Being A Good Neighbour

Benefits must be mutual

At the front line with host communities, junior explorers have the chance of setting the basis of the new wave of mining that is sustainable by implementing environmentally conscious provisions early-on, or being “good neighbors,” as Danny Callow, the CEO of African Gold Group (AGG) puts it. At its Kobada project in Mali, AGG started with meeting the local chiefs to better understand their needs. Only after these consultations, the junior designed its social and environmental license at its premise: “We made a decision not to have anybody within 300 m of our mining area, and particularly to have no one living downstream of our tailings dam area. In terms of sustainable environmental management, we have included full HDPE lining of the tailings dam into the cost of the project. AGG will also partner with a power provider to construct a hybrid power plant (solar-battery energy storage-and heavy fuel oil), producing 40% of green energy, and diverting the surplus energy to the community,” said Callow.

Governments, too, are taking a more holistic view of the environment around mining. Burkina Faso has finally disbursed 51 billion CFA to mining host communities as part of its Local Community Development Fund.

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Governments’ approach to artisanal mining is also changing. Because it is unregulated, artisanal mining takes a big toll not only on the environment- through the illegal use of mercury, for instance- but also on people’s lives. In 2018, Ghana launched a massive crackdown on this sector, but estimates suggest there are still about one million people engaged in the sector in the country, while in other countries with less-developed formal mining industries, the illegal sector makes up for the majority of all mining activity.

“When it comes to permitting, what people forget is that setting up a mine is not just about getting the papers, but it is also very important to work closely with the communities around you to make sure they're supportive.”

Emma Priestley, Goldstone Resources, CEO

Nana Sangmuah, president and CEO of junior developer Roscan Gold, explained how the relationship between legal and illegal miners has changed: “Illegal miners have become sophisticated; they read press releases and pursue gold discoveries made by the companies in the region. The best way to deal with artisanal miners is for governments to recognize the nature of this issue as being a socio-economic one: poverty, unemployment and lack of food drive these people into selling minerals to support their livelihoods.”

This is exactly what governments have started doing: the Ghana Chamber of Mines has encouraged small scale miners to organize under the Ghana National Association of Small-Scale Miners (GNASSM): “Of course, it always takes two to tango, and so small-scale miners (SSMs) need to be responsible agents and respect their environmental, social, and fiscal commitments. Recent reviews indicate there has been an increase in the amount of taxes paid, and generally, the compliance levels have improved,” said Sulemanu Koney, president of the Chamber.

In Burkina Faso, the approach to artisanal mining has also turned more people-centric and empathetic towards the underlying reasons behind this phenomenon. The country implemented a structure called ANEEMAS (Agence Nationale d’Encadrement de l’Exploitation manière Artisanale et Semi-mécanisée).

"Our key value is care: for people, for the environment, and for our team. We embrace the diversity of our team, and we have managed to create a safe space for people to bring their ideas to the table; these ideas have led us to improved performance.”

Ricus Grimbeek, President and CEO, Trevali Mining

Legacies for the future

A common criticism of the mining industry is that it does not adequately benefit the host nation’s economy, merely exploiting raw materials which are then exported for processing. African governments are also showing more teeth by enacting downstream beneficiation policies. Nigeria, a country that is vivaciously working to grow its mining sector, introduced a downstream beneficiation policy last year. Developments include the reactivation of the Ajaokuta steel mill and the opening of the first gold refinery in Nigeria, but also three gold refineries pending global certification in Ghana, which are encouraging signs.

The investment sector is the final contributor in driving sustainable development and this also has heralded a preference for projects with strong ESG mandates. The African Finance Corporation (AFC) is looking at projects from an ecosystem-creation perspective, together with its potential for downstream beneficiation. Osam Iyahen, senior director natural resources of AFC, said: “We invest in associated infrastructure for an asset, such as building a power station for a mine, and we believe this paves the right investment model Africa needs: No longer focused on individual investments, but on creating ecosystems around an asset.”

The AFC has recently launched the first green bond on the Swiss Stock Exchange for CHF150million, which will be invested in renewable assets.

Smaller investors like Ibaera Capital only invests in projects around “future-facing” metals: gold, copper, cobalt, nickel, zinc, or those metals that underpin future world economies by their association with green energy sources and decarbonization, or, in the case of gold, which act as a hedge against instability. James Wallbank, managing partner of Ibaera Capital, commented: “From a future-facing perspective, I believe the mining industry has understood that the investment community is increasingly more concerned about ESG and requires companies to be more considerate of their footprint on the world we live in. Ibaera reflects the interests of our investors, and we work to ensure that the money we invest will contribute to a greener and more balanced economy through projects that are net beneficial to both local communities and the planet.”

Images courtesy of Roxgold