Industry needs proper policies

Business
The alluvial mining industry has existed in Papua New Guinea for over a century since the day gold was first discovered on Sudest Island, Milne Bay in 1888. It is almost 132 years of the existence of alluvial mining activities in this country yet the plight of struggling mining families and communities who encounter so much financial, technical and social stress to ensure a gramme of gold reaches the refineries have been overlooked. Sustainable Alluvial Mining Services co-founder DARREN SUTTON spoke to Business reporter PETER ESILA about the industry.
A child involved in small scale mining in Wau, Morobe. – Pictures courtesy of Sustainable Alluvial Mining Services

Question: What is the status of the alluvial mining industry in PNG?
SUTTON: The Sustainable Alluvial Mining Services (Sams) is a nationally-owned company providing alluvial mining services in PNG.
Every day, more than 100,000 women, men, youth and children sift through alluvial (streambed and surface) deposits to mine for gold.
The Government sanctions, encourages, and benefits from the taxable income of these small-scale alluvial mining operations, which produce upward of K300 million in export levies as revenue to the Government annually.
There is evidence of many remote districts in PNG that are economically supported by the artisanal and small-scale gold mining sector.
Some of the rural districts economically empowered by this industry are Wau/Bulolo, Maprik, Samarai-Murua and Kainantu.
The evidence of this economic aspect of the sector presents itself in the revenue generated through gold export levies.
Although there is economic potential in this sector, many successful governments have given little attention to the sector in terms of financial and technical assistance.
On the policy aspect of the sector, no specific legal framework or regulations is in place to protect small-scale and grassroots miners, including women and children, from the dangers of this mining practice, including mercury poisoning and child labour.
While in the process of advocating for policy inclusion to effectively regulate the small-scale mining industry, there can be programmes rolled out in small scale mining communities and districts around the country to reinforce the idea that this sector can be an economic driver for rural development to give that needed confidence to the government to revisit existing mining laws that can incorporate the Artisanal Small-Scale Gold Mining (ASGM) industry.
Creating wealth in the small scale mining industry by delivering better and tailored services to clients (SMEs, entrepreneurs, local governments, etc), hence creating an avenue conducive for all to participate in business/economic activities.
The ASGM sector is inadequately understood by many, thus we provide the general information regarding the sector.
It supports hundreds of thousands of rural people, almost all of whom live in remote rural areas.
It incorporates both formal and informal activities, where the latter is widespread and is commonly referred to as “illegal mining”.
Thus the sector needs to be formalised.
ASGM plays a key role in mineral economy, where it is estimated to contribute one-third of less-fuel mineral output.
ASGM is pivotal in alleviating poverty and improving living standards through increase in community capital, diversifying local economy in rural areas basically because it is viable in areas with minimal to no infrastructure where other sector cannot function.

What is Sams’ views on the Government’s move to establish a gold refinery and mint project in the PNG?
In the wake of a biased gold deal forced upon Papua New Guineans to exploit their resources, hundreds of thousands of alluvial miners around the country who will either be victims or beneficiaries of this deal face another grim reality of ignorance, misrepresentation, and forced decision from a Government who is expected to fairly represent them.
The alluvial mining industry has existed in PNG for over a century since gold was first discovered on Sudest Island, Milne Bay, in 1888.
Almost 132 years of existence yet the plight of struggling mining families and communities who encounter so much financial, technical and social stress to ensure a gram of gold reaches the refineries have been overlooked.
The fact that no proper consultations with local mining communities to establish understanding, seek informed consent and input around the gold refinery plan, it seems a biased and rushed decision by a few individuals whose interests are not representative of the sector and people who not only work in difficult and dangerous mining sites but also those who have been deliberately neglected by many governments in meeting their financial and technical needs despite their direct input to strengthening rural economies and generating income for the Government.
The small scale mining industry in Papua New Guinea comprises of many actors, from miners, local mining services providers, to local buyers, established gold buyers and exporters, suppliers of mining equipment, policy makers, regulators, civil societies and local governments who play significant roles in their capacities to ensure a gramme of gold reaches a refinery.
It is an informally established supply chain that has existed for centuries and the only sensible thing any responsible Government with aspirations to improve its resources sector could do is to involve all players, understand their situations, address pressing issues faced by the sector before jumping quickly to a deal that does not represent all players involved.
A consultation process would help identify the many issues faced by the sector that is hindering progress.
The alluvial mining sector is not only about gold and refineries, there are other more significant issues to be addressed.
The prime minister should be seeking appropriate advice to develop a plan that addresses many of these issues whilst looking at the economic aspect of the sector.
One of the key concerns of the government establishing a refinery is to ensure that small scale and artisanal miners have a safe secure and fair way of selling their gold to either government gold buyers, or directly to the refinery.
Often, the small miner sells his gold to unscrupulous buyers for as low as 30 per cent of its real value.
The buyer then sells to another buyer who pays well under market price and then finally the gold is sold to existing foreign buyers who pay usually about 80 per cent of the true value of the gold.
The reality here is at the end of the day no one really gets a fair price for their gold, particularly the miner or the low end buyer.
If the government is to establish a refinery it must ensure that there is a regular outreach programme where buyers representing the refinery visit remote areas outside major cities to buy directly from the miners giving the miner a much better and fair price.
Through training and registration, buyers could be trained, registered and the act on behalf of the government refinery.
This can only happen if the artisanal and small scale mining sector is formalised, regulated, and recognised as a significant provider of gold to the Government.
With no formalisation, miners are subjected to dealing with buyers who are not registered, unregulated, and in many cases illegal, many of whom smuggle gold out of the country.
They have to deal with them as there is no other economic option to sell their gold in any other way.
The prime minister should be focused instead on addressing issues that might be a hindrance to the success of his plans for a refinery.
Issues of greater concern in the alluvial mining sector include:

  • POLICY and regulatory regime of the sector;
  • INSTITUTIONALISATION and formalisation;
  • TECHNICAL and financial assistance to improve the sector;
  • EVER increasing social issues faced in the sector;
  • ENSURING PNG becomes a party to the Minamata Convention to phase out mercury;
  • HEALTH and safety issues affecting miners;
  • VICIOUS cycles of illiteracy on generations of miners;
  • RISING illegal mining activities near large mining companies;
  • ENVIRONMENT concerns associated with unregulated mining activities in fragile environments;
  • DEVELOP policies to recognise the sector as an important SME to boost rural economies.

These are pressing issues which the Government must address before settling for deals that may never eventuate as a result of all the issues mentioned above.
International Gold buyers are affiliated to organisations such as the World Gold Council which regulates the industry and ensures ethical gold is sourced.
The Government should be asking:

  • IS PNG gold ethical? Does it meet international standards?
  • IS the National Gold Corporation Ltd a member of the World Gold Council to be able to sell directly to the London Gold Bullion market?
  • DOES the National Gold Corporation have experience and expertise in international fair-mined standards to ensure benefits trickle down to people?
  • DO they have experience in social responsibility, to include rural mining communities, since bulk of the gold NGC will be dealing with, will be sourced from these disadvantaged mining communities? and,
  • WHY can’t it collaborate with gold exporters or mining companies operating in the country, or local miners to establish a refinery?

It is also important that the NGC should have experience and knowledge in the formalisation of the ASM sector so they can adequately advise Government on the changes happening to the sector in terms of global ban in mercury, and possible ways to identify alternative ways of extracting alluvial gold.
The Prime Minister should engage foreign companies that have technical capacity in dealing with all cross cutting issues whilst also ensuring gold production rates are steady and not affected by these global changes.
The Prime Minister should ensure international standards are accommodated to address issues in the sector before settling for economic deals that might turn out to be unsuccessful.
For instance, there is international lobbying behind improving the ASGM sector and Governments are taking this sector serious has it has a potential to economically empower indigenous resource owners.
The Government should be empowering its local miners to participate in fair-mined gold initiatives rather than dealing with middlemen. They should be participating as a government in these international forums to assist local miners, collaborate with reputable organisations to holistically address many grave issues faced in the sector whilst also venturing into economic collaboration.
The Government should be considering these options and ensuring that the country is actively participating, sharing knowledge and ideas with many other successful countries in the mining sector and particularly the ASM sector.

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