Independent precious metals authority LBMA has launched a major initiative to support the integration of artisanal and small-scale mining (ASM) into the legitimate global gold supply chain, through its 66 accredited refiners. The initiative takes the form of a ‘toolkit’ which addresses issues specific to the ASM sector, including legal titles, mining licences, formal regulatory oversight, and the existence of pre-refinery aggregators, as well as environmental issues.

“While 20% of global gold production comes from [ASM], less than 2% moves directly into the formal good delivery supply chain,” pointed out LBMA CEO Ruth Crowell. “Much of the rest comes into the market via illicit supply-chains and unregulated recycling, practices which diminish confidence in the legitimacy and environmental integrity of the metal bought by investors and end-users.”

The toolkit retains the same core principles that are the foundation of the relationship between large-scale miners and LBMA gold refiners, a relationship that is independently audited. These principes are the sustainable sourcing and the responsible souring of gold.

“The aim of this new toolkit, one of the first fruits from the LBMA ‘ASM Taskforce’ which was established last year, is to provide our accredited refiners with the confidence to handle more ASM gold,” she explained. “Hopefully this will begin to redress the balance between legitimate and unregulated production with its concomitant negative impacts on the environment and on the human rights of the 40-million people worldwide who depend on ASM as either their primary or exclusive source of income.”

The stimulus to the development of the toolkit was encouragement from those groups that desired Good Delivery List refiners to work with, and not avoid, the ASM sector. Many ASM producing countries are developing economies, and bringing ASM producers into the legitimate gold supply chain could bring a number of socioeconomic benefits to these societies. These could include legal recognition of ASM miners and better peace and security in the mining areas, as well as economic development.

The LBMA’s new approach to ASM operations follows guidelines from the Organisation for Economic Cooperation and Development. These include the phased implementation of some requirements, rather that the immediate raising of red flags. Thus, in countries in which the use of mercury is still legal, the LBMA will require them to reduce their use of this harmful extraction method. And, in all cases, there must be a continuous and progressive enhancement in health and safety standards.

The toolkit will be an essential element in the LBMA’s plan to engage with the governments of, and industry stakeholders in, Ghana, Peru, the Philippines and Tanzania.

LBMA is an abbreviation for London Bullion Market Association.