The development banks, particularly the World Bank and Inter-American Development Bank, provide significant financing for mining projects in developing countries and have focused on improving the environmental performance and formalization of artisanal and small-scale mining. These banks have provided technical assistance for reforming mining sectors and improving livelihoods in the artisanal and small-scale mining industry. There remain opportunities to support this industry through improving health, safety, technology and socioeconomic conditions in countries across Latin America, Africa, and Asia where artisanal and small-scale mining is prevalent.
1. Development Banks and Green Mining –
Focus on Artisanal and Small Scale Mining
Len LaVardera
Finpro Stamford, CT USA
May 8th 2014
2. FINPRO
Development Banks and Green Mining
Development Banks, the World Bank (WB) and InterAmerican
Development Bank (IDB) in particular, are significant players in the mining
sector in developing countries.
The overall volume of WBG Extractive Industries financing in FY2012 was
US $695.5 million. Inter-American Development Bank (IDB), which is the
biggest development financier in the Latin America and Caribben, recently
restarted it’s mining sector financing in the region.
For over 20 years the WB has been instrumental in providing technical
assistance to countries in Latin America, Africa, and Eastern Europe, East
Asia and the Pacific, and Central Asia to help reform mining sectors.
However, since the mid-1990s, the need to improve the environmental
performance of the sector became an essential part of the reform
effort.
Source: The World Bank Group In Extractive Industries 2012 Annual Review
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Focus on Artisanal and Small Scale Mining (ASM)
An estimated 20 million people in more than 80 countries around the
world make up the artisanal and small-scale mining (ASM) workforce.
Over 100 million are dependent on the sector for their livelihood.
ASM production accounts for 80% of global gemstones, 20% of gold
mining and up to 20% of diamond mining. Widespread in developing
countries in Africa, Asia, Oceania, and Central and South America.
The focus of WB support has been to formalize the sector and to
improve livelihoods and enhance its productivity and
environmental performance.
ASM is visible both in the WB and IDB mining sector agendas. The
environmental sustainability of mining has become increasingly
more important.
On a global scale, ASM of gold production presents the biggest
environmental challenge due to mercury use.
Source: Communities and Small Scale Mining: An Integrated Review For Development Planning; World Bank 2005
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Communities and Small-Scale Mining Initiative
(CASM)
In response to the need for a coordinated approach towards ASM, the WB established a
Communities and Small-Scale Mining Initiative (CASM). CASM aims to reduce
poverty by building sustainable communities in those countries where ASM is an
important economic.
CASM’s strategy to achieve this goal is based on four pillars:
Better governance and formalization of the sector
Initiatives to enhance environmental and technical
performance, and socio-economic development
Network building for more effective partnerships
Knowledge development and best practice sharing
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Distribution of ASM Activities around the World
Source: Communities and Small Scale Mining: An Integrated Review For Development Planning;
www.casmsite.org
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The Extractive Industries Transparency Initiative
The Extractive Industries Transparency Initiative (EITI) is a global coalition of
governments, companies and civil society working together to improve openness and
accountable management of revenues from natural resources. As of March 2014, there
were 44 countries implementing, or in the implementation process of the EITI standard
requiring full disclosure of government revenues from their extractives industries.
The WB supports the initiative through:
administration of the EITI Multi-Donor Trust Fund (MDTF) that provides support to
governments to implement EITI; (Finland is a MDTF donor)
support to civil society to enable effective participation in the multi-stakeholder
process;
global knowledge work, including assistance to the EITI Secretariat in its
coordination function and serving as an observer on the EITI Board.
By end FY13, the facility had established partnerships with four supporting countries
and had financing commitments totaling US $26 million.
As more countries attain EITI-compliant status, WB/MDTF technical assistance and
funding are shifting to support broader areas of EI governance.
Source: http://eiti.org/eiti
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Environmental Impacts of Small Scale Mining
The impacts of small scale mining on the environment varies according to geographical
setting and methods of mining used. Risks involved include:
- deforestation and the discharge of mine tailings into natural waters
- destruction of vegetation and top soil exposure
- soil erosion
- river/water pollution through the use of mercury and discharge of particulate matter
- acid mine drainage
- mercury vapor and clouds of dust emissions and the emission of harmful chemicals
Environmental degradation is severe when thousands of miners are spread throughout the country.
Threats posed by these environmental destructions include:
- loss of biodiversity and extinction of unique and endangered species.
- excessive and unnecessary clearance of vegetation without revegetating the land results in high occurrences of soil
erosion, landslides and destruction of public infrastructure
- pollution of rivers by mercury and sedimentation threatening fisheries downstream
- river diversions to recover alluvial gold destroy low lying villages and roads
- forest destruction and emissions of dust are also contributing factors to global warming
- mercury and other chemical spillages may contaminate ground water that most people around mining
communities depend on.
Source: World Bank, IADB
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Inter American Development Bank – ASM Mining
IDB provides loans to Government’s for R&D and technology cooperation.
The investments are typically seed funds for public and private economic
development
Loans for assessment and execution are overseen by IDB and Gov’t along
with the regional offices, aimed primarily at improving mining governance.
Bank can contract with companies or experts to provide advice to Gov’ts for
assessing new technology or other requirements in identifying, evaluating
and developing mineral resources.
Gov’ts want the bank to be more involved for improving mining governance
as it relates to royalties and transparency.
How to improve efficiency up the value chain is key, i.e. water use,
energy efficiency, reprocessing of mine tailings…How to incentivize
technology and introduce value?
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ASM Mining – What is Needed Today?
Technology
- mercury abatement; what alternatives can be used?
- smaller mining equipment to improve efficiency and productivity across the value chain
- technical support and equipment for appropriate and effective comminution techniques
- detection equipment
- exploratory equipment
- engineering and technical expertise for dam and collective tailings impoundment design
- user friendly data management tools for Banks for inspection reports & planning services for local Gov’ts
- updated geological data & services for both Gov’ts and miners to prevent unnecessary destruction of land
- training for the revegetation of ASM sites
Health Issues
- diesel is a health issue; clean alternative energy systems are needed.
- ventilation equipment
- water pumps and containment equipment
- waste management solutions - in conjunction with clear advantages
- training of ASM miners, doctors and village officials in health issues and mercury alternatives
Safety Issues (from operational side)
- training and education regarding the use of technology for more efficient mining practices
- a sustained, on-the-ground effort to address the occupational health and safety challenges in ASM
- reduction in the use of mercury through improvements in technical processes -the use of retorts (mercury recycling
technologies )
- safety “gear”
- risk prevention training
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ASM Mining – What is Needed? (cont’d)
Socio-economic Impacts
- Up the value chain opportunities with respect to gemstones and precious metals – jewelry making or bricks from artisanally
mined clays
- Gender mainstreaming including legislation, policies or programs. Developing clear targets and mechanisms for measuring
progress
- Implementing programs to train women in various aspects of mining, as well as in marketing, management and bookkeeping
- Development of national and local public policy dealing with child labor
- Community development and poverty reduction and support in integrated sustainable development
Source: World Bank, IADB
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Where are the ASM Opportunities?
Geographically, the portfolio of activities spans the globe (Latin America, Africa, and
South Asia). Moving forward, African countries will remain a source of demand for
advisory services, but the team will work towards a more diversified country portfolio.
Active country-level grants include: Colombia, Guinea, Kenya, Kyrgyz Republic,
Liberia, Mauritania, Mozambique, Pakistan, Seychelles, and Sierra Leone (total
commitment amount US $5.8 million).
The pipeline of 11 potential projects includes Republic of Congo, Guatemala,
Guinea, Haiti, India Orissa State, India Federal, Lesotho, Mauritania, Morocco,
Pakistan, and Peru (total value US$5.0 million). Projects in Cote d’Ivoire, DRC,
Guinea Bissau, Mongolia, and Togo are also under discussion.
It is important to recognize that the borrowing country is responsible for managing
the implementation of the project. As a result, the borrowing country, not the World
Bank, is responsible for buying or “procuring” goods and civil works and selection
consultants. The Implementing Agency that was established during project
preparation is the main point of contact for companies on procurement matters.
Source: Extractive Industries Technical Advisory Facility Annual Report 2013
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Where are the ASM Opportunities?
Extractive Industries Technical Advisory Facility (EI-TAF) Potential Pipeline
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Where are the ASM Opportunities? (cont’d)
Extractive Industries Technical Advisory Facility (EI-TAF) Potential Pipeline
Source: Extractive Industries Technical Advisory Facility Annual Report 2013
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What Do Finnish Companies Need to Do?
In an effort to expedite the deployment of advisers, the WB put together a consultant roster on which EI-TAF recipient
countries can draw. This roster is used to provide governments with vetted long or shortlists of consultants that fit the
profile of the type of assistance sought.
Going forward, the EI-TAF proposes creating a mechanism whereby a group of pre-qualified consultants will be
contracted through the Bank under a retainer-type arrangement. These arrangements will be particularly relevant in
Bank-executed projects, allowing task managers to rapidly deploy experts on a short-term basis.
Finnish consultants/companies should begin by accessing the public sector in countries where there are potential
projects. Companies can make presentations to the Ministry of Industry and Mines (or other appropriate agency) in
specific countries regarding their technical expertise.
Consultants/companies should also register with the WB for potential procurement opportunities at the WB’s
eConsultant2 website :
http://siteresources.worldbank.org/EPROCUREMENT/Resources/eConsultant2_Firm_Experience.pdf ;
Vendors can also follow WB project advertisements and search mining projects at:.
http://search.worldbank.org/projects?qterm=artisanal+mining&projname=&id=
Finnish companies should also participate in WB conferences, and fairs . They can also make arrangements to
present and demonstrate innovative technologies directly with the Bank at specific times.
World Bank Procurement Policies and Procedures
http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/PROCUREMENT/0,,contentMDK:50002392~menuPK:939
77~pagePK:84269~piPK:60001558~theSitePK:84266,00.html
Inter-American Development bank projects can be found at: http://www.iadb.org/en/projects/projects,1229.html
16. FINPRO
Thank You
Len La Vardera
Sr. Consultant
Finpro USA
Email: leonard.lavardera@finpro.fi
Tel: +1 203 524 2050