Artisanal Gold Communities as Prime COVID-19 Intervention Targets: Supply Chain Reform, Health In Gold Out
By Shawn Blore, Marieke Kroll, Kevin Telmer - May 14, 2020
The AGC’s policy position
In this paper, the AGC announces its three signal interventions for dealing with the crisis in ASGM communities brought about by the COVID-19 pandemic:
(i) Supply Chain Reform Project – a project to restart and reform artisanal gold supply chains;
(ii) Health In Gold Out – a project to deliver health assistance via this gold stakeholder network; and
(iii) Artisanal Gold Prices Database – a project to monitor these interventions via a worldwide database of artisanal gold prices.
The paper further analyses the causes of the crisis in ASGM communities, and summarizes the policy positions of other leading NGOs
Artisanal Gold Communities as Prime COVID-19 Intervention Targets: Supply Chain Reform, Health In Gold
Even pre-COVID, the world’s more than 40 million artisanal miners earned a precarious living. Producers of diamonds and tin, tungsten and tantalum, cassiterite, cobalt, and an estimated 20% of the world’s new gold supply each year, artisanal miners generally earn more than farmers or other labourers in their region, but it’s a highly contingent living; their incomes are at all times dependent on whatever they’ve dug out of the earth that particular day.
The worldwide coronavirus pandemic has rendered an already precarious existence even more risky, and further reduced what were already quite basic incomes, in most cases dramatically. In Colombia, prices for gold miners fell by fully 40%, while in places such as Burkina Faso in West Africa, gold prices dropped by 20%. In these and many other places trade has frozen up altogether – reducing the price of gold to effectively zero – as traders and exporters run out of cash to buy.
Causes of the Crash
Commodities and their supply chains differ one from the other, and the pandemic has hit each in a particular way. Artisanal gold was hit especially hard by the grounding of much of the world’s air fleet and the closure of major gold hubs including India and the UAE (Dubai). In the years prior to the pandemic, exporters in most of Africa and large parts of Central Asia had become almost entirely dependent on hand-carrying gold on flights to Dubai.
With no place to exchange their gold for cash, Africa’s gold exporters have seen their liquidity frozen, which has in turn frozen the supply chain for all the other intermediary traders all the way up to the miners. Liquidity serves as the supply chain’s lubricant; without buying cash supply chains in many places have simply seized shut.
But even as field gold prices have crashed, the gold price on the world market has risen, from US$1600 per ounce in early March to just over $1700 per ounce in late April. The rise in international price is likely due to gold’s status as a financial instrument that serves as a safe haven during times of economic turbulence. But none of that price rise has been passed down to miners. Among commodities, this divergence between rising world prices and falling local prices is unique to gold.
Other commodities have seen prices decline as the world economy slows under the pressure of lockdowns and other restrictions on the movement of goods and people. Tin prices on the London Metal Exchange have fallen by 10% from beginning of March to beginning of May, cobalt by about 5% over the same period. The restrictions and closures in India and Dubai have also affected diamonds, with prices in late April down about 12% year over year, and liquidity problems affecting diamond traders and by extension diamond miners.
Within regions, border restrictions on the movement of goods and people have hindered or prevented the evacuation of minerals. Within countries, artisanal miners have been affected by local restrictions on movement that – while necessary and laudable from a public health perspective- restrict their ability to access their mine sites, or travel to local service towns to sell their product, obtain supplies or access health care facilities.
Effects up and down the chain
The effects of what is to a greater or lesser extent a worldwide shutdown in ASM activity are showing up along the entire length of ASM supply chains. At the most fundamental level artisanal miners worldwide are being partially or completely blocked from making a living digging and selling minerals. The scope of this impact can be better appreciated when one recalls that – just taking gold into account – the AGC estimates that there are at least 10 million artisanal miners in a documented 80+ countries across the developing world, producing 20% of the world’s annual gold production or some 500 tonnes of gold.
Considering the secondary economy (a factor of 6) and dependants, this industry supports around 100 million people. Dependents often include relatives can be spouses and children living directly with miners, but they can also be supported via remittances sent back by miners to support families living in more distant home towns. Either way, these people are all the more vulnerable as they have no fall back; mining is often their only source of income.
Beyond the miners and their dependents, there are the towns and cities that supply artisanal miners with food and equipment and services such as transport, communications, banking and health care. These can be the outskirts of capital cities like Ulaanbaatar or Ouagadougou or else one-industry towns, places that came into being largely because of mining, places that will continue to exist only as long as they have miners to serve. There are many such places scattered around the globe – Bunia, Beni and Butembo in the Eastern DRC, Geita in Tanzania, Istmina in Colombia, Dano in Burkina Faso, Wau in Papua New Guinea, and dozens of others. The longer the supply chain freeze-up lasts, the more precarious the very existence of these cities becomes.
At a slightly higher level again, frozen mineral supply chains will need to be re-started and re-organized. As in any crisis, this presents both danger and opportunity. The near complete dependence of Africa on hand-carry gold to Dubai has been shown in retrospect to have been a mistake. The COVID-19 crisis presents the opportunity to refashion this and other supply chains into something more robust, something that better serves the needs of miners. Supply chains could also be made fairer, by enforcing the payment of moderate export royalties and respecting the sourcing standards of the OECD, among other measures.
Such reconfigurations will take the concerted efforts of many people of good will, and will take time to organize. The danger, in the meantime, lies in less salubrious actors moving to refashion supply chains in ways that may set back efforts for fair prices, responsible sourcing and responsible supply chains. Preliminary indications of slightly rising field prices in Burkina Faso, for example, may be an early indication of non-official exporters discovering ways to exploit air freight to new gold trading destinations.
What is to be Done?
Faced with this set of challenges, how should the ASM community respond? Presciently, one early analysis noted that information would be critic al in formulating responses to the COVID-19 and ASM crisis, and called on ASM focussed organizations to mobilize their networks to generate and then share information with the wider ASM policy world. Globally focussed entities such as Delve, planetGold, and the Artisanal Gold Council have begun publishing regular web updates recounting the situation in various producer countries, data and status of gold hubs. The AGC in particular has focussed on collecting and publishing the gold prices paid to miners in the field, finding this an extremely useful barometer of local conditions in ASGM communities. More locally focussed organisations are publishing updates covering the situation of artisanal miners in their own country or area.
Other organisations have concentrated on formulating a policy response to the challenge of COVID-19 and ASM. In an April 2 brief, Levin Sources noted the critical role that finance and liquidity were playing in this freeze up. This analysis was perhaps also the first to note that the breakdown in mineral supply chains presents both danger and opportunity. Danger that ill intentioned actors would substitute existing supply chains with (more) clandestine ones. Opportunity for well-intentioned players to replace existing, broken, supply chains with others that better serve artisanal producers.
In Colombia, ARM published a detailed series of recommendations for the gold sector. PlanetGOLD followed suit in Peru. Both policy briefs contained measures designed to ensure that artisanal gold producers were included in health, income support and poverty relief efforts, as well as measures designed to re-start stalled or frozen gold supply chains.
For IMPACT, COVID-19 could portend damage to years of work dedicated to eliminating armed groups from supply chains and establishing adherence to standards of responsible sourcing and supply chain due diligence. IMPACT cautioned that any loosening of sourcing or due diligence standards as a short-term reaction to the pandemic would only serve to harm artisanal producers in the long run. In a similar vein, The Sentry argued that sanctions targeted at individuals or networks implicated in corruption should be maintained during the pandemic, as any loosening would only encourage corruption, possibly including the embezzlement of funds dedicated to health care.
In a second brief, Levin Sources argued that ASM communities should receive priority treatment in COVID-19 relief efforts. Levin based this argument on, among other factors, the vulnerability of ASM actors to disruptions in income, and the possibility that ASM activity might, due to the nature of the work environment, serve a vector for coronavirus transmission.
These points are certainly well-intentioned, but on the other hand several of these arguments simply apply to rural populations in general. Malnutrition and respiratory diseases as risk factors for a severe COVID-19 infection have generally a higher prevalence in rural areas in ASM countries, and there is no evidence that ASM communities are especially strong vectors of COVID-19 transmission. And while ASM communities are certainly being hard hit by the economic impacts of the crisis, with the IMF predicting global shrinkage of -3% and “the worst economic downturn since the Great Depression”, it’s not clear that this suffering is greater than in other rural communities. Attempting to prioritize ASM communities due to their vulnerability could even produce resentment and thus prove counterproductive.
The AGC Position –Target Artisanal Gold Mining Communities for Maximum Impact: Health-in Gold-out (HIGO).
The Artisanal Gold Council believes that there is an argument for prioritizing ASGM communities, one based on maximizing impact. Artisanal mining communities make excellent intervention targets. Gold supply chains can deliver wealth and support disease prevention, and do both very cheaply. Indeed, it’s the AGC’s view that the ASGM sector offers a rare and desperately needed income opportunity in the face of otherwise collapsing formal and informal income sources in low-and-middle-income countries (LMICs). This is due in part to strong and ongoing global demand for gold and stable or rising international gold prices– even despite observed local price drops in several ASGM countries.
In addition, ASGM communities can benefit from the already existing infrastructure designed to facilitate the gold trade, to bring funds into ASGM communities and transport gold in the opposite direction. This is a unique feature of ASGM communities, one not shared with other remote and impoverished rural areas.
The AGC believes this strong, pre-existing infrastructure can be harnessed to deliver both income and health assistance to the ASGM communities that occupy remote and impoverished areas in over 80 LMICs. The existence of this gold network lies at the heart of three policy interventions proposed by the AGC: (i) a project to restart and reform artisanal gold supply chains; (ii) a project to deliver health assistance via this gold stakeholder network; and (iii) a project to monitor these interventions via a worldwide database of artisanal gold prices.
The AGC proposed interventions are in in line with the strategic priority 2.1 of the UN Humanitarian Response Plan for COVID-19: “Preserve the ability of the most vulnerable and affected people to meet the additional food consumption and other basic needs caused by the pandemic, through their productive activities and access to social safety nets and humanitarian assistance.”
1. Supply Chain Reform Project (SCRP)
The AGC’s signature response to the crisis is a project dedicated to restarting and reforming seized-up gold supply chains. There is little that can be done for artisanal gold mining communities that will compare with re-starting and reinvigorating frozen mineral supply chains. Health prevention and treatment initiatives geared to ASM communities are certainly necessary. Income support and emergency assistance measures are certainly welcome. But even supposing that the in low-and-middle-income countries that are home to most of the world’s artisanal miners can muster the funds and capacity to successfully carry out such initiatives, they would still pale in comparison to the beneficial effects of simply getting miners’ incomes back to normal.
The best and most important thing that can be done for artisanal gold miners and their dependents is simply to buy their gold, or by working to allow international supply chains to reconnect and begin to move mineral commodities again. In pursuit of this strategy, the AGC has initiated test purchases of small volumes of artisanal gold at near pre-COVID prices for export to refineries with responsible sourcing policies. The intent of these test exports is to work out the legal, logistical and financial challenges in re-opening stalled supply chains. With the test exports complete, the AGC believes that financial actors with the wherewithal to finance or guarantee much larger gold volumes will enter the market.
The AGC’s intent is emphatically not to become a gold speculator, but rather to use its knowledge of ASGM production areas and international supply chains to demonstrate that fair, legal and responsibly sourced gold trade is possible, even during the COVID-19 pandemic. Once this has been established, the AGC hopes and expects private sector actors to follow the blazed trail and – with their vastly larger financial resources – resuscitate the developing world’s artisanal gold supply chains, now and improve them and make them more resilient in the future. This approach is a natural one for the AGC and falls directly into its mission to professionalize artisanal gold production and improve artisanal gold supply chains to maximize development potential.
Interestingly, the SCRP nicely reveals that sourcing artisanal gold and respecting the gold industry’s required due diligence as developed by the OECD is not a dichotomy. It has and will be possible to shorten ASGM supply chains by bringing artisanal gold more directly from miners to OECD compliant refiners. In the longer run, post-COVID, these shorter supply chains should hopefully prove more robust and potentially more remunerative to artisanal producers.
2. Health Assistance
Restarting and reforming mineral supply chains – and encouraging governments and private sector actors to do the same – does require considering the potential consequences for containment and control of COVID-19. The scale of the coming “third wave” of the pandemic in Latin America, Africa and Southeast Asia is impossible to fully predict, but there are likely be significant and potentially devastating impacts in many countries with ASGM sectors. Already as of early May we are seeing significant infection and death rates in countries such as Ecuador, Peru and Brazil.
Clearly then, for mineral supply chains to function and societies to feel confident permitting artisanal mining to continue, there needs to be an effective health program to mitigate the risk of COVID-19 infiltration to and from ASGM communities. Interventions also needs to reduce the risk of community transmission and protect vulnerable people in face of inadequate treatment options for severe COVID-19 cases in many mining communities. The health response will need to be tailored to local needs and in line with national public health policies.
Health interventions can be carried out on two levels: as a community-based response and a health sector-based response. Keeping in mind the limited health care infrastructure in many artisanal gold mining communities and their work and living conditions, many public health interventions such as spatial distancing measures and hospital-based interventions deployed in high-income countries are not feasible in these settings. Based on our work experience in these communities, we recommend a prioritization of the following actions:
- Prevent infiltration: With communities working and trading gold, gold traders become a potential vector, particularly if they are infected but not showing symptoms. Gold traders and gold shop owners should thus receive training on COVID-19 transmission, symptoms and prevention. While interacting with ASGM communities, they should be advised to conduct self-monitoring for symptoms, use masks and hand sanitizers, and separate themselves from clients by an adequate distance and/or with barriers like those used in many grocery stores. Some portion of this training can be delivered by organisations with artisanal mining projects already on the ground.
- Increase awareness: Within ASGM communities, health plans need to focus on the prevention of community transmission. COVID-19 containment is highly dependent on the compliance of the population to follow community-based measures such as spatial distancing, self-isolation and improved hygiene, especially in remote areas with limited abilities of the government to enforce rules. Information flowing up from AGC’s many local networks indicate that remote artisanal gold mining communities have limited access to quality information, and this increases the risk of the spread of misinformation leading to fear or panic. Locally connected and trusted organizations (e.g., NGOs, miners’ associations) should provide mining communities with information on COVID-19, for example in the form of formal trainings, informal discussions, flyers or posters and through social media, considering different levels of literacy. Training should follow a community engagement approach to ensure that communities’ needs are considered and that they have access to trusted and accurate information. Importantly, communities might have more appropriate solutions to mitigate transmission risks that fit better in their daily realities.
- Improve hygiene: In addition to information, ASGM communities will also need infrastructural support to improve hygiene. Priority should be given to low-tech handwashing interventions at mining sites and within the communities, and the distribution of soap, hand sanitizers and potentially masks..
- Protect high-risk groups: since enhanced community quarantine is often not feasible in artisanal gold mining communities, a ‘targeted shielding’ approach to protect vulnerable groups (elderly, people with underlying medical conditions) could be applied.
- Coordinate with the health care sector: A health sector-based response in artisanal mining communities will be more challenging due to the limited capacities of local clinics. However, the improvement of communication systems and financial, logistical and infrastructural support can help to maximize the use of local capacities. Priority should be given to the protection of health workers though personal protective equipment, testing and monitoring of the situation.
The Artisanal Gold Council recently published a full policy brief on health and the ASGM sector containing further specific examples of the application of ASM knowledge to the design and practise of health initiatives during COVID-19. The AGC further plans to develop ASGM specific health programmes, in cooperation with the miners and their communities in Colombia, Indonesia, the Philippines, Mongolia, and other areas where AGC has projects or strong relationships to build on. The AGC encourages other organisations with similar strong community ties to pursue similar endeavours.
3. Artisanal Gold Price Tracking via a World Wide Database of Gold Prices
The final part of the AGC effort involves a monitoring effort designed to gauge the effectiveness of the supply chain reform project and to evaluate the general and economic health of ASGM communities. The metric chosen for this monitoring effort is a simple one – the price paid for gold in ASGM countries at miner trader and export levels, as a percentage of the world spot price.
This single metric can show the effects of international, national and local level restrictions on travel and trade on the ability of miners to sell their gold, and thus make a living from mining. Monitored over time, local gold prices (and ideally also volumes) in a particular place show whether and to what extent an individual community is recovering from COVD-19 related economic shutdowns. This metric has obvious correlations with the social determinants of health, especially the ability to purchase food, to improve livelihoods and to some extent also to access health services.
Monitoring the local price of gold in conjunction with government-imposed travel restrictions also provides insight into the extent to which mineral supply chains are being pushed into greater levels of informality. To take one concrete example, local gold prices in Burkina Faso crashed from some 94% of world price to just 54% in the immediate aftermath of the initial round of COVID-19 restrictions in late March. Since then they have slowly crept back upwards again, even though both local restrictions on movement within the country and international travel to the UAE – Burkina Faso’s traditional gold hub – have not been lifted. In some fashion or other, the gold trade is being revived, but seemingly in a new, clandestine form.
While in some ways this can be seen as a welcome development – at least miners can work and sell gold – in other ways it bodes ill for the future. Clandestine networks, once established, can become entrenched and tend to persist. Developments such as these highlight the urgency of restarting and reforming artisanal gold supply chains via initiatives such as the AGC’s SCRP.
The AGC’s database of gold prices is already up and active on the AGC’s COVID-19 Portal. The intent, as the pandemic moves forward, is to expand and develop this tool to a global scope, and generate interpretive reports with regular updates on artisanal gold prices at the miner, trader and exporter levels of the gold supply chain.
 Rapnet Diamond Index, 30 April 2020, 1ct (-12.57%), 3ct (-11.80%),
 A point noted by Levin Sources, among others. https://www.levinsources.com/knowledge-centre/insights/asm-responsible-sourcing-covid-19 :“Further, they generally rely on income from mining to satisfy their dietary needs and are therefore susceptible to income interruptions in a way that wholly subsistence communities may not be”
 IMF World Economic Outlook, April 2020 https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020
 OECD Country Policy Tracker: https://www.oecd.org/coronavirus/en/#policy-responses
 The WHO has developed a guidance on how to develop a risk communication and community engagement plan when working with specific communities on COVID-19, a basic model that should be followed and adapted as necessary when engaging with ASM communities.
 https://www.who.int/publications-detail/advice-on-the-use-of-masks-in-the-community-during-home-care-and-in-healthcare-settings-in-the-context-of-the-novel-coronavirus-(2019-ncov)-outbreak The guidelines regarding masks differ: Whereas WHO and many national health authorities do not recommend the use of masks in the general public without symptoms in order to avoid a false sense of security and to spare masks for the health care sector, some countries have made the use of masks mandatory (e.g., Burkina Faso). Therefore, recommendation at the local level have to be in line with national public health policies. Since simple dust masks can also prevent the inhalation of silica particles, the use of masks should be encouraged, but together with proper guidelines how to handle masks