Multi-stakeholder Partnership (MS) to improve ASM-LSM cohabitation in Tanzania

1

Artisanal and small-scale mining (ASM) in

the World: A Map and a Few Numbers…

• 20+ millions ASM

• 100+ millions people depending for their livelihood

• 50+ countries

• 30%+ are women

• 75% of color gemstones

• 300t/year of gold

Why ASM Matters? The case of Gold Mining

Positive aspects • Alternative employment for the poor: ASM is the poor man’s version of mining - barriers to entry are often

low, there are no specific skills required and most operations use manual labor.

• Source of income: the minerals extracted provide quick cash due easy transportability and the presence of

willing buyers at most links of the supply chain.

• Livelihood alternative in rural areas: about 10 million miners and provides a livelihood for about 100 million

people (9 times the formal employment in the gold industry) in more than 70 developing countries; about 1

to 3 million women and children involved in ASM.

• Wealth creation potential: 15% of global gold production in 2011 or 400 tons, with a corresponding value of

about US$20 billion, or US$2000 per miner per year or US$8per miner per day if evenly divided.

Negative aspects • ASM is often informal, unregulated, and prone to illicit activities. Working conditions are poor,

environmental impacts are severe, and social norms are appalling (get rich quick mentality, child labor, drug

use, prostitution).

• The “wild, wild west” atmosphere in ASM sites in some parts of the world has led to organized crime and

lawlessness.

• In the Great Lakes Region, ASM has been a key factor in fueling devastating civil wars, human rights

abuses, and regional instability

• Unmanaged tensions between ASM and LSM are threatening the peaceful and sustainable development of

mining in a number of countries.

3

Evolution of World Bank Interventions in Artisanal and Small-Scale Mining (ASM)

• ASM intervention fits with the Bank’s efforts toward poverty reduction and sustainable

development: There are an estimated 20 million small-scale/artisanal miners operating in

over 40 countries, and about 100 million people depend directly or indirectly on this activity

for their livelihood.

• During the 1970s the focus of the Bank and other donors was on defining the scope of

ASM and assessing its technical, financial, social, developmental, human rights, and

environmental challenges.

• In the 1980s donor interventions focused on addressing technical issues in the hope that

this will address the financing and environmental issues and encourage miners to get

organized.

• In the 1990s, the Bank led the effort to generate a consensus developed over the need for

an integrated approach (policy, legal, technical, environmental) for the sustainable

development of ASM

• In 2001, the Bank supported the establishment of CASM to provide an integrated, multi-

disciplinary solutions to the complex social and environmental challenges facing ASM

communities, and improved coordination between those working in this sector.

• In 2012, after CASM’s mission was completed, the Bank is focusing on in-country

interventions which leverage its TA programs

4

The challenge of ASM-LSM Cohabitation in Tanzania

5

• Artisanal and small scale mining directly occupies an estimated

680,000 people in Tanzania and tens of thousands of men, women and

children along the value chain.

• Prior to the early 1990s, the mining industry of Tanzania was

dominated by ASM. With the reforms undertaken in the mid-1990s, a

number of large-scale mining (LSM) companies were attracted to the

country and were granted rights in areas where ASM was a significant

source of livelihood.

• Expectations that LSM will create shared prosperity in ASM areas did

not materialize, leading to frustrations, tensions and growing conflict

between ASM and LSM companies and in some instances leading to

fatalities and disruption of operations.

• The tensions have become a major security, safety and operational

concern for LSM development and threaten the future of the mining

industry in Tanzania.

Challenge of ASM-LSM Cohabitation Confrontation between illegal rock collectors and security

forces at North Mara Mine in May 2011

Rationale for MSP to improve ASM-LSM cohabitation

Service Provision

Financing Private Public

Private

Highly efficient but marginally effective: Narrow focused Inflexible and risky Suspicious May not be fully appreciated by beneficiaries

Moderately efficient but highly effective: Broader focus Inclusive and less risky Greater credibility Wider acceptance and appreciation

Public

Somewhat efficient but limited effectiveness: Only work for sub-contracting ASM extension services Not financially sustainable Could be influenced by politics

Inefficient and ineffective Lack of capacity Lack of human and material resources Governance issues

Objectives of the MSP

8

• Leverage industry efforts and enhance government’s capacity to

develop integrated ASM solutions by combining the policy actions of

the government, the convening power of the World Bank, and the

technical know-how, managerial expertise, financial resources and

technology of the industry to achieve mutually beneficial and lasting

results.

• Develop creative approaches to engage stakeholders, coordinate

activities, and leverage resources and expertise to achieve shared

objectives.

• Improve ASM-LSM Coexistence in Tanzania to foster the legal,

regulated, safe, sustainable development of an ASM sector that

operates within the rule of law and with respect for human rights, under

fair labor standards and in proper health and safety conditions.

Value proposition of the MSP

9

• Government: better access to new resources (financial, technical expertise,

research and infrastructure) and maximize development impact of mining

through linkages with non-mining activities, including local procurement, and

rural economic diversification.

• Industry: opportunities to leverage partnerships to better translate corporate

policies and strategic plans on sustainable development into concrete actions on

the ground; help reduce conflicts and manage stakeholder expectations with

respect to ASM; improve public perceptions about the gold mining industry and

enhance its corporate reputation; mitigate operational risks and challenges

arising from unregulated illegal artisanal mining activity; and to meet host

government, and where practical, international standards on community

development and sustainability.

• ASM Associations and Civil Society: opportunity for greater involvement at the

grass root level, funding for implementation of ASM and wider community

development and access to technical expertise.

Implementation process of the MSP

10

• Phase I: multi-stakeholder consultation leading to an initial

document, the framework agreement, outlining the objectives,

roles, responsibilities of the multi-stakeholder partners as well

as and governance mechanism and implementation

arrangements of the MSP.

• Phase II: implementation MOU between the Government of

Tanzania (GoT), the participating companies, and the World

Bank.

• Phase III: implementation in selected pilot areas

• Geita Mine

• North Mara mine

• Phase IV: taking the pilots to scale

MSP Financing Arrangements

11

• World Bank Provide loans to support government in-country efforts through

traditional technical assistance

Negotiate with governments about use of loan proceeds to support MSP initiatives on ASM (supply chains, alternative livelihoods, ASM-LSM collaboration).

Convene multi-stakeholder consultation meetings to agree on MSP framework, objectives, funding, monitoring and governance.

Set up multi-stakeholder structures and manage the implementation to ensure that agreed objectives are achieved.

Mobilize donor funding to take the pilots to scale

• Industry Select pilot projects, sign an MOU, and co-finance a 2-year

program to support MSP initiatives around ASM.

Sign an Administrative Agreement with the World Bank for the cost of program monitoring and management.

Contribute to a special Trust Fund to co-finance eventual scale-up of the pilots.

MSP Governance Structure

12

MSP Steering Committee (National)

MSP Steering Committee Pilot

Area A

Pilot Area A activities

MSP Steering Committee Pilot

Area B

Pilot Area B activities

Status of implementation of the Tanzania MSP

13

• In Tanzania, the MSP will tap into the ASM component of the Bank-funded

project, which provides US$15.9 million funding to support ASM, local economic

development, and skills development.

• Multi-stakeholder consultations have already taken place to agree on roles and

responsibilities of participants, identify pilots and activities.

• A second round of meetings resulted in signing a Framework Agreement for the

MSP.

• Companies are now scoping the pilot areas and exploring activities around (i)

technical assistance extension services for ASM, particularly in the area of

geology and mining methods and processing; (ii) supply chain development,

including value-added activities; and (iii) integration of ASM into local

development planning.

• During the week of June 25, 2013, meeting will take place in Dar to sign MOUs

for implementation of the pilots. Activities which could be supported include: (i)

establishing pilot ASM projects and regional centers of excellence at selected

artisanal gold mining sites; (ii) providing technical and financial assistance to

ASM; and (iii) strengthening linkages between LSM and ASM starting with pilots

in Geita and Kahama, and eventually scaling up these projects by expanding

into other districts.

Future agenda of ASM interventions in the Bank

• Supporting the formalization of the chain of custody of small-scale and artisanal mining:

focus on upstream links of the supply chain – mine site, trading houses, exporters, transit

countries.

• Building government’s capacity to manage ASM and comply with conflict minerals

legislation (mainly Dodd-Frank):

• Traceability of origin: support of database of mineral flows to ensure that the origin and

production volume of minerals are transparent.

• Certification: support of regional standards and processes to help certify that products

containing 3Ts&G are conflict-free .

• Auditing: support of quarterly third-party audits of the regional certification scheme.

• Leveraging Bank-funded technical assistance with public and private donor contributions to

support the sustainable development of ASM: policy guidance/reform, training and

capacity building for formalization of ASM; support for livelihood alternatives.

• Information dissemination and advocacy: organize joint events with the Mining Industry to

increase public awareness and mutual understanding among stakeholders.

• Scale up our pilot efforts: from Tanzania into Ghana, Burkina Faso, Colombia, Peru and

Bolivia

15