The Changing Impacts of COVID-19 on Mongolia’s Artisanal Gold Mining Sector
By Namuun Tsegmid - May 19, 2021
Mongolia, a vast country characterized by rugged landscapes, a nomadic culture, and an active artisanal and small-scale gold mining sector has not been untouched by the COVID-19 pandemic. Having the longest land border with China spanning 4,600 kilometres, as well as a very long border with Russia, the Government of Mongolia instituted a number of pandemic-related border restrictions right at the beginning of the pandemic in an effort to curb the spread of the novel coronavirus amongst its sparse population. Until November 11, 2020, there were no locally transmitted COVID-19 cases in Mongolia. This changed quickly when a 29-year-old Mongolian transport driver tested positive for the coronavirus after returning home from Russia.
As of 18 May 2021, figures from the Center for Systems Science and Engineering at Johns Hopkins University, which tracks global COVID-19 cases in real-time, has put the total number of cases in Mongolia at 49,524 (the highest per million people in the Asia-Pacific region) with total deaths at 221. With a robust testing system, and restrictions in place, Mongolia has been able to curb further spread of the virus, which has plateaued at roughly 1,000 cases per day, but that has not left the ASGM sector untouched from economic impacts.
The Effects of Lockdown Restrictions on the ASGM Sector
Supported by the Global Environment Facility, the planetGOLD Mongolia project is led by the United Nations Environment Programme (UNEP) and the UN Industrial Development Organization (UNIDO), and executed by the Artisanal Gold Council in partnership with the Ministry of Environment and Tourism of Mongolia.
When the planetGOLD Mongolia team initially reported on COVID-19 impacts in April 2020 and collected data on the ASGM sector in project target areas in Selenge, Gobi-Altai and Khovd provinces in June of the same year, the impacts of the pandemic were low relative to other ASGM countries with ASGM sectors where activities were curtailed during the early stages of the pandemic (see for example this blog on Indonesia). During the Mongolian survey, conducted by the team in June, 67% of 371 surveyed artisanal miners reported income loss (32%) being the main impact related to COVID-19, with only 2% of miners reporting decreases in the price of gold.
Due to recent surges in COVID-19 cases, lockdown measures are now in place and enforced from the soum to the aimag level. A total lockdown has been in place in planetGOLD Mongolia project areas, halting both formal and informal ASGM operations (Gobi-Altai province until May 2, Tunkhel village until May 1, and Khovd province until May 8). According to the E-Mongolia portal, confirmed cases in these three provinces include 401 in Selenge, 54 in Gobi-Altai, and 236 in Khovd.
Enforced by the Mongolian authorities, the current lockdown measures include a number of restrictions on public gatherings, proper PPE usage, regional travel, border closures, and curfews. Essential services like the delivery of food, fodder, and fuel products are still allowed throughout the country.
With most of the ASGM population largely dependent on day-to-day income generated from mining along with other livelihoods, the ongoing lockdowns are creating a growing sense of economic uncertainty that is becoming more concerning with each passing day. Although there is the provision of one-time cash assistance of 300,000 MNT (approx. 105 USD) for every Mongolian citizen, there are also other challenges on the horizon for Mongolia’s artisanal miners. One of the primary challenges as the COVID-19 pandemic continues is in the area of formalization. An additional worry is the halting of regulatory approval for artisanal mining. This poses another potentially large burden on miners especially those that have already committed to the process of formalization.
The planetGOLD Mongolia project spoke to a few stakeholders and women and men miners in the project areas in early April and learned that the delays in the approval of permits and registrations are pushing some artisanal miners back into illicit mining. For example, in Gobi-Altai, there would have been two potential mining areas for artisanal mining, but the approval and negotiation processes in both have been hampered by the lockdown. The Altai soum area, a hard rock mining site, is still awaiting blasting approval from the government while in the Biger soum area, miners through the Aimag Federation are still negotiating a tripartite agreement with a large-scale mining company to have access to the site. Some miners have reflected on the impacts the pandemic has had on their livelihoods.
“People who depend on artisanal mining don’t have any other source of income. We are at a loss for what to do,” rued one miner from Gobi-Altai.
“[With the lockdown] we are not even allowed to go out of our homes except to buy groceries and medicines,” said a miner from Altai soum. “But we don’t have any money to buy them at this moment,” he continued.
In some areas, miners are reportedly engaging in non-permitted mining – travelling at night, digging in secret, spending the night in open areas, and generally exposing themselves to numerous hazards – just to achieve a subsistence level of income during this uncertain time. Miners that engage in these practices are at risk of attracting the attention of authorities, which can result in fines and the confiscation of much-needed mining equipment.
Similarly, artisanal miners in Tunkhel village are entering a period of extreme economic instability. Most of the miners have loans ranging from 2-10 million MNT ($700-3,500 USD) from gold traders and processing plants, which tend to ask for repayment in a short time period. Before the pandemic, miners also started using credit for gas from local gas stations and for groceries from local shops until they earned enough capital to pay. But these days, they can no longer borrow cash for much-needed necessities like food because of the lack of cash turnover in the shops, processing plants and with gold traders. Simply put, the entire supply chain is cash poor and has tightened up from mine to market.
In Altai soum, Khovd aimag, the lockdown that started on March 29 also prevented miners from travelling to their mine sites, which has seriously put them in economic jeopardy. They have an agreement with a processing plant – a loan worth a few thousand US dollars – to process 50 tonnes of ore from which the loan can then be repaid. But with no access to the mine site and no accumulated ore because of the lockdown, the miners will not only be without cash but will also have to pay interest on the outstanding loan. This is driving miners to try to find alternative livelihoods, but they are very rare, or to find alternative means of extracting ore.
The lockdowns are also affecting other parts of the artisanal gold supply chain in Mongolia, which in turn impact miners on the ground. Due to the travel restrictions, local gold traders also cannot go to Ulaanbaatar to sell their gold, which leaves gold buyers in Ulaanbaatar with no reason to open shop and operate. For example, miners from Tunkhel village used to take their ore to a neighbouring province for processing and sell their gold for a better price to the traders there. With road closures now in effect, cross-province travel has ceased, and miners are processing and selling their gold locally for significantly lower prices. In Tunkhel, the price of gold per gram is 130-140,000 MNT ($45-49 USD) but if miners travel to Bornuur (roughly 30km away) and sell gold there, the gold price can reach up to 155,000 MNT ($54 USD). For reference, the current price of gold per gram in Mongolia is 162,072 MNT ($57 USD). These kinds of price discounts leave artisanal miners with a tough choice. Do they risk international price declines and wait until restrictions ease and then sell their gold at a more competitive price? Or, do they sell their gold now for a lower price? Many do not even have the choice of waiting as they need income during this uncertain time.
Lockdown restrictions are understandably a necessary public health measure. While restrictions impact every Mongolian citizen, the livelihoods of artisanal miners – and other groups that are reliant on daily income to survive – are severely impacted. From a public health perspective, rapid testing and vaccination would be the best strategies to end the lockdown and resume some semblance of social and economic normalcy. Once the country is through this challenging period though, miners and governments alike should take the lessons learned and focus on building more resilient supply chains so that they are better prepared for the next systemic stress and leave their citizens better able to cope.
Fortunately, the government has rolled out its vaccination program, and has been vaccinating eligible Mongolian citizens since February and aiming to complete the vaccination by July. To increase the vaccine roll-out, the government is offering a 50,000 MNT ($17 USD) cash incentive to individuals who have completed their second dose.
It may take a while before everything eases back to normal. The lockdown was lifted on May 8, with some restrictions still enforced along with required safety measures. For the ASGM sector, it is important to keep safe, remain protected at all times and participate in the vaccination process. In the meantime, the authorities need to expedite efforts to improve and approve the new ASM regulations, to offset the already difficult situation caused by the lockdown measures.