mining activity on that demarcated surface will prevail over ail other activities.

The "settlement" thereby acquires the right to stay and dig on a stable basis but in turn accepts to fulfill more obligations. That "settlement" can be illustrated by result from a "rush" but it can also arise when a group of miners from the community who decide to opt for a higher degree of formalization.

A form of cadastral management would be useful to arbitrate the eligibility of a given parcel such that it does not interfere with other valid permits and/or zones of a special nature in the community (sacred areas, cemeteries...).

Licensing

An artisanal license should be accessible to the identified person in charge of a given surface. It should be granted only to nationals. It should be annual because the corresponding reserve is often limited. Renewal should not be systematic: it can be conditioned by respect for the environment, the approval of the concerned community...


The license should confer an exclusive right to exploit.

At this stage, the license does not have to be transferable (as it is still for a short term) or mortgageable.

A restriction should exist as to surface area, Le., less than 1 ha. Other restrictions should include the means used to extract (minimum equipment).

This is still too early a stage to tax the activity: no VAT, no social charges, no tax on profits and even no royalty, ail of which should be collected further along in the marketing chain.

Payment could take the form of a surface tax paid to the municipality, to incite it to agree to such licenses. The cost should be higher than for Level 1, but this level still should be treated with circumspection.

The stage often also has a "prospecting virtue": its vocation is to lead on to a SSM license or to lead to the discovery of an industrial deposit. With that in mind, it should thus be fairly state supported.



The declaration of production need not be compulsory: tax collection and statistical monitoring can still be conducted at the next level in the marketing chain, that of the collectors (first purchasers), for example.

Interactions

No prospecting or exploiting permit should be granted for the concerned surface as long as the license is valid, except by mutual agreement.

If informal artisanal mining settlements are located on a zone subject to an on-going prospecting permit, the company that holds it should be obliged to negotiate with them, but should ultimately have the means to refer to the central administration to evacuate illegal miners.

Environment

Controls should be stricter. The administration should have the possibility to refuse the renewal of the license for environmental reasons (including water pollution).

The respect of the environment could even be a condition for the validity of a future pre-emption right. Local institutions should indeed be able to arbitrate on technical and quality criteria.

Upgrading

Given its characteristics, the formalization process should be particularly cautious in dealing with this category. It is approaching the stage of an enterprise and should be encouraged to take the "leap in scale" (technical assistance).

The most important thing is to bring security to the entrepreneur prepared to upgrade, while safeguarding any potential industrial development. The license should have a real "test value." The successful candidate should be able to become eligible to more in case of success. The principle is to give priority to the artisan when a given surface is about to change status.

A local institutional structure should be able to oversee this category and arbitrate in the questions of upgrading.

4.2.4. The formalization of level 3: artisans within "enterprises"

Principles

Here the formalization process goes even further. The group of artisans here will not only formally respect the community's rights by custom but also the country's work code, as with any other activity.



• An identified artisan acts as an entrepreneur and has the will to acquire a new status that extends his security and his rights. The central administration is now in a position to monitor him more directly.

Licensing

A small-scale mining license should be defined and made accessible to this level of player if it does exist.

It should be attributed to a natural person or to a legal entity that can be either a company or a co-operative or even a community.

The surface involved should be between 50 and 100 ha.

The duration should be two to five years initially, and renewable thereafter as long as reserves are available and the environment and other health & safety constraints are respected.

A proportionate surface tax could be demanded. The amount of that tax will reflect the nation's will to develop or not that type of activity.


The license should of course be exclusive.

A list of the employees can be required by the administration as well as production reports.

The license should imperatively be transferable and mortgageable, to afford the miner the opportunity to have access to financing, using his title as a guarantee (it becomes a mining asset).

Taxes should exist at this stage, but with a sufficient number of exemptions (exonerations will be a useful instrument for promotion, if needed).

As with other kind of enterprise, regular monitoring should be respected and notably the declaration of production to the administration.

Interactions

The administration would still have the right to refuse to grant a SSM permit when it is suspected that the deposit in question may correspond to a LSM context. In such a case, the administration should provide the technical arguments and settle on a means of compensation.

In turn, incentives should be offered in order to encourage the industry to retrocede some parcels potentially suited to artisanal mining and/or SSM. It is certainly not sufficient to require the industry to publish the its prospecting results.



Environment

Some precise specifications should attend the right as to the respect of the environment, of health & safety and related questions.

Upgrading

There are conflicting concepts or policies regarding the transformation and upgrading of SSM to larger-scale operations. On the positive side, the Zambian legislation requires holders of small-scale mining licenses to upgrade to a large-scale license when mining operations reach a substantial scale. Guinea has adopted a similar policy.

In some countries like Tanzania and Indonesia, however, SSM designated areas may be declassified or abolished and be opened up to large-scale mining operations if the area or deposit is recognized to have the potential for large-scale economic exploitation.

4.2.5. Conclusion

Recommendations for each level are partially regrouped in the following table:

Table 8: Recommendations for the three levels of ASM

RECOMMENDATIONS Level1:

Communities Level2: Settlements Level3: Enterprises

Role of the community representative

XXX XX X

Local authorization (patent)

XXX XX X

Central authorization (mining title)

0 X XX

Provisions: - Exclusive 0 X X

Transferable 0 O/X X -

Mortgageable 0 0 X

Cost of license X XX XXX

Declaration of production

0 0 X

Taxation 0 0 X

Interactions: Landowner prevalence

X 0 0

Prospecting permit possible

X O/X O/X

Exploitation permit possible

O/X 0 0

Obligations X XX XXX

The conceptual diagram below summarizes the principles of this community-driven ASM formalization process. Each side of the triangle corresponds to the territory of a given community. Again, "community" here refers principally to the cadastral division, the "municipality," but in some instances where customary rights prevail or where the



administrative division is less meaningful, the "community" can also refer to the traditional community.

Figure 2: A community-driven approach to ASM formalization: a conceptual diagram

The diagram above illustrates the main differences, as well as the progression of the formalization process from one level to another. At Level 1, the artisans are represented by the community representative, and he is the one who delivers them the



patent. In Level 2, he still delivers a patent to artisanal miners, but since they are organizing themselves on a delimited area, a representative of the workers can be named who will apply for a mining title from the central administration. At Level 3, an entrepreneurial structure is emerging, and the artisans are now employed by the entrepreneur, who obtains a mining title from the administration for a demarcated perimeter.



5. Conclusions

Artisanal and small-scale miners will only formalize and register their operations if they see some real advantages to doing so. In other words, formalization stands no chance of success unless it represents a "win-win" situation between the artisans and the State. A win-win situation consists in identifying the balance point between supply and demand: the supply of rights and the demand of obligations, from the point of view of the 8tate, the offer of conformity and the demand of rights, from that of the miner (Hruschka, 2001).

The most favorable situation is naturally when the artisanal miners are convinced that formalization will be beneficial to them. The example of Peru over the period 2000-2002 is exemplary in this respect: if the formalization process met with such success, it is thanks to appropriation by the gold washers, whose interests and motivations coincided uniquely with the political will of the moment.

But in any cases, the importance of creating an enabling environment for formalization of the A8M sector is increasingly being recognized by legislators throughout the world. The activity is designated as formal when the players respect the "game rules". It thus is necessary that these rules exist, that both parties be familiar with them, that they be applicable by the administration, and comprehensible and acceptable to the miners, for there to be any likelihood that some of these latter may respect them.

If governments have experimented little success up to now, it is in part due to a tendency for regulatory frameworks to be control-oriented, or too "State-oriented" with few obvious benefits or incentives for miners. The State remains off course the authority that delivers through its administration the "form" in question, as mentioned in introduction. But the A8M formalization process cannot do without field realities and this is the aim of that research paper to call for a complementary approach based on Community-Driven Development principles.

Indeed, the formalization process cannot be solely legal: it has to be a participative evolution. The community, that undefined entity that is the mediator between the government and the workers at the end of the chain, will only come to the fore, reveal itself and defend its rights in the framework of a consultative process, which is the foundation of good governance.



6. References

Andrew J.S., Hilson G.M. (2003) - Land Use Disputes between Small- and Large-Scale Miners: improving conflict management, in The Socio-Economic Impacts of Artisanal and Small-Scale Mining in Developing Countries, Gavin M. Hilson (ed.), 2003.

Andrews-Speed Ph. et al. (2003) - The regulation of China's township and village coal mines: a study of complexity and ineffectiveness, Journal of Cleaner Production, 11 (2003), 185-196.

Andrews-Speed Ph. (2002) - Mineral and Petroleum Taxation, UNCTAD Distant learning Course, 2000.

Andriamasinoro F., Jaques E., Pelon R. and Martel-Jantin B. (2005) - Artisanal and Small-scale Gold Mining in Aiga (Burkina Faso): Building a Decision-Aid Model for Development and Governance. In Proceedings of the Summer Computer Simulation Conference (SCSC'05), july 24-28, Philadelphia, Pennsylvania, USA, pp 292-297F.

Aryee (2003) - Overview of artisanal mining and its regularization in Ghana, Presentation at the Second CASM Annual General Meeting, Elmina, Ghana, Sept 8-10,2003, www.casmsite.org/programmesJearning_Elmina.htm.

Asante G. (2003) - The Importance of Marketing in the Small Scale Mining Regularization Process in Ghana, Presentation at the Second CASM Annual General Meeting, Elmina, Ghana, Sept 8-10, 2003, www.casmsite.org/programmesJearning_ Elmina.htm.

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Appendix 1

Countries Reviewed



These case studies highlight very briefly the main reported features of ASM legislation regarding formalization.

AFRICA

The Democratic Republic of Congo (DRC)

Importance of ASM in the country

DRC is supposed to rank first among African countries in terms of ASM workers. Estimations range from 800,000 to 1,200,000 individuals. A large workforce of Congolese miners also reportedly work in neighboring countries, notably in Angola. The main substances concerned are diamonds, gold, coltan, copper, and cobalt.

Political and legislative context

After the fall of the Mobutu Government in May 1997, the new government of DRC began planning for the revitalization of its resource-rich but capital-poor mining sector. The outbreak of armed rebellion delayed the reforms. The new Mining Code was finally passed in 2002 and develops a comprehensive regime for artisanal and small-scale mining.

Initially welcomed by international actors, the Code has come under increased criticism as being complex and insufficiently streamlined, and this is reflected in the difficulties encountered in its enforcement.

Main features of ASM laws

The Mining Code of 2002 defines two mining titles.

The Artisanal License: Accessible to Congolese artisanal miners who work with non-industrial means and at depths of less than 30 m, this license is granted for an unspecified duration and surface area. Apparently the government's only role is to designate reserved artisanal mining areas, within which the workers are left to set up their own organization.

The Small-Scale License: That license applies to semi-industrial operations with specifications stipulated by regulation. Based on quantitative elements, they concern the volume of ore mined, the annual production capacity or the initial investment (typically between 0.1 and 2 million USD). The surface and duration are not specified by law but the title is a real, transferable, transmittable and mortgageable right.

Issues and successes

Artisanal mining is allowed only in designated areas. It is consequently impossible for ASM workers to mine on existing mining concessions. It is also impossible to obtain a mining title on an area designated for artisanal mining. The Direction of Geology, however, can conduct prospecting, and in the event a deposit is discovered, the



Ministry of Mines can close the area to ASM. That kind of clause makes the artisans vulnerable, for they are easily subject to expulsion.

But problems arise even at an earlier stage: the designated areas have not yet been definitively delimited and are already a source of conflict. Consultation of the artisans is not included in the process, and the risk is real that the Administration will be designating remote or inaccessible areas - places where artisans do not want to operate.

From a general stand point, legalization is clearly the first step towards formalization, but a certain degree of flexibility in legislation is nevertheless still necessary so that, unlike in ORC, it remains applicable in the short term.

Madagascar


Madagascar, known for its gem production, has never had a major mine. However, two major investment projects by two of the world's leading mining companies are at the feasibility study stage. The number of ASM workers in gold is estimated at between 100,000 and 200,000, many them being seasonal. Between 300,000 and 500,000 are believed to work in gemstone mining.


The 1999 Mining Code, together with related decrees, is slated for reform in the framework of the current World Bank "PGRM" project.


The mining code has separate provisions for gold, and the "autorisation d'orpaillage" is delivered by the municipality and is valid within its circumscription, exclusive of mining concessions unless the holders give their formal agreement. The "PRE" Permit is a single permit for exploration and exploitation reserved for the small operator. It is a complete right, which guarantees exclusivity at each stage of the mining cycle. As for "large-scale" permits, they are transferable, mortgageable and may be inherited, with no requirement of prior governmental approval.


The Madagascar code is a good example of a decentralized system. The country has enforced a wide-scale policy of decentralization that goes far beyond the mining sector. The six provinces (and recent 22 regions) have more and more responsibilities, as do municipalities.

The code is also a good example of respect for communities, because custom rights are recognized by the administration, and people who commonly have the use of a territory may ask for compensation even if they are not landowners.



The legislation focused on gold but did not anticipate the gem rushes: it did not provide a satisfactory framework to accompany their development properly, and the right measures are still to be enforced.

Ghana


It is estimated that some 200,000 individuals are involved directly in the extraction of gold and diamonds, the great majority of whom are galamseys. A technical paper published by the World Bank entitled Strategy for African Mining estimated at 30,000 the number of individuals employed within the legalized segment of the Ghanaian small-scale mining sector (although more recent official sources indicate 50,000 SSM miners).


The legislative framework for mining in Ghana is laid down in the Minerals and Mining Law, 1986, PNDCL 153 (Law 153) as amended by the Minerals and Mining Amendment Act 1993, Act 475 (Act 475) and modified by the provisions of the Constitution of 1993.

The Ghanaian government was among the first to discuss plans to formalize the ASM sector after identifying the potential earnings in the industry, revenue that under an informal organizational scheme, is largely lost via smuggling and other avenues of illegal trading. By the end of the 1980s, the government had regularized the small-scale mining sector through a series of policies and regulations.

Initially, only diamonds could be legally mined on a small scale in Ghana. However, in 1989, a much-needed move was taken to legalize small-scale gold mining, which, from an economic perspective, is by far a more important sector of the economy. The following three laws were passed:

- The Small-Scale Gold Mining Law (PNDCL 218): provides for the registration of activity; the granting of gold-mining licenses to individuals or groups; the licensing of buyers to purchase product; and the establishment of district-assistance centers.

- The Mercury Law (PNDCL 217): legalized the purchasing of mercury (for minerai processing purposes) from authorized dealers.

- The Precious Minerals Marketing Corporation Law (PNDC Law 219): transformed the Diamond Marketing Corporation into the Precious Minerals Marketing Corporation (PM MC), which was authorized to buy and sell gold.


The Ghanaian legislation has set the scene for many other countries. The legislation does not distinguish between artisanal and small-scale mining. Small-scale gold mining operation is defined as the mining of gold by any method not involving substantial



expenditure by an individual or group of persons not exceeding nine in number or by a co-operative society made up of ten or more persons.

A single exploitation license is granted, but the provisions can vary with regard to the number of persons to which the title is granted. A license issued to an individual shall not exceed three years but can be renewed for a period of no more than three years for two consecutive terms. A license issued to a cooperative shall last for a period of five years but is renewable for a period no longer than five years for two consecutive terms.

A group of individuals not exceeding four shall be granted an of area no more than three acres; a group exceeding four but not more than nine shall be granted an area of no more than five acres; and a company or a co-operative society shall be granted an area not exceeding 25 acres.


The law is simple and clear: 21 articles (with reference to the Minerals and Mining Law).

One of the good points was that for a period of three years dating from the coming into force of this Law, ail persons engaged in small-scale gold mining operations shall be exempted from the payment of income tax and royalties with respect to such mining operations.

The issue of land-use disputes between small- and large-scale miners, however, is particularly pressing in Ghana at the moment. The government, which is continually 100 king for strategies to increase foreign investment in its minerals and mining sector, is awarding land to large-scale mining companies. This is displacing a great number of local small-scale miners, most of whom are operating illegally but nevertheless rely upon their mining for subsistence.

Tanzania


Estimations of artisanal miners in Tanzania range from 400,000 to 500,000 permanent workers in many substances, but gold and gemstones principally.


Following the 1990 policy reforms, artisanal miners were encouraged to peg their claims and organize miners' cooperatives and societies. The 1997 mining policy was also exemplary in many ways. It led to the Tanzania Mining Act of 1998 with the aim of reducing bureaucracy in its implementation. The 1998 Act is now regarded as a good legislation that is transparent and sub-sector specific (UNECA, 2002). As a result, even if most miners are still operating without licenses, there was a sharp increase in legal artisanal mining operations.




There are two categories of mineral rights issued to ASM: Primary Prospecting Licenses and Primary Mining Licenses. These two categories do not differentiate between the artisanal and small-scale miner, nor do they differentiate between mineral types. In the large-scale sector, the categories can distinguish between those for gemstones and those for other minerals.

Compared with the 1979 mining act, under the new legislation, concessions for ASM have been increased to a maximum of 10 hectares and a tenure period of five years renewable. Like in the mineral rights category, there is no distinction between size arid tenure periods for artisanal and small-scale miners.

The new mining legislation provides licensed artisanal and small-scale mining operators with the right to renew, transfer and mortgage their mineral rights.


The need to declare and set aside specific areas for ASM is typically halled as necessary in the promotion of the sector (UNECA, 2002). However, in order to undertake such an exercise effectively, detailed geological data must be available that will en able one to classify the mineral reserves accordingly. Such data can only be obtained by conducting detailed geological exploration, the costs of which exceeds what the Government in Tanzania currently allocates to the Ministry responsible for mines. Because of budgetary limitations, for example, in Tanzania the setting aside of areas specific to ASM is being used as a way of dealing with rush areas, i.e., areas where large numbers of unlicensed miners turn up at once.

Upgrading is well planned, as the holder of the Primary License "may apply to the Commissioner to convert the License or Licenses to a Mining License or Gemstone Mining License." The Act modified some codes such that it guarantees progression from one license to another depending on the work undertaken.

The procedure by which an individual obtains a small-scale mining license is tedious, requiring the completion of several forms, and final approval from governmental authorities.

Mali


Mali has long been famous for the importance of gold in its economy and its tradition. Estimations deduce around 100,000 workers in gold ASM.


The current Mining Code consists of Order No. 99-032/P-RM and its enforcement orders. It introduces four concepts concerning ASM: the gold mining gully (couloir d'orpaillage), artisanal mining, small-scale mining and artisanal career.




Gold mining gullies are zones reserved for traditional artisanal mining and for a limited period of time. They are defined jointly by the Ministry of Mines and the Ministry of Local Territories, and are published by the Administration. No mining title can be granted on their surface. Traditional artisanal mining is also tolerated on other zones where no titles have been registered or inside concessions with the holder's prior agreement. A license attested by a card (carte d'orpailleur) is necessary to mine, but organizing is delegated to the communities.


Gold mining gullies are a good way to protect traditional rights.

Mali offers a good case study of ASM/LSM co-operation with the Sadiola mine. That partnership between AnglollAMGold and local artisans has allowed two villages to be displaced in exchange for a set of compensatory measures: the allocation of a dedicated zone for ASM, technical assistance, education, health and security services.

Senegal


The number of workers engaged in the ASM sector in Senegal is not large. The mining code reflects some "classical" dispositions and is not really customized.


The 1989 mining code defined a specific regime for artisans or semi-industrial mining. Exploration and exploitation zones used to be defined by decree. Those decrees had to designate, case by case, the substance, the eligibility, the period and the surface area of the authorization, as weil as the obligations, notably in terms of tax. The new 2003 mining code has improved the predictability of those provisions.


Current legislation makes a distinction between artisanal mining, which should be manual and traditional, and mechanized mining, considered small for daily capacities under 250 t of ore, and large otherwise.

The zones where ASM is authorized are still defined by 'decree, but ail the provisions relating to licenses cannot be affected? by those decrees.

The artisanal license is allocated for two years, renewable for three years and for an area of less than 50 ha. It is a real right and guarantees exclusivity. The SSM license is granted for three years, renewable three years, and for areas under 5 km2




The weak point is that neither the artisanal nor the SSM licenses are transferable and mortgageable.

Burkina Faso


Artisanal gold mining is practiced by over 100,000 miners and supports over 200,000 people across more than 200 sites in Burkina Faso.


The Mining Code was reformed in 1997 with a view to promoting private initiative and foreign investment. After the World Bank's PRECAGEME project, the code was revised again in 2003.


Artisanal exploitation used to be defined as involving traditional and manual processes exclusively. The 2003 mining code, however, has introduced a distinction between traditional artisanal exploitation and semi-mechanized artisanal exploitation. Both differ from a "small mine," which is based on the existence of a small deposit exploitable by semi-industrial or industrial means.

A real five-year mining permit (exclusive and mortgageable) is granted for artisanal mining, whereas only a two-year authorization (exclusive but not mortgageable) is granted to traditional artisans miners. Contrary to the first one, the second right cannot prevent research activities on its surface and would not be renewed in case any mining title is granted on it.


The introduction of the semi-mechanized artisanal exploitation permit is promising because it results in better confidence on the two main aspects of the upgrading prerequisite: title security and access to funding. The difficulty, or the crucial point, will probably be to make a clear distinction between semi-mechanized and traditional activities.

ASIA / PACIFIC

The Philippines


More than 300,000 artisanal and small-scale miners are active in the Philippines, two-thirds of whom are engaged in gold mining. Almost 100% of the Philippines industrial minerals and up to 80% of its gold are produced mainly through ASM (Bugnosen, 2004).




ln recognition of its economic and social significance, the government has instituted a number of laws pertaining to gold panning and sluicing (PD 1150), mining of small deposits (PD 1899), identification and segregation of ASM zones (RA 7076). The most recent legislation in relation to small-scale mining in the Philippines is the promulgation of the small-scale safety rules (AD No. 97- 30) and regulations in 1997; and the Philippines is perhaps the only country to have such a separate and distinct set of safety rules on small-scale mining.

The general mining law of the country (Philippine Mining Act of 1991) also provides provisions for other mining activities such as quarries and sand and gravel extraction, which are generally classified as small-scale mining operations


PD 1899 was the initial legislation to legalize small-scale mining. It provides a licensing system that includes provision for issuing small, scale mining permits within existing mining claims subject to the consent of the claim holders. On the contrary, RA 7076, enacted in 1991, grants mining rights in the form of joint ventures or mineral production sharing agreements between the government and the small-scale miner.

Miners can obtain a range of renewable permits that can be granted for one- to three-year periods contingent on limited production, non-mechanization, the ban of explosives, and the exclusion of child labor. Permits are commodity-specific, addressing gemstone gathering, gold panning and sluicing, commercial and gratuitous guano extraction, commercial and industrial sand and gravel extraction, and small-scale mining permits.


With some exceptions, decentralized Small-Scale Mining Offices undertake most ASM-related regulation and monitoring functions in addition to technical assistance. The Natural Resources Development Corporation is responsible for managing rushes, while the demarcation and designation of ASM zones is undertaken at a provincial level by multi-stakeholder Mining Regulatory Boards. The Boards are further charged with the management and regulation of these areas, including the resolution of conflicts.

Bugnosen, (2004) contends that a number of legislative measures have failed, while others have succeeded. Failures include:

- The designation of ASM areas;

- Permitting activities (e.g. gold panning permits) within existing concessions;

- Overly restrictive provisions for obtaining permits; and

- The need for multiple permits depending on the stage of operations (mining, permitting and marketing).



Successes have been observed in terms of gold rush control measures that have enabled tax collection and environ mental protection in these areas and efforts to inhibit damaging sand and gravel operations (Bugnosen, 2004). The emergence of "contract mining," wherein formai companies purchase minerals from ASM producers, has been deemed promising, although local indigenous communities have expressed concern over its potential for stimulating uncontrolled activities (Bugnosen, 2004, Caballero, 2004).

China (after Gunson, 2001)


The six million artisanal miners in the People's Republic of China compose well over half of the artisanal miners in the world and constitute one of the largest sectors of the mining industry worldwide.


Most artisanal mining in China today can be categorized as Township and Village Enterprises (TVE). As China began to implement economic reforms in the late 1970s, the idea of TVEs was propagated by the state both to 'promote economic growth and to absorb the surplus rural labour force and discourage excessive urban migration'.


Artisanal mining operations are governed by various laws; however, the concept of a legal society is rather new to communist China. Most of the laws are only a decade or so old and they mean less and less the farther one gets from Beijing. The current legal position of artisanal miners is in flux, especially since the 13 June State Council Order demanding ail small coal operations be shut down.

A Draft ASM Law of the People's Republic of China is currently under review.


The negative impacts on health and the environment due to artisanal mining in China are massive and difficult to quantify. First and foremost is the massive death toll in small coal mines. Statistics show over 6,000 coal miners die officially per year. Unofficially, there are probably hundreds if not thousands more unreported deaths or serious injuries.

Sri Lanka


For thousands of years, Sri Lanka has been renowned for its gems. The majority of gem mining in Sri Lanka is carried out within communities by the local population. Dissanayake & Rupasinghe (1995) estimate that there are at least as many illegal as legal mining operations in Sri Lanka, with a figure of up to 15,000 quoted.




Sri Lanka's gem mining was no exception. The large numbers of illicit gem pits dug over the last few decades have caused serious concern among environmentalists, and stringent laws have been passed to try to halt the alarming rate of land degradation due to gem mining.

The legislative framework is the Mines and Minerals Act No 33 of 1992.


Gem mining is carried out on both private and state land after obtaining permission from the owners and the state authorities. The sole licensing authority for gem mining in Sri Lanka is the National Gem and Jewellery Association (NGJA). For applications to mine on private land, the NGJA will issue a license when certain conditions, mainly relating to payment of license fees, ensuring the health and safety of miners and the correct procedures to minimize environmental impacts, as laid out in the 1971 and 1992 Acts, are satisfied. Land belonging to the state, if it is suitable for gem mining, can also be obtained with the agreement of the NGJA, usually by lease. In most cases, the NGJA will parcel out the prospects and invite bids at an auction for mining rights. Usually the lease is for one year in the first instance, although longer leases can be obtained by negotiation. Similarly, the NGJA will auction off the mining rights for selected stretches of rivers and streams for an initial period of one year, within which mining should be completed or the stake will be re-auctioned.


Most illegal mining occurs on government land, often in rubber or tea plantations, and in active watercourses (rivers and streams). Illegal mining is fingered as the main source of environmental damage caused by gem mining in Sri Lanka.

Papua New Guinea


The small-scale mining sector currently mines gold with some silver. The bulk of the 50-60,000 small-scale miners throughout the country falls into the category of individual artisanal miners, who use simple panning dishes, shovels and rudimentary sluice boxes and comprise about 90 percent of this sector. There are no medium-sized mining activities in PNG, only either big mines (five large mines operating in PNG at the beginning of 2001) or artisans.


The principal specific policy statement directly related to small-scale mining was the government's Five-year Development Plan for 1989-1993, which emphasized the importance attached to the participation of PNG citizens in small-scale mining. It was recognized that small-scale mining was a viable economic industry for the indigenous population that needed vigorous work promotion.



The old Mining Act, adopted from the colonial administration in 1975, was reviewed, repealed and enacted in 1992 within a new Mining Act.


The new 1992 Mining Act has cut down the number of tenements required under small-scale mining to two: the alluvial mining lease (AML) and the mining lease (ML). Sorne of the permits, such as homestead leases, were referred under appropriate legislation such as the Land Act. The administrative procedures for processing the tenement (AML and ML) application were improved, with the establishment of a registrar's office and the statutory appointment of a registrar to simplify the structures and approval process.


The notable improvement in the new legislation was that AML were restricted to PNG citizens, who traditionally are the landowners of the alluvial deposits. But no provision was made for mechanized mining on AML's although some sections of the act allow mechanized mining operations under joint venture arrangements with foreign investors. The properly surveyed lease maps were not fully implemented when the lease conversion exercise took place in 1994.

LATIN AMERICA

Peru


In Peru, artisanal mining produces gold exclusively. In an area such as Madre de Dios, one of the least populated departments of the country, the discovery of gold in placers and riverbeds caused massive immigration from the poorer regions. On the other hand, in the mid-south, because of the exodus of inhabitants from zones stricken by terrorist violence and there being gold deposits not attractive to mining companies, this activity has developed to a point that it is now the area's main economic activity.


The mining code in Peru was initially developed to facilitate large-scale, multinational investment in the country. Since then, the code has been adapted to recognize ASM on the basis of title area and production capacity.

An exemplary consultative process made possible the passage in 2002 of a dedicated "Iaw for promotion and formalization of artisanal and small-scale mining" No. 27451.


Specifically, artisanal mining refers to daily extraction and processing of less than 25 tones on less than 1,000 hectares of land, while small-scale mining must extract and



beneficiate between 25 and 350 tones daily on 1,000-2,000 hectares (Medina, 2002). Licenses can also be granted for construction materials, with extraction limits of 200 m3 per day and 3000 m3 per day for artisanal and small-scale operations, respectively.

Streamlined registration requires completion of a simplified environ mental impact assessment and, given that activities are not proposed for lands within national parks or where titi es have already been granted, individuals or associations can receive preferential land rights provided they are registered with the Dirrecion General de Mineria (DGM). Maintenance of licenses requires minimum production volumes and adherence to environmental regulations, violation of which draws penalties and fines (Medina, 2002).


Peru illustrates the success of a consultative approach to give the formalization process a chance. Favorable factors included the fact that ASM workers in some regions were looking for legal protection against terrorism or legal permission to detain explosives.

Bolivia


The number of people employed in the cooperative sector has increased from about 20,000 in the early 19805 to about 50,000 registered by the early 19905. Current statistics show that artisanal mining provides 85 percent of the employment generated by the mining industry as a whole, as compared to only 30 percent in the 19805. This increase came about because a large number of mine workers employed by the state-owned COMIBOL mines were made redundant in the 19805.

There is no longer any large-scale mining in Bolivia. The medium-scale mining sector, meanwhile, increased its production through intensive capital investment in technology, which reduced the demand for manual labor in this sector. The small-scale sector has responded to these changes by absorbing the available labor and consequently has rapidly grown in size.


The new Mining Code of March 1997 changed the law regarding domain and mine concessions. Article 22 of the Mining Code declares that the state will establish mechanisms to help develop the small-scale and cooperative mining sector through technical and developmental assistance and through financial support. It also states that it will establish incentives for the mining industry to promote the protection of the environment. However, the fact that by May 2001 there were still no effective policies in place to achieve these aims led to serious social unrest. On 8 June 2001, thousands of miners arrived in La Paz demanding that the government comply with Article 22. As a result of the violent demonstrations that left five people seriously wounded, the government signed a 16-page agreement with the Federation of Mining Cooperatives.



In Bolivia, small-scale mines are considered to be operations that exploit less than 500 tons per day. A fundamental part of the economic movement generated by small-scale mining is cooperative mining. The Mining Code takes this into account in articles 20 and 21, where the terms 'societies', 'mining companies' and 'cooperative mining societies' are used. The Mining Code specifies that mining cooperatives must be legally constituted and have the sa me obligations and rights as those laid out in the General Cooperative Law.


It only defines one mining title for all kinds of operators and all kinds of activities. There is no legal distinction between artisanal, small-scale or large scale mining: each can register a claim for a concession for a surface area counted in 500-meter squares.

The concession title is a real, exclusive right, which can be transferred, transmitted and leased. It is granted to both natural persons and legal entities, whether Bolivian or not, for an undetermined period of time.

The rights of concessionaires are more protective than those of landowners, who can be expropriated in case of conflict, albeit with compensation.


The Codigo de Minerfa of March, 17 1997 is remarkably simple and clear. However, the concession system applies typically to an ASM sector that is capable of regrouping into formal co-operatives.

Neither the Mining Code nor the "Environmental Regulations for Mining Activities" takes different types of small-scale mining into account. The problem is of course to impose the same obligations on each kind of operation. They make reference to concession owners and mine operators but do not classify the scale of mining operations in relation to the type of technology employed. The only distinction made by the Environmental Regulations is that operations that extract less than 300 tons per month have fewer environ mental requirements.

Brazil


About 300,000 workers make a living from gold mining in Brazil, and many other substances are mined on an artisanal basis.


The federal Constitution of 1988 gives "garimpos" the right to exploit, but it expects them to form cooperatives. It takes into account the protection of the environment and socio-economic promotion of garimpos.




The main existing legal framework is the Mining Code, promulgated through Decree 227, of 1967, and brought up to date by Law 9,314, of1996. However, the Law n° 7805 of 1989 and the Decree Law 98,812 of 1990 have been promulgated to normalize the activity of garimpos in line with the new conceptions appeared through the Constitution of 1988.

Law 7805 established a specific exploitation permit for "garimpos," the LPG, that can be attributed to either cooperatives or fiscal persons. No preliminary geological studies are demanded, but an environmental license is required.

The permission to exploit depends on previous environmental licensing, granted by the competent environment agency. This title is valid per 5 years renewable under the criteria of the ONPM; the title is personal and can be transferred with consent of the ONPM. Generality; the maximum area that can be granted is 50 hectares.


Dedicated areas are established by the DNPM for garimpos taking into consideration: the occurrence of the minerals exploitable by ASM, the interest of the mineral sector and the social and environmental factors. In these areas, ASM has preferably to work in associative form and priority is given to garimpos cooperatives. The creation of these areas depends on previous environmental licensing. ASM workers can be suspended temporary or definitely for environmental causes.

Scientific and Technical Centre

Minerals Resources Division

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Guidance Note on Formalising Artisanal Mining Activity

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