One of challenges to envisioning artisanal mining as a viable enterprise is that the economies of scale involved do not always make for a good business case.
Ordinarily, artisanal operations have erratic production recoveries and make narrow margins of profit. Resultantly, the sector has mostly remained subsistence in nature.
The failure to break out from this subsistence level is a combination of lack of adequate structural support and the inherent operational inefficiencies and limitations that consequently stifle meaningful growth.
It is undoubtedly a challenge to plan or structure a comprehensive regulatory system, financing solutions or to even attract transformative innovation for this sector.
Governments and prospective business partners alike find it difficult to envision artisanal miners as sustainable business partners. When considered in its current state, the production volumes and the risk associated with these small operations make it difficult to imagine an organised system or to rally an adequate amount of investment around their activities.
However, the sector is a potent vehicle for socio-economic development and is pivotal to addressing the effective and balanced exploitation of the mineral resources in Africa.
The artisanal sector has the capacity to become commercially sustainable and wholly governable. To see this potential, one has to take into consideration the value of the aggregated returns of the sector instead of focusing on the minuscule values generated by individual miners.
The biggest lesson from companies like Uber is that small pockets of seemingly unprofitable and dissipated efforts can be harnessed profitably if they are organized and managed through an appropriate platform or system.
Therefore, whilst the individual production of an artisanal miner is seemingly insignificant, it is well established that the total production statistics of the sector are quite substantial. For instance, in the gold sector it is widely acknowledged that artisanal and small-scale mining accounts for nearly 20% of the world’s annual gold production.
This signals the existence of significant market which can deliver great value to the overall global economy that is if the sector can be organised and managed efficiently.
The weekly collection of even as little as two grams of gold from each individual across a network of 1000+ artisanal miners is a profitable exercise to any government if it can be undertaken in a cost-effective manner.
Therefore, the key task for policy makers is how to turn this aggregated value into an asset that can be used to attract capital, improve production, and spur growth for the sector. To fully achieve this objective the first port call is to strengthen the rules around this sector and create a concise system of operation and structures.
Many African countries still have very weak structures that represent the sector and the regulations guiding the sector are sometimes ill fitting, too pliable or simply nondescript. It is important to have a clear and firm system of rules and structures that will apply to the sector. Once this is established it is easier to facilitate growth and sustainability.
Once the sector has been given an unequivocal form; governments must provide an integrated regulatory solution that can achieve multiple objectives concurrently That is, the solution has to effectively manage the miners, facilitate structural support so as to ramp up capacity and also provide a central buying system.
Creating such a system hinges on identifying a robust information management system which can facilitate the effective deployment of information, resources and services within the artisanal network.
This can be attained by creating an exclusive platform that links miners, value chain agents, governments, financiers, service providers and designated buying agents in real time in order to facilitate communication and commercial efficiency.
The artisanal mining sector requires the use of smart regulatory solutions which can complement and overcome the shortfalls of traditionally organized regulatory systems. Appropriately scaled technology should play a pivotal role in creating an effective regulatory mechanism for the artisanal sector.
Once an integrated system is established it will be easier to draw capital, services, and support to the artisanal mining sector. A well organised system of miners, service providers and buyers will reinforce business confidence because all players will know that they will receive their due returns from a secure system which can effectively keep tabs on each miner and can accurately monitor their returns.
The system should also have the added advantage of in-built market intelligence and trends which can enables partners to correctly scale and position their services and products for maximum benefit.
The creation of an integrated value chain for the artisanal mining sector is critical because it will provide two elements that are critical for investment, that is, security and predictability.
With the added reinforcement of a stable regulatory environment these two elements will be important in attracting and retaining capital in the sector long enough to register meaningful impact and deliver the growth that is needed.
The use of technology to solve the artisanal mining dilemma also addresses another issue which is important to improving the commercial growth of the sector. That is, tackling the technological gap that exists between large scale mining and the artisanal and small-scale mining sectors.
The global economy is increasingly becoming digitalized and in line with this transition; the mining industry is picking up the pace of digitalization. However, the adoption of technology, be it mechanical or data based in the artisanal and small-scale sector is still extremely limited and falls far behind.
If this gap is not proactively addressed, it will continue to further widen the imbalance that exists in the mining industry and it will make it more difficult for the artisanal and small-scale sector to catch up.
Thus, by delivering a smart regulatory solution that incorporates relevant technology; governments would have set a firm foundation for future integration and adaptation to advanced technology and digitalization.
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These issues are critical in determining whether the industry remains sustainable and competitive in increasingly digitalized economies. Large scale mining has shown us without doubt that the correct application of technology significantly improves extraction, processing, safety and health, enterprise management, environmental management and revenues.
These proven advantages should not be lost to the artisanal and small-scale mining sector and are critical in addressing the limitations and inefficiencies in the sector.
Government need to take the lead in prepping the sector for sound and sustainable integration. This included increasing its own capital investment into the sector.
Thus, it is important for policy makers to make use of the potential possessed by the artisanal mining sector. Every opportunity that exists to maximise the efficient use of mineral wealth should be utilized so as to derive full value from available resources.
This can be achieved by strengthening and enhancing the role of smaller local mining enterprises. The artisanal mining sector possess significant potential for positive contribution to economies and livelihoods, which potential is currently not optimally recruited in Africa’s fight for economic stability.