Maria Laura Barreto MERG – Materials Efficiency Research Group

1. Principles and recommendations for a legal framework for artisanal and small scale mining (ASM) Maria Laura BarretoMERG – Materials Efficiency Research Group 7th CASM Conference, Ulaanbaatar, Mongolia 7-12 September 2007

2. Do we need a new legal framework for ASM? YES, because: • mining regulations are partially responsible for the process of marginalization of ASM (Brazil is a paradigmatic example) • The new processes of regulation of ASM happening in several countries (e.g. Peru, Mongolia) need to have a solid framework that understands the ASM phenomenon to not repeat old mistakes • ASM is difficult to regulate because the traditional mining framework does not really work in the case of ASM • The ASM framework needs to distinguish between the real phenomenon of ASM and the characteristics and distortions that have accumulated in the absence of legalization and other appropriate policies

3. Is it possible to build a legal framework for ASM that can be used effectively in different countries? • Legalization is a socio-cultural process • It is possible to build a framework because the ASM has characteristics, problems and challenges that are similar independent of the country where the activities occur. • The proposed framework consists of a series of principles and recommendations (and not an actual draft law) • It is based on the theories of natural resource management in the situation of open access, but takes into account ASM realities. • It is a mining activity that has many unique social, economic, labour, technological, and environmental characteristics

4. What is ASM? • ASM is an activity of simplified mineral extraction of secondary deposits (alluvial, eluvial and residual) and in some cases in shallow primary deposits (generally not more than 50m). • Simplified mineral extraction is a mining activity where there is only the extraction and processing phases. The exploration phase does not exist as a defined period of time with the objective of quantification of the deposit and evaluation of the characteristics of the mineral(s) • The extraction and processing phases are characterized by very simple technical processes and the use of machines and instruments that do not need specialized skills. Where the extraction is undertaken the typical duration until exhusting the resource is generally 5 years • From these characteristics of ASM, others emerge such as mobility and intensity of labour • This activity exist in differents parts of the world (Asia, Africa and Latin America) most commonly in tropical humid regions

5. Principles of the legalization process 1. Legalization is a necessary condition but is not sufficient for the formalization process 2. The diverse dimensions of public policy need to be integrated 3. The legalization process has many legal dimensions (health and safety, economic, environment, etc.) 4. The process of legalization starts with the attribution of mining titles 5. Legalization is a progressive, incremental process

6. Principles of the legalization process 6. Human rights are a fundamental component of legalization and are not incrementally applied 7. The small miners and their associations have to participate in the process of developing the ASM regulatory framework 8. The implementation and the enforcement of the regulation has to be monitored by multiple ASM actors 9.The miners’ capacity to participate at a legal level is as fundamental as the existence of legislation

7. Generic principles for the ASM regulatory framework 1. ASM has to receive specific legal treatment, different from other mining activities 2. ASM is an economic activity and a mining activity. The legislation has to recognise these realities 3. The legislation has to allow for the development of the ASM as a legitimate economic activity 4. The legalization has to include all ASM activities 5. The diversity of ASM has to be recognised in law

8. Generic principles for the ASM regulatory framework 6. ASM actors have to have freedom to choose the legal entity for the mining project 7. The partnershipbetween ASM actors and between ASM and other mining activities has to be promoted by law 8. Legal restrictions of the use of specific technologies have to be avoided or used with extreme caution 9. The stability and the transparency of the legal framework is as important for the ASM as for other mining activities

9. Principles and recommendations for mining titles (concessions) and environmental licenses • The process of concession and environmental licenses has to be simplified without compromising the environmental and social standards for the ASM • Each type of ASM requires different types of mining titles (concessions) • Mining titles must have value in the market (because it is an important economic instrument of the regulatory framework, e.g. quality of mining titles depends of size of area, number of the years, conditions of transfer, rights and obligations, etc.) • It is recommended that there is a single concession and environmental license for the different work phases of the ASM (exploration, extraction and closure) • The governmental agencies responsible for the management of the mining titles and environmental licenses have to be closer to the ASM areas

10. Principles and recommendations for legal entities of the mining project • All legal entities that do not contradict the commercial legislation in the country should be allowed • The promotion of one legal entity doesn’t have to mean the prohibition of others • If the legislation promotes or stimulates the use of a specific type of legal entity, research should be done to support such a decision • Formal economic and commercial associations between ASM actors and between ASM and other mining activities should be promoted by law

11. Principles and recommendations for legal treatment of the mining area in ASM • The concept of “mining area” is a fundamental legal policy instrument for ASM • The concept of “exclusivity” and “priority” of the holder(s) of the area is as important for ASM it is for the other mining activities • If the legislation defines the size(s) of the granted area it needs to take into account that it is a legal policy instrument. This decision can impose economic restrictions by determining the dimension of the mining project and the forms of legal organization of the activity • The use of exclusive areas or reserves for ASM seems attractive but can create significant problems. Approach with caution

12. Principles and recommendations for technological aspects of ASM • The regulation should promote the utilization of technology that increases use of better environmental practices • The governmental (or other) programs of R&D for ASM have to include product development and commercialization strategies • The use of machines and equipment that cause major environmental and social impacts have to be prohibited and the specific characteristics of them specified in law • Any legal restrictions on frequentlyused processes or chemical substances essential to some processes have to be avoided when there are not substitutes in the market

13. Principles and recomendations for environmental and social aspects of ASM • ASM environmental regulation has to promote the integrated managment of environmental and social impacts • Environmental and social impact assessment and managment plans have to be related to the characteristics of the activity, the category of the ASM title and scale of the project • The use of mercury without control is one of the most serious environmental impacts, but ASM generates other important impacts that the regulation needs to address (such as sedimentation, erosion, etc.) • ASM has to have specific regulation for health and safety and this has to be based in ASM conditions and workplace realities

14. Principles and recommendations for environmental and social aspects of ASM • The attribution of ASM title in protected areas have to respect the legislation in place in respect of the managment of the protected area • The existence of ASM activities prior to the creation of the protected area has to be taken into account by the legislation • Some social, cultural or environmental sensitive areas have to be classified as “no-entry areas” to ASM and should be clearly defined in law. In this case the restriction also needs to be for the mining activities in general. • The activity of the ASM in river edges and beds has to be defined by areas and limits to the number of titles attributed on basis of the capacity of regeneration of the ecosystems

15. Principles and recommendations for taxation regulation and policy • ASM has to have a specific taxation policy and regulation • Progressive taxation and tax stability are important principles for the ASM taxation policy • The historic social contribution and undercapitalization of ASM have to be taken into consideration in the determination of the taxes contribution • Fiscal exemption in the initial years (at least 5 years) has to be considered

16. Principles and recommendations for the credit policy • Development banks have to be the pioneers in the creation of credit programs for ASM • Different types of credit have to be developed for different categories of ASM • The concession of credit has to depend on attribution of mining titles and environmental licenses • Renewal of the credit has to depend on evaluation of the environmental, economical and social performance of the mining project