How formalization can boost artisanal and small-scale mining potential

Artisanal and small-scale mining (ASM) is a significant sector that supports over 200 million people globally, yet it remains largely informal, with only 15% of operations formalized. The lack of formalization not only hinders the sector's potential for growth but also poses challenges in terms of governance, safety, and environmental sustainability. However, recent initiatives such as the introduction of a digital marketplace during COP16 in Cali, Colombia, are paving the way for ASM formalization and sustainable development. CNBC Africa's Tabitha Muthoni recently spoke with Rob Karpati, a Partner at The Blended Capital Group, to delve into how formalization, access to capital, and global collaboration are key factors in unlocking the potential of ASM for sustainable development and improved governance. Karpati highlighted the immense scope of ASM, with 15 million miners in Africa and 45 million globally, supporting a network of over 200 million individuals when including their families. The formalization of ASM is crucial as it enhances the connection between miners and capital, enabling them to access resources for equipment, training, and governance improvement. This, in turn, leads to increased productivity, social gains, and positive environmental impacts such as reduced deforestation and biodiversity loss. By transitioning to formalized structures, ASM operations can contribute to sustainable development by establishing cooperatives that uplift local economies and communities. The Blended Capital Group, in collaboration with partners like the Alliance for Responsible Mining and Capital Hubs Canada, is spearheading efforts to bridge the gap in capital access for artisanal miners. Through the establishment of a digital marketplace, miners can connect with a diverse range of investors and secure funding for their projects. This innovative platform offers transparency on the social, environmental, economic, and financial aspects of each project, enabling the creation of combined capital stacks from different investors. The intersection of ASM with COP16, focused on biodiversity and environmental conservation, underscores the importance of formalization in promoting 'forest smart mining' practices. By adhering to higher environmental standards facilitated by the digital marketplace, ASM operations can align with global sustainability goals and attract investors seeking impactful and ethical investments. Karpati emphasized the significance of creating investment structures that are fair and non-exploitative while ensuring the long-term sustainability of ASM initiatives. By offering a range of financial instruments that prioritize sustainability, the digital marketplace aims to support miners in building resilient and responsible businesses that benefit both the miners and their communities. Transparency plays a key role in attracting impact investors and value investors, showcasing the positive impacts generated on the ground. From a global collaboration standpoint, reshaping ASM through formalization requires a shared intent among stakeholders across the value chain. Collaboration extends beyond miners and investors to include refineries, large-scale mining companies, and international organizations such as the International Council on Mining and Metals (ICMM) and the Mining Association of Canada. Aligning mining standards and practices to accommodate ASM operations fosters positive relationships and ensures that the sector's development is sustainable and inclusive. The journey towards formalizing ASM is a win-win opportunity that not only unlocks the sector's potential for growth and sustainability but also promotes responsible mining practices, fosters community development, and contributes to global sustainability goals. With continued efforts in formalization, access to capital, and international collaboration, ASM has the potential to transform into a thriving sector that drives sustainable development and uplifts millions of livelihoods worldwide.