Hands That Dig, Hands That Feed:
Lives Shaped by Coloured Gemstone Mining
The artisanal tradition of coloured gemstone mining
If you were to step back in time to 1880 and enter the sapphire mines along the Himalayas in Kashmir, India, you would see hundreds of workers using basic tools to free valuable gemstones from the rock before passing them hand to hand to be washed and sorted ready for market. A little further afield in the valley floor you might find individuals, families or small groups scouring riverbeds in the hopes of finding loose gemstones amongst the gravel.
Across the coloured gemstone world, this picture remains largely the same to this day. Independent diggers, small groups and family businesses comprise the overwhelming majority of workers in the coloured gemstone mining industry. While the sector has been described as fragmented, decentralised, opaque and illegal, it’s also an industry that comprises many generations of resourceful, resilient community businesses that sustain the livelihoods of hundreds of thousands of people in over 50 countries. The “miners” behind the great discoveries in gemstone history, such as the Star of India, are not multinational organisations but rather independent explorers, individual diggers collaborating together, and worker cooperatives.
While mining for many metals and commodities like gold and diamonds is now largely a modern, mechanised, internationally-regulated business dominated by large-scale producers, coloured gemstone mining is still the domain of smaller operators – artisanal and small-scale mines. With the exception of one or two gemstones types, there has been no discernible progression from artisanal mining to industrial-scale extraction for decades.
Table of Contents
(You can also use the menu dots below to navigate chapters)
The impact of changing economics
This unchanging state is down to fundamental mineral economics. Recovering and selling rough coloured gemstone in large volumes has never been considered profitable enough to interest commercial business or even investors. Until now. An increase in both the demand for and the price of some coloured gemstones has caught the eye of entrepreneurs who see the opportunity for high-volume sales. Today, US$2 billion of rough coloured gemstones are sold annually – and this figure excludes the US$3 billion to US$6 billion jade industry1Governing the Gemstone Sector: Lessons from Global Experience, pXX. Paul Shortell and Emma Irwin, Natural Resource Governance Institute. May 2017. www.resourcegovernance.org (pdf). As large corporations enter the coloured gemstone industry, smaller traditional miners are, not surprisingly, concerned for their future.
The responsible sourcing movement
This period of change in the coloured gemstone mining industry is not only characterised by growing demand and rising prices. Another force is at play. The attention given by regulators and luxury brands – often initiated by their own consumers – to how metals and gemstones are mined and awareness of the negative environmental and social impacts of irresponsible operators has been increasing steadily over the last two decades, with significant acceleration in the last five years. Originally scrutinising the production of diamonds, gold and ‘conflict’ minerals, the responsible sourcing movement now has its eye on coloured gemstone mining of all kinds. Buyers, retailers and standard-setting organisations are seeking ever more stringent standards, as well as transparency at the mines and traceability of material origins. While large companies are able to meet customer requirements, many smaller businesses – especially artisanal miners – lack the knowledge and the resources to fulfil the demands of compliance officers in companies far down the supply chain. However, the responsible sourcing trend’s steady and persistent progression seems unlikely to change and mines of all sizes will undoubtedly have to decide how to answer the call for greater accountability.
The role played by governments
In countries with strong institutional and governance systems, the mining and export of coloured gemstones is largely overseen by governments. Mineral rights always belong to governments, and governments issue the permits. As interest in coloured gemstones rises, so governments increasingly attempt to retain maximum value from mining – not always successfully – while attracting foreign investment with the capital and expertise needed to explore larger deposits. New policies around natural resource governance is emerging to shape the industry. Some governments pursue greater formalisation of artisanal miners and small mines, a process which may actually lead to their exclusion. Others seek to accommodate large operations and negotiate taxes and royalties for their citizens. Striking a balance between appropriately incorporating artisanal mining into a system of governance and permitting large-scale mining to play a useful fiscal role is, unfortunately, incredibly difficult and risks criminalising some of the very poorest in society. The path taken may determine a country’s future, and certainly impacts both those who work in the industry and those who depend on a steady supply of gemstones to meet consumer demand.
Gemstone mining has economic, technical, political and social dimensions – we have mined, cut, polished, set, sold and bought coloured stones for thousands of years. Yet the gemstone story starts with the geological forces that shaped our billion-year Earth history.
THE GEOLOGY OF GEMSTONES
Geology matters to mining
Geological processes determine where coloured gemstones are in the world, and whether they are deposited deep in the Earth or near its surface. These processes are continuing.
Gemstones form deep within the Earth’s crust as plate tectonic cycles create and destroy vast mountain ranges and deep oceans. Rocks are subjected to high pressures and temperatures creating fractures and hot fluids that, when at the right temperature, pressure and chemical composition, result in gemstones crystallising in underground fissures. Coloured gemstones emerging from this molten mix of minerals and chemicals crystallise in hard bedrock buried deep under the surface. Over millennia, these primary deposits may rise to the surface where they are exposed to the rain, ice and wind that wear away the hard rock and liberate the gemstones. These are carried into rivers forming secondary deposits, such as alluvial deposits.
Geological deposits and geographical spread
Gemstones can be truly ancient. The rubies of northeast Mozambique date back 500 million years, and some Zambian emerald deposits are over one billion years old2Mapping the gemstone mining hotspots. Mining Technology. 21 May 2018. www.mining-technology.com/features/gemstone-mining-map . Such finds are not common and although coloured gemstones are mined globally, some countries have a disproportionate abundance. Madagascar supplies 40% of the world’s sapphires. The famous Colombian emerald belt accounts for 25% of the world’s emeralds, its high-quality gemstones representing 50% of the world’s value3Company walks fine line to revive Colombia emerald mine. Julia Symmes Cobb and Susan Taylor, Reuters. 12 December 2018. www.reuters.com. Thanks to geology, these and other countries have been able to establish themselves as the source of reliable volumes of valuable stones. Key gemstone centres such as India, Myanmar, Afghanistan, Sri Lanka, Thailand and Brazil owe much of their success to having many varieties of coloured gemstones in close proximity and high concentrations. In countries where gemstone deposits become depleted and mining activity dwindles – such as Thailand – the economy tends to adapt. Gemstone trading, cutting, polishing and finishing businesses develop along with new trades and traditions.
Chemical composition determines colour
There are over 200 varieties of coloured gemstones. Each one has a chemical fingerprint of its geological origins that stretches back millions or even billions of years. A few stones are well known. Emerald, ruby and sapphire have always been favourites. Tanzanite, aquamarine, topaz, garnet are gaining in popularity.
The spectrum of colour within a type of gemstone is vast and often subtle. The colour of an individual gemstone is determined by its chemical composition and the presence of inclusions and trace amounts of metal impurities. An amethyst gets its colour from iron, an emerald from titanium, a ruby from chromium and vanadium, and a turquoise from copper. Combinations of metals located in only one region result in unique gemstone types like the tanzanite that’s found only at the foot of Mount Kilimanjaro, Tanzania, or in variants of gemstones with distinct colouring such as the deep red of the famous pigeon blood ruby from Mogok, Myanmar, and the almost neon hue of Brazil’s Paraiba tourmaline.
Origin determines value
For coloured gemstone miners – and their customers – origin is important. The value of a Burmese ruby is unequal to that of a Madagascan or Thai ruby, and a deep green Colombian emerald is worth far more than a lighter emerald from Brazil. Even when equal in terms of hue, saturation, size and clarity, the gemstones from some locations will always command a premium.
As deposits are depleted, new sources are sought and discovered. Emerging regions in Kenya, Mozambique, Madagascar and Tanzania are becoming more important for citrine, ruby, peridot, sapphire, and tsavorite. Ethiopia, already known for its Welo Opal, has now discovered valuable emerald deposits that have drawn international attention.
A tradition of exploration
People have mined coloured gemstones since pre-history. Egypt’s emerald region of Sikait-Zabara was mined from at least 2000 B.C4Mines and Quarries of Ancient Egypt: An Introduction. Jimmy Dunn writing as Virginia Davis, Tour Egypt. http://www.touregypt.net/featurestories/minesandquarries. The Romans and Greeks recovered coloured gemstones for their distinctive colours and beauty. Today gemstones are mined in over fifty countries. But before they can be mined, they must first be found. In 1550, the German scholar and mineralogist Georgius Agricola described the skills required in gemstone and mineral prospecting in De Re Metallica:
“Many persons hold the opinion that the mining industries are fortuitous, and that the occupation is one of sordid toil, and altogether a kind of business requiring not so much skill as labour. But as for myself, when I reflect carefully upon its special points one by one, it appears to be far otherwise. For a miner must have the greatest skill in his work, that he may know first of what mountain or hill, what valley or plain, can be prospected most profitably, or what he should leave alone; moreover, he must understand the veins, stringers and seams in the rocks. Then he must be thoroughly familiar with the many and varied species of earths, juices, gems, stones, marbles, rocks, metals, and compounds. He must also have a complete knowledge of the method of making all underground works.”
Agricola’s description of sixteenth century mining is remarkable for how little this industry has changed since. And despite technology and information revolutions, there is no central source of knowledge for the location of the world’s gemstones. While discoveries can happen by chance – a farmer tilling a field finds a gemstone – exploration is driven by the desire to find a new variety of gemstone or the next big deposit and is often undertaken by a lone explorer with an entrepreneurial streak or a taste for adventure. They might be locals with traditional knowledge and an instinctive understanding of the landscape, prospectors or gem hunters trained in gemmology, or geologists with advanced mineral exploration skills. Prospecting for lapis lazuli is carried out by local ethnic groups, and the peridot mines of the San Carlos Apache reservation in Arizona are explored exclusively by Apache Indians5Gemstone Mining. Gemporia..
Unpredictable by nature
New deposits of coloured gemstones can be discovered during exploration for other minerals. Sometimes, indications on the surface or the occurrence of particular chemicals in rock formations suggest the likely presence of gemstones. Explorers look for discolouration that indicates chemical fluids, evidence of fractures and veins which could host gemstones, and favourable rock types such as pegmatites. But finding these clues is no easy task. Unlike other minerals, such as potash or copper which occur in layers or large volumes of relatively consistent grade, the location of gemstones can be unpredictable and constrained to narrow zones. Trial pitting and panning is used to test for the presence of stones in river beds or in surface sediments. This can result in the discovery of a secondary deposit, or be a way to trace the gemstones upstream back to the primary deposit.
The challenges of gemstone exploration
When prospecting for precious metals such as gold, a geologist might assess a sample of rock as containing four grams of gold for every ton of rock. Assessing another sample 100 metres away at five grams of gold per ton suggests the likely presence of a steady concentration of gold at four to five grams per ton over the distance between. Gemstone geologists have no such luxury. Each gemstone's value is unique, dependent on its size, its colour, its degree of inclusions or lack of clarity, depth of colour and other factors. Discovering two gemstones 100 metres apart gives little insight as to the value of other stones that might lie in between.
Larger and better-resourced operators use advanced exploration techniques to define the economic opportunity before they invest further. Geological mapping, aerial ground surveys, geochemical sampling, satellite imagery and geophysical data can identify areas with potential. These techniques also help to ensure that more responsible and efficient mining takes place as determining the optimal type of mining to extract the resource helps governments better manage production. While large-scale mining can and does compete with small-scale artisanal mining, the efficiencies, from exploration to mining, are undeniable.
Where there is promise, explorers use drilling to attempt to build a profile of a resource, creating models of the surface of the deposit and its depth. Knowing the quality of the gemstones when still underground may be near impossible to assess but this kind of exploration may still reveal valuable geological data.
Discovering an outcrop of rock containing gemstones. Photo Credit: Swarovski.
A drill core sample from exploration at the Montepuez ruby mine, Mozambique. Drilling is an example of an advanced exploration technique used to reveal information from below the surface. Photo Credit: Gemfields
Exploration is, on the whole, highly speculative and often comes down to sheer luck. This is less of a barrier for artisanal miners who, in the hope of a special find, can simply take up pick and shovel. For large-scale mines and the companies that finance them, it represents a massive investment with no guarantee of return. In this way cost of entry is another reason why the gemstone exploration and mining business favours the small-scale approaches first described by Agricola.
A reliance on traditional artisanal techniques
To recover gemstones from a primary deposit, miners must, in most cases, remove vegetation, soil and rock to access gem-bearing ore. How this is done hasn’t changed significantly for centuries although techniques are varied and depend on the material and the deposit. Strip mines slice away the land’s surface or remove entire mountain tops and use explosives to reveal a gemstone vein. Small pits reach tens of metres underground while large open-cast mines plummet hundreds. Underground mines tunnel to follow a seam or blast vast chambers to maximise the opportunity to find a deposit. But over-zealous blasting and crushing of rock risks spoiling the gemstones – and the integrity of the gemstone is everything. That’s why even large gemstone mining operations use hammers and chisels to pry precious gemstones from their host rock.
An emerald being removed from a large-scale underground mine in Colombia. This is an example of a primary deposit where emeralds are hosted within veins. Photo courtesy of Muzo
Not all primary bedrock deposits are hard. Here emeralds are hosted in soft talc magnetite schist, a type of metamorphic rock, where they can be sifted out by hand, preserving the integrity of the gemstone. Photo credit: Gemfields
Finding concentrations of secondary gemstone material already liberated in gem gravels on river beds presents a lesser challenge. Medium- and large-scale mines can use large earth-moving equipment and mechanical buckets to scoop target deposits or high-pressure water jets to loosen and free the gemstone-rich material. Alluvial deposits need little more than a pick and a shovel for digging in rivers to capture gem gravel, and sieve and separate rough gems.
Once extracted, rough gemstones are washed, picked, sorted and graded for sale. Gemstone-rich gravels can be run through a trommel screen to remove fine sediment and concentrate the gemstones, which can be easily hand-picked or, in large mines, mechanically sorted and selected. Water, gravity and human judgement are the key factors of production.
Unlike other commodities such as diamonds, gold and silver, the vast majority of coloured gemstones are dug and scraped from the Earth by small groups of artisanal miners using hand tools and little or no mechanisation. Coloured gemstones from artisanal miners are estimated to account for more than 80% of the industry6Artisanal and Small-Scale Mining. The World Bank. 21 November 2013.. Take away emeralds, rubies, tanzanite and jade and that proportion is nearer 100%.
Industry Break Down of Selected Coloured Gemstones
Artisanal miners – diverse and disparate
Artisanal miners are highly diverse. They include tight-knit family units and, increasingly, groups of women who pass traditional knowledge of gems across generations; organised community groups mining gemstones as part of a broader livelihood strategy that often includes seasonal agriculture; well-structured profit-sharing cooperatives with formal governance; and small businessmen and entrepreneurs from urban centres. Artisanal miners might also be opportunist transient individuals that group and disband as they move from one deposit to another, or groups that control illegal mine sites that are involved in the funding of conflicts or money laundering. Thanks to their mobility and the near surface availability of many varieties of gemstones, artisanal groups aren’t constrained to one place but can effectively target one discovery and then swiftly move on to the next.
CASE STUDY: COLOMBIAN EMERALDS AND THE GREEN WAR
Colombian emeralds are prized for their bright, verdant green colour and have been mined and traded for over a thousand years. They have been continuously fought over as far back as the Spanish conquest of what is now Colombia. At this time, the Spanish seized control of emerald mines from indigenous peoples and held this monopoly until the country’s independence from Spain in 1810. Since then, the Colombian government has alternated between being heavily involved and hands-off in its regulation of the emerald trade7Emeralds of Colombia. Keller, P.C., Gems and Gemmology. Summer 1981. In more recent times, emerald wars have been a material part of insecurity in Colombia, overlapping with narcotic cartel wars and leftist insurgencies.
A key figure in the emerald wars was Victor Carranza, Colombia’s so-called ‘emerald czar’ from 1946. By the time of his death in 2013, Carranza controlled 40% of the country’s emerald industry. Through his informal governance structure policed by private security forces, Carranza ensured that emeralds of value were declared to him for selling on to Bogota’s black market. Over time he amassed an empire worth billions of dollars, one that had to be defended against the armed groups and drug cartels who were attracted by the region’s emerald wealth.
The 1980s was a decade of violence in Colombia. Territorial disputes between armed groups and the country’s most powerful mining landowners and families turned into full-blown conflicts in which thousands of people, including civilians, disappeared or were displaced, killed, kidnapped. Carranza’s reign, however, remained free of any kind external governance and, in general, he opposed the formalisation of Colombia’s emerald sector. This period of Colombia’s history, known as the Green War, came to an end when Carranza used his authority together with that of the Catholic Church to broker a peace deal between the warring factions, a deal that also secured his position within the emerald industry until his death in 2013.
8Victor Carranza. The Economist. 20 April 2013.
Carranza’s death marked a turning point for Colombia’s emerald industry and made space for the industry to be restructured, prioritising large-scale, formalised operations and criminalising artisanal guaqueo mining practices. In their time, Carranza’s operations had enabled a livelihood for guaqueo miners, individuals with traditional rights to recover gemstones from the surface, as they were permitted to sift through mine waste to find overlooked gemstones. The large companies that replaced Carranza’s operations established more sophisticated systems for sorting mine waste in-house, leaving little to be scoured for secondary material. This restructuring increased traceability of emeralds and transparency of the emerald industry, and brought improved job security and working conditions to those who found employment with the new emerald mining companies. However, it also left miners and traders who had been dependent on guaqueo practices without livelihood.9Peace with Hunger: Colombia’s Checkered Experience with Post-Conflict Sustainable Community Development in Emerald-Mining Regions. Isabel B. Franco, Jose A. Puppim de Oliveira and Saleem H. Ali, Sustainability, Volume 10, Issue 2. 13 February 2018.
During the same period, Colombia’s national authorities reformed the mining royalty system. Local governments were now required to apply for funding of specific development projects rather than directly receiving mining proceeds. National policymakers argue that this change, first implemented in 2011, imposes important protections against corruption, and ensures that the money earned from mining is used to further sustainable development. Preliminary results from the new policy, however, indicate significant room for improvement. One report noted that in the Muzo region only one application for funds had been submitted by the local government and, as of February 2018, the project had not been implemented10Ibid..
In the coloured gemstone industry, there often exists a delicate balance between large- and small-scale miners, and the Colombian emerald industry is no exception. Large-scale mining, often seen by countries like Colombia as an opportunity to capture greater value from gemstone reserves, can also threaten the livelihood of community members that have long relied on the guaqueo trade. Conflict between these two kinds of operations, however, is not inevitable. When the dynamics of local communities are carefully considered there may be opportunities for peaceful co-existence between large-scale and small-scale miners.11Ibid.
The discovery and recovery of coloured gemstones can be well suited to small operators. Harvesting alluvial gravel-bed deposits requires little investment – a simple sieve is all that is required – and, when the unit value of the stone is high, is very profitable. Other deposits might be buried under thick layers of sediment through which miners dig by hand or use a light mechanised excavator to reach concentrations rich in gemstones.
Artisanal miners are not dissuaded by depth. Following a discovery, they tunnel underground with rudimentary equipment, perhaps using a pully, winch and cable to lower tools and even people into mine shafts. The Nova Era mine in Brazil is worked by a collective of 140 garimpeiro – independent miners – who tunnel shafts looking for a vein that can lead them to a large pocket of emeralds. The garimpeiro can search for these concentrations of emeralds for up to three years before any gem-quality material is discovered, but one pocket can produce stones worth up to US$10 million12
Mining for Emeralds in Brazil. GIA. 21 July 2014.
Artisanal and ‘illegal’ mining
Most artisanal miners do not have title to land or permits to extract minerals and indeed regulatory frameworks for national mining policy may actually work to restrict or exclude artisanal miners. But without titles or permits, the sector is categorised as ‘illegal’ mining, even when more gently referred to as ‘informal’.
The legal status of artisanal miners is not, however, a useful distinction when considering the effects of their behaviour on land, property law and people. A community of women participating in the relatively benign and peaceful activity of mining tiger’s eye quartz in South Africa’s Northern Cape province is considered as illegal as the illicit miners who trespass on old abandoned mines because neither group holds an official government permit. And in Colombia, while there is a world of difference between the thousands of armed individuals who plunder from a privately-owned emerald mine and the men and women barequeros who collect gemstones from valley floors as they have done for decades, both are considered illegal.
In some jurisdictions, however, artisanal miners are protected. In Sri Lanka, for example, foreign investment in mechanised mining is not permitted, and its natural resource governance policy supports the growth and formalisation of nationally-owned mining operations. This policy favours artisanal or small-scale miners who are monitored and measured by local agencies and are a recognised part of the gemstone value chain.
A distinction is now often made between ‘illegal’ invasive miners or groups controlled by organised crime, and ‘informal’ community-based mining that typically follows customary laws, although it’s important to note that so-called customary laws are not necessarily rooted in any formal legal principles.13Why it doesn’t make sense that all informal mining is deemed illegal. Kgothatso Nhlengetwa, The Conversation. 12 April 2016. Over the last two decades, there has been a consistent call for governments to formalise artisanal mining. At the International Conference on Artisanal and Small-Scale Mining and Quarrying in Livingstone, Zambia, in September 2018, hundreds of delegates, including artisanal mine owners and operators, concluded that the legal status of artisanal miners and their rights to land tenure and sub-surface minerals should be recognised, and that governments should encourage responsible practices and better governance to maximise the positive impacts of the sector14http://asmconference.org/. The delegates’ sentiments were summarised in the Mosi-oa-Tunya declaration on artisanal and small-scale mining and quarrying.
THE VOICE OF ARTISANAL AND SMALL-SCALE MINERS
The Mosi-oa-Tunya declaration on artisanal and small-scale mining and quarrying seeks to:
“Affirm that artisanal and small-scale miners and quarry workers must be at the heart of any efforts to transform artisanal and small scale mining, and call on all stakeholders to recognise the initiative and leadership demonstrated by miners and their representatives; actively listen to all issues, concerns and suggestions raised and seek to understand on the ground realities; eliminate any language, discourse and behaviour that worsens the stigma associated with artisanal and small scale mining; and act in a way that empowers miners to chart their own vision of development”
The declaration gives a collective vision for and voiced by artisanal and small-scale mining communities involved in several raw material supply chains, including coloured gemstones. It recognises that while there has been much progress in recognising the legitimacy of this sector, it still faces persistent challenges associated with unclear or unsupportive regulation, poor practices of some operations, and a lack of access to resources and financing and that because of these challenges, the full potential of the sector is not being realised.15Mosi-oa-Tunya Declaration on Artisanal and Small-scale Mining, Quarrying and Development.
Report of the International Conference on Artisanal and Small-scale Mining & Quarrying. 13 September 2018.
The effects of industrialisation on artisanal mining
Artisanal mining is ancient. By comparison, mechanised mining is in its infancy. And recently, the industry has seen the entry of larger industrial operations, often owned by foreign investors attracted by the rise in gemstone prices. The sale of rough coloured gemstones is a US$2 billion industry and demand for these stones continues to grow. The governance and institutional relationships of these large industrial operations is very different to those of artisanal mines. These large businesses are formally established entities that negotiate licenses and permits with central government and, in many cases, also answer to boards of directors and shareholders. A handful are publicly traded and are required to disclose data on their operations.
The impact of commercial mining companies
Although there are only a small number of commercial companies mining a few high-value gemstones, such as rubies, emeralds and tanzanite, these companies have managed to capture significant market share.
Illustrative industry analysis to demonstrate types of mine ownership in different gemstones.
Adapted from Shortell & Irwin (2017)
Citizen Mining National Companies International Companies
Gemfields, an early mover, entered the industry in 2007 and now claims to supply as much as 30% of the world’s emeralds from its Kagem mine in northern Zambia. In 2012, Gemfields acquired the Montepuez site in Northern Mozambique, an area bigger than the country of Malta and the largest known ruby mine in the world today.
Gemfields is not alone. In the emerald industry, Fura Gems, Muzo mines and Cosquez mine dominate the Colombian market, and the family-run Belmont mine is a significant player in Brazil where the company has been producing for 30 years. In the ruby industry, Danish-owned Greenland Ruby has invested in large-scale opportunities, starting production 155 miles south of Nuuk, Greenland. In East Africa, TanzaniteOne controls significant tanzanite reserves. The jade mines of Myanmar are heavily mechanised and the country accounts for the vast majority of global production, estimated to be worth billions of dollars16
https://resourcegovernance.org (pdf) . Although large, these companies are minnows when compared to the behemoth international precious and diversified metals mining houses. Few of these are publicly listed, and none appear in a list of the world’s top 100 largest mining companies.
Well-capitalised mining companies have the advanced technology and greater mechanisation capabilities that allow them to recover gemstones from primary deposits on a much larger scale and at greater depths than artisanal miners. Operating in large areas gives these companies more options to find the rich concentrations of gemstones. They also typically exploit coloured gemstone deposits through a highly engineered approach, designing open pits or underground mines that more efficiently target higher-grade gemstone-bearing rock.
Economies of scale also play a part. As a mining operation grows, the business can spread big costs – like an expensive piece of machinery which will increase the number of gemstones recovered – over the operation’s activities. The result is greater production efficiency. Explosives, pneumatic drilling and heavy machinery are used to recover gemstones from large volumes of rock, tools which smaller mines cannot easily afford.
Ultimately, nature dictates success
To justify the investment needed to establish an industrial mining operation, companies need continual access to the high volumes of gemstones that only some deposits will offer, as well as a buoyant market. Even if the value of gemstones continues to rise, the viability of large-scale mining will always be constrained by the size and quality of gemstone deposits. And this is controlled only by nature.
THE BENEFITS OF GEMSTONE MINING
Wealth creation and wealth distribution
Coloured gemstones have always been associated with great wealth. Agricola, writing in 1550, noted:
“Besides, of all ways whereby great wealth is acquired by good and honest means, none is more advantageous than mining ; for although from fields which are well tilled (not to mention other things) we derive rich yields, yet we obtain richer products from mines; in fact, one mine is often much more beneficial to us than many fields. For this reason, we learn from the history of nearly all ages that very many men have been made rich by the mines, and the fortunes of many kings have been much amplified there-by.”
How that wealth is distributed in gemstone-producing countries is equally significant, and is dictated by the labour-intensive nature of the industry. Gemstone mining employs many people, and artisanal mining employs the most. It supports the livelihoods of millions of people around the world, mainly because a high level of mechanisation is not well suited to coloured gemstone mining. There is a greater dependence on a human workforce for extracting, sorting and picking coloured gemstones. In fact, it’s estimated that an artisanal mine needs ten times more workers than an industrial mine to recover the same quantity of gemstones.
Millions depend on artisanal mining for their livelihoods
Approximately 90% of the countries where coloured gemstones are mined are classified as having low to middle incomes, and many of these incomes are dependent on mining17Colored Gemstones from Mine to Market: Ethical Trade and Mining Certification Challenges. J. C. Michelou. Paper presented at the Rapaport Fair Trade Jewelry Conference, Basel, Switzerland. 18 March 2010.. Coloured gemstone mining represents one of the few income opportunities for many people. In Mozambique alone, there are thought to be 100,000 artisanal miners directly employed extracting gold and coloured gemstones, with a further 1,200,000 delivering goods and services to the sector18Global Trends in Artisanal and Small-Scale Mining (ASM): A Review of Key Numbers and Issues. Morgane Fritz, James McQuilken, Nina Collins and Fitsum Weldegiorgis, The International Institute for Sustainable Development. January 2018. . In Zimbabwe and in Madagascar, the number is five times higher with 500,000 people digging for gold, diamonds and gemstones, and a further 3,000,000 and 2,500,000 dependents respectively – their children and extended family members – engaged in mining-related activities in each country19Artisanal Mining and Sustainable Development, African Centre for Economic Transformation. 4 July 2018.. The figures are similar in Brazil and Colombia; a 2014 estimate put the number of artisanal miners at 467,500 and 385,500 miners respectively. In China, the number of small-scale miners has surpassed a million20Global Trends in Artisanal and Small-Scale Mining (ASM): A Review of Key Numbers and Issues, pXX. Morgane Fritz, James McQuilken, Nina Collins and Fitsum Weldegiorgis, The International Institute for Sustainable Development. January 2018.. Not all artisanal miners and communities are solely dependent on mining. Many have built diversified livelihood strategies around mining, working seasonally or temporarily in mines to boost their incomes and, at other times, working in agriculture or other activities.
How large-scale mining differs
Large-scale mechanised mining employs fewer local people as there is greater reliance on automation and qualified technical operators who have to be brought in from overseas. The jobs are often more stable and longer term, however, and companies typically invest in on-the-job training and transferable skills, which contributes to economic resilience in the national workforce. Additionally, while artisanal mining operations can be managed safely, they are often associated with injury; formal, large-scale operations can be better able to mitigate many of the health and safety risks associated with mining21Ibid.
Creating a growing economy
The benefits of foreign investment in mining can be seen in activities related to mining that provide indirect employment. These include infrastructure construction and service provision to meet the needs of the mine such as transport, food or the building of access roads. These activities create a “multiplier effect” within mining communities, amplifying one job in the mines to anything between three and twenty jobs outside (an effect that’s also seen, to a lesser degree, in artisanal mining). But for this economic force to be realised, strong links have to be forged between the mine and the surrounding economy, something that generally only happens when governments and companies intentionally set out to find and realise such opportunities22McMahon, Gary, Moreira, Susana, April 2014, Extractive Industries for Development Series No. 30, 87298, World Bank. – Oil, Gas, and Mining Unit Working Paper
Gemstones as national revenue generators
In almost all countries, the state is sovereign over its mined minerals. Mining is an opportunity for governments to capture economic value for national distribution through taxes, royalties and mining licence fees, and to funnel revenue into national and local level development projects such as infrastructure and education. Some larger commercial mines are controlled by foreign investors, but many others are owned by local business people or partners in joint ventures with governments or state-owned enterprises. Weak government revenue collection systems, however, permit informal trading networks and even smuggling, and most gemstones mined globally bypass official government tax and royalties systems. But while government dues from gemstone mining paid into national treasuries are not well documented, they have the potential to be significant. Gemfields has calculated that the total economic impact of mining in each country varies between $0.24 and $0.30 per US dollar of revenue.
Revenue flows in the diamond industry have come under scrutiny in recent years and evidence is emerging that in some countries, such as Botswana and Sierra Leone, more value is being captured at home. It is reasonable to believe that as the coloured gemstone mining industry formalises and its value increases, similar policies will be implemented in important gemstone-producing countries.
Comparison of key fiscal terms for company gemstone mining projects in selected countries
|Country||Commodity & company/ project name (if applicable)||Royalty rate (%)||Corporate income tax rate (%)||State equity participation (%)||State production share (%)||State profit share (%)|
|Malawi||Ruby & Sapphire|
It is much more time- and resource-intensive for a government to gather taxes and royalties from many thousands of small miners that come and go, are largely unregulated and are scattered throughout a region often in inaccessible locations. Since levying taxes on artisanal miners tends to be costly and ineffective – especially as coloured gemstones can so easily be smuggled out – most countries assess royalties on domestically-mined gemstones at the point of sale or export. Many countries fail to maximise this revenue stream, levying low royalty rates of between 1 and 3 per cent, substantially lower than taxes levied on individuals. Nevertheless, local ownership may provide more tangible economic benefits at the village level than foreign or national investment can23Global Trends in Artisanal and Small-Scale Mining (ASM): A Review of Key Numbers and Issues, p XX. Morgane Fritz, James McQuilken, Nina Collins and Fitsum Weldegiorgis, The International Institute for Sustainable Development. January 2018..
The market price of a gemstone can vary widely, which is one of the reasons why it is difficult to accurately calculate the revenues that governments might collect from mining. It is evident, however, that gemstone mining already provides a significant source of revenue for a number of resource-rich countries, and with mine formalisation these numbers could increase. In Colombia, for example, emeralds earned about US$16 million in royalty revenue in 201624From Colombia EITI Report, Esmeraldas value 2016 (http://www.eiticolombia.gov.co/media): 14.610.142 carats *71.85 (https://www.iol.co.za) *.015 (from table above) = 15,746,080.54, without consideration of corporate income taxes. In places like Zambia where, according to the table above, the state holds a 25% stake in some emerald mines, there is an even greater opportunity to harness gemstone resources into a significant source of national revenue25Review for final version. Zambia seems to be getting more complicated by the day – see here: https://ihsmarkit.com/research-analysis/zambian-mineral-royalties-increase.html.
Despite the prospects, it is important not to overstate the possibilities of generating government revenue from coloured gemstones, particularly in countries that have not developed their own cutting and polishing industries – the part of the gemstone production process where much of the market value is created and captured. As one report notes:
"Such perceptions may stem, in part, from falsely inflated expectations of gemstones’ revenue potential. While retail sales are worth billions of dollars, colored stones themselves only represent about a third of this value (the rest is accounted for by diamonds and precious metals). The tax base available to gemstones’ countries of origin is lower still; since most stones are exported in rough form, they are valued at approximately 50 percent less, on average, than after cutting and polishing.”26Governing the Gemstone Sector: Lessons from Global Experience, p39. Paul Shortell and Emma Irwin, Natural Resource Governance Institute. May 2017.
In Tanzania, for example, the annual export value of tanzanite, the country’s signature coloured gemstone, is approximately US$25 million, US$17 million of which comes from artisanal and small-scale mines after a large government effort to encourage formalisation (discussed below)27These figures are based on 2016 data taken from the Final Report for the Period July 1 2015 to June 30 2016. Tanzania Extractive Industries Transparency Initiative. March 2018. Nevertheless, the Tanzanian government collects only about US$1.3 million in royalties on tanzanite, far less than that earned from gold, copper and diamond extraction.
The benefits of mine formalisation
As previously noted, the revenues generated for governments from mining can dramatically increase when artisanal and small-scale mining is formalised, or registered and regulated by the government. This is particularly true in the coloured gemstone sector, where small-scale mines account for the vast majority of stones that are extracted every year. In addition to increased revenues from mining, formality can also bring benefits to miners. If done well and when supported by sufficiently robust government and legislative frameworks, it brings legal protection and official support to small-scale mining communities and can help those communities protect themselves from corruption and criminality within the sector28Global Trends in Artisanal and Small-Scale Mining (ASM): A Review of Key Numbers and Issues, p XX. Morgane Fritz, James McQuilken, Nina Collins and Fitsum Weldegiorgis, The International Institute for Sustainable Development. January 2018. . A poorly implemented formalisation process can, however, create problems.
Tanzania’s recent experiences with formalisation demonstrate some of these benefits and drawbacks. Tanzania first started to improve its policies for its exceptionally large number of small-scale miners back in 1997. In the intervening years, it has sought to make improvements to national regulation of licensing and land access, and passed the 2010 Mining Act in order to establish a citizen mining license:
“A ‘primary mining license’ for citizen mining, defined as requiring less than USD 100,000 in investment and a tenure of five to seven years. Procedures for obtaining a primary mining license are less demanding than those for a regular or special mining license, although they do require applicants to conduct an environmental and social investigation of the proposed site. The licenses are granted by Zonal Mines Officers rather than the Commissioner for Minerals in Dar es Salaam.” 29Governing the Gemstone Sector: Lessons from Global Experience, p28. Paul Shortell and Emma Irwin, Natural Resource Governance Institute. May 2017.
These specialised regulations for artisanal miners represent an important and promising accomplishment, but their implementation has been challenging. For example, while the 2010 Mining Act provided for over 2,000 square kilometres of land to be reserved for artisanal and small-scale mining, a move which aims to “allow the state to more efficiently target technical assistance, including geological mapping, the introduction of efficient techniques, and training on safety and environmental standards”, as well as financial support from the Tanzanian government30Ibid., conflict between large-scale projects and small-scale miners persists.
In the areas surrounding the TanzaniteOne mine, the country’s only large-scale tanzanite mine, investors have grown frustrated with continual encroachment on their concession while artisanal miners complain that the project unfairly hoards the richest tanzanite concessions for large-scale production31Ibid.. Other experts have noted that the mining planning process remains tightly controlled by the central government, with local government and communities largely left out of decision-making about the governance of mining concessions and the use of mining revenues to address community needs32
Artisanal and small-scale mining in Tanzania – Evidence to inform an ‘action dialogue’. Willison Mutagwaba, John Bosco Tindyebwa, Veronica Makanta, Delphinus Kaballega and Graham Maeda. July 2018.. So while formalisation holds serious promise for the coloured gemstone sector – well-executed policies can increase mining revenues and provide much needed protections for small-scale citizen mining operations – inherent pitfalls threaten the potential of the burgeoning artisanal industry to drive equitable economic growth and development.
CASE STUDY: THE JADE MINES OF MYANMAR
In terms of both export value and gem quality, Myanmar’s coloured gemstone riches are virtually unparalleled. The country provides an estimated 90% of the world’s jade, along with a significant portion of rubies, sapphires and other stones to the global market33
Tip-Toeing Toward Transparency: Jade and Gemstone Sector Disclosures in Myanmar, pXX. Natural Resource Governance Institute. 13 December 2018.. Sadly, much of this natural resource wealth has brought far more harm than good to the people of Myanmar. In previous eras, Myanmar’s jade from Kachin State has been used to fund both sides of a civil war, and has helped to finance luxurious lifestyles for one of the world’s most oppressive military dictatorships. Over the past quarter century, large-scale mines, backed by the dictatorship, moved to consolidate the industry and ramp up production, cutting out the ecosystem of small-scale producers from surrounding communities34https://www.globalwitness.org/en/campaigns/myanmar/jade-and-generals/.
Since beginning its transformation to democracy in 2011, there has been hope of a turnaround within Myanmar’s jade industry. It’s clear that, if managed properly, jade resources could be a windfall for the people of Myanmar and provide the opportunity to fund equitable economic development. As a Global Witness report argued:
“Global Witness estimates that the value of official jade production in 2014 alone was well over the US$12 billion indicated by Chinese import data, and appears likely to have been as much as US$31 billion. To put it in perspective, this figure equates to 48% of Myanmar’s official GDP and 46 times government expenditure on health.”35https://www.globalwitness.org/en/campaigns/myanmar/jade-and-generals/; pg. 6
Yet, this potential seems to have gone largely unrealised, and corruption is often cited as a significant causal factor. Many international watchdog NGOs and industry experts, including a recent report by the Extractive Industries Transparency Initiative (EITI), raised serious concerns about the level and persistence of government graft associated with Myanmar’s coloured gemstone operations. For example, the fact that Myanmar has disclosed data – including information on jade and gemstone ownership, mining permitting and production, and gemstone sales – about its mining industry seems a positive step. However, experts have found that the data it disclosed on virtually all of these issues was problematic. Specifically, one report stated that, “Nearly half of jade and gemstone companies’ data shared from financial years 2014/15 and 2015/16 were missing, incomplete or irreconcilable with government data.”36Tip-Toeing Toward Transparency: Jade and Gemstone Sector Disclosures in Myanmar, p2. Natural Resource Governance Institute. 13 December 2018. These discrepancies can easily be seen in the table below. And while the percentage of companies “making complete consistent disclosures” regarding legal ownership went from 81% in financial year 2014/2015 to 88% in 2015/2016, there were no cases in which the values that companies reported were consistent with government data. A lack of consistent data collection and measuring systems is likely the cause of problematic data.
Ownership of the jade mining operations, and the distribution of mining revenue, is another possible reason for the benefits failing to raise economic conditions locally. Based on the available data it seems that many coloured gemstone mines, jade mines in particular, are controlled by Chinese investors and government officials37Jade: Myanmar’s “Big State Secret”. https://www.globalwitness.org/en/campaigns/oil-gas-and-mining/myanmarjade/ 38https://www.resourcedata.org/dataset/rgi-myanmar-eiti-gemstone-sector-review
. Mining is regulated by the Myanmar Gems Enterprise (MGE), the government’s state-owned enterprise, whose monitoring and enforcement responsibilities are unclear, and whose staff is largely comprised of retired military personnel, as is the case with most government institutions in Myanmar39Ibid, p7..
Furthermore, MGE’s mandate is unclear as it includes both regulation of the industry as well as operation of joint mining ventures throughout the country, a clear conflict of interest. With systemic corruption in government, weak government institutions and legislative and regulatory frameworks, and poor enforcement mechanisms, and with gemstone resources and commercial operations mostly in the ownership of an opaque elite, the possibility for jade mining to benefit the citizens of Myanmar seems remote.
Despite inherent problems, efforts to address challenges are underway. For example, a new national gemstone policy has recently been developed through an extensive participatory multi-stakeholder consultation process supported by international technical assistance. This policy aims to align the governance of the gemstone sector with international good practice standards and the principles of sustainable development. The country’s commitment to implement the EITI Standard also ensures ongoing dialogue and efforts towards continuous improvement in terms of transparency and governance of the sector. Furthermore, an active and engaged civil society network is increasingly participating in reform efforts, putting pressure on key players to implement reforms. The extent to which these key reform activities will have visible and measurable benefits in the short to medium term remains unclear. They are, however, certainly planting important seeds of change that will ideally deliver necessary longer-term changes.
The benefits of good governance
Both artisanal and large-scale gemstone mining bring benefits. Artisanal mining provides jobs for millions of people and facilitates the continuation of traditions that span multiple generations. It provides a livelihood for people who might have few choices, in some of the poorest places on the planet. Large, more commercial companies in coloured gemstone mining bring capital, mechanisation and more efficient and productive mines, and a government revenue much needed in many host countries. Getting the best out of coloured gemstone mining requires good governance to ensure that artisanal miners are brought inside the formal economy, that revenues from larger operators are collected, and that the benefits of this fundamentally important industry are invested into development at both local and national levels.
CASE STUDY: Regulation of gemstone mining in Australia
Australia has developed ways to regulate a mining sector that comprises many different types and sizes of operations, ranging from the largest corporate entities to tourists searching for souvenirs. Australia – both at the national level and through its states and territories – has designed effective legislation to govern all of these different mining activities, regardless of the scale or type. As a result, they co-exist harmoniously.
Because of the varying terrain across Australia, as well as the range of gemstone varieties recovered, the methods that miners use can differ widely between operations. In the Kings Plains national park of New South Wales, for example, gems are mined at some concessions via open pit mechanised commercial production, and in other places with jackhammers and hand shovels. The juxtaposition of large and small is even more pronounced in Queensland’s gem fields region. Here large-scale projects operate alongside recreational ‘fossicking’ – a kind of small-scale surface digging by enthusiastic treasure-seeking individuals with hand tools .
While it is common for medium- and large-scale miners to be properly regulated, countries that effectively regulate small-scale miners are scarce. Australia is an exception. Even for recreational fossicking, there are regulations for the kinds of mining tools and methods that are permitted, environmental protections, proper licensing, and the requirement to respect the property and rights of other miners. Queensland’s fossickers, many of whom are tourists, are only permitted to mine in designated areas. On these smaller deposits, the amount of mining is restricted by not allowing large-, or even medium-scale mining activities. These restrictions ensure that small gemstone reserves can be sustained long-term, rather than being exhausted rapidly by industrial techniques. Similarly targeted regulation for opal mining in New South Wales restricts this to mechanised underground mining and does not allow artisanal digging. Other states allow open-pit mining and ‘noodling’ – or small-scale mining – of some deposits.
Source: Australian Government, Geoscience Australia. Accessed at https://www.ga.gov.au/education/classroom-resources/minerals-energy/australian-mineral-facts
This carefully segmented regulatory approach works well for Australia. The rules governing the sector clearly signal what kind of mining is allowed where, and what requirements there are for each mining method. This helps prevent confusion and disagreement over who has the right to occupy or mine any given deposit. As one recent analysis notes:
“Each state’s Mineral Resources Development Act declares certain areas official fossicking areas; therefore, no prospecting and mining licenses are issued there for businesses or corporations. The authors were amazed by the harmony between the miners and fossickers in areas where fossicking zones are right next to mining claims. To help people locate their targets, many private and government websites provide maps and detailed guidance. Local mineral and gem clubs also host events as a platform for fossickers to communicate and possibly exchange items.”
Australia has sought to export its success with small-scale mining regulation to other countries that seek to better regulate diverse mining sectors. In Ghana, for example, the Australian government has helped fund the creation of official gem deposit maps and a database of mining concessions. This project aims to address inconsistencies in Ghanaian government records where multiple individuals or entities have been granted or sold rights to the same gemstone mining concessions which has created conflicts over which claims will be honoured.
It’s important to note that Australia takes a decentralised approach to mining regulation – each state defines its own regulations and legislation within the broader federal framework, a local-level approach to effective artisanal mining management which could prove successful in other countries. In fact, Australia’s mining regulations make a compelling case for best practices for coloured gemstone mining and for recognising the opportunities for both artisanal and commercial mining.
THE ENVIRONMENTAL AND SOCIAL EFFECTS OF GEMSTONE MINING
Calculating the environmental impact of mining
The recovery of raw materials cannot be achieved without some adverse impacts, at least in the short term. Most mining, however careful, disturbs plant life, removes soil and rocks, and places pressure on natural habitats. Gemstone mining is no different.
Small groups or individuals recovering gemstones from alluvial deposits can leave a light footprint environmentally, but large numbers of artisanal diggers working at unplanned and uncontrolled sites can result in severe ecological degradation. The cumulative effects of multiple small mines can pock-mark a landscape with pits and waste dumps, remove vegetation and drive wildlife away. There is little or no economic incentive for miners to rehabilitate the land once they are finished and when there is a lack of government regulation or accountability, local communities are left to live with the consequences.
In extreme cases, the discovery of a new deposit leads to a gemstone ‘rush’. The influx of itinerant workers can result in the depletion of local resources as they hunt wild animals for food and deforest large areas to secure wood for fuel and to build shelters and mining infrastructure. If the mining concession encompasses forests, ecologically sensitive areas or highly-valued animal or plant species, the impact can be deep and lasting, as has been seen in other mining industries, notably gold and diamond. This is, of course, deeply concerning to conservationists.
Madagascar, a biodiversity hotspot known for its important native species found nowhere else, has experienced several gemstone rushes for sapphires, rubies, aquamarine, tourmaline, topaz, amethyst and emeralds, often in or near protected areas or critical ecosystems. Conservation groups raised the alarm when tens of thousands of illegal sapphire miners settled the makeshift village of Ambodipaiso as a staging place to enter the protected Ankeniheny-Zahamena Corridor. The village grew from 100 to over 10,000 residents in months and environmentalists claim that large areas of the national park, famous for its lemurs and other natural treasures, have been converted into scarred, treeless wastelands.
Others, however, assert that gemstone rushes are short-lived and pose less of a threat to the environment than gold or diamond rushes. They note that this type of mining does not depend on chemicals and is largely done on the surface or in river beds and so cannot irreversibly damage the landscape. Their argument is that gemstone mining is transitory – mined areas will, therefore, eventually be left to recover – and that the economic advantages to local communities outweigh negative short-term impacts to the surrounding habitat.
The truth lies somewhere between these two perspectives and, of course, depends on whether you are an environmentalist or a gemstone trader or jeweller. It’s true that landscapes may recover, yet it’s questionable whether potential restoration ever justifies present damage, especially in areas that support unique ecosystems.
Hydraulic mining is common in the small-scale exploitation of gemstone deposits from sediments. High pressure water jets are used to break apart the consolidated material and loosen gemstones. If unmanaged, the practice can result in tons of earth transported downstream altering waterways, killing aquatic species and, in some cases, leading to flooding. These disturbances can alter or permanently destroy soil quality in both wildlands and agricultural plots and may also impact underground water resources if not managed carefully.
Large mining operations using modern technology are often more efficient in the recovery of gemstones but can make a considerable dent in the Earth’s surface, especially when open-pit mining is the chosen method. And the deeper a mine tunnels to find gemstones, the more waste rock is generated. The effective management of waste rock, including waste dumps on or near mining concessions, is an extremely important consideration.
The social consequences of gemstone mining
Coloured gemstone mining can also lead to workplace and social problems. Where operators lack safety knowledge or are careless, their mines can be highly dangerous places to work. Tunnels dug too deep and with insufficient support and infrastructure may collapse, trapping workers. Where seasonal tropical rains are heavy, mines can fill with water. In 2008, 60 miners died while trapped in a flooded mine shaft in the Mererani tanzanite mining area in Tanzania40Tanzania mine flooding traps 66.The Irish Times. 31 March 2008.. A decade earlier a similar number drowned in the same area, some 1,000 feet below the surface41
Over 50 dead in Tanzanian mining disaster. BBC news. 14 April 1918..
Although there are few international health and safety statistics on the coloured gemstone industry, there many reports of workplace injuries and fatalities caused by falls into unsecured pits, accidents with explosives, poorly maintained mechanical equipment, a lack of protective equipment, and poor access to emergency services, as well as evidence of chronic respiratory illness from dust exposure, malaria, tuberculosis, HIV AIDS, alcoholism and substance abuse42Substance abuse in the mining townships of Myanmar is discussed in Jade and heroin in Myanmar. Reuters. 30 December 2015..
Human rights groups have drawn attention to incidences of child labour at coloured gemstone mines. The United States Department of Labor lists the diamond-producing countries of Angola, the Central African Republic, the Democratic Republic of Congo, Guinea, Liberia and Sierra Leone, and the coloured gemstone-producing countries of India, Tanzania and Zambia as among those that use child or forced labour in gemstone production43Governing the Gemstone Sector: Lessons from Global Experience, pXX. Paul Shortell and Emma Irwin, Natural Resource Governance Institute. May 2017. .
However, not all work done by children is child labour, and not all child labour falls under the internationally-recognised definition of the “worst forms of child labour”. Children and young adults often assist or follow their parents at mine sites. They may be earning pocket money by sorting rough stones or even using wages to fund the school fees of younger siblings. Or there simply might not be a safe place for working mothers to leave their children.
Mineral rights and land disputes
A consequence of the rising prices of coloured gemstones is heightened competition to secure access to land and minerals rights which often leads to disputes. This is especially true for higher-value gemstone deposits such as emerald and ruby. In some countries, larger foreign-owned companies may have formal agreements with governments that provide them with secure access to gemstone fields but their development can shut out traditional artisanal miners without recourse, if appropriate consultation processes are not followed. The legitimacy of land claims can be unclear with plausible arguments on all sides. Conflict can also arise when artisanal miners rush to mine land that is already used productively, such as for agriculture. Individual farmers and whole communities can be displaced by an influx of miners.
Addressing the negative impacts
The environmental, workplace and human rights problems associated with gemstone mining can be severe and certainly should not be ignored, but it would be incorrect to assume that they are universal. There is no global assessment of the impacts of coloured gemstone mining – while coloured gemstone mining takes place in more than 50 countries, the available information on the negative impacts of coloured gemstone mining is relatively limited.
The negative aspects of gemstone mining are not inevitable. In many cases, these can be avoided, managed or remedied where there is the appropriate knowledge, technology and incentives. For example, when the villagers of the Sakaraha community of Madagascar44Sapphire mines that become forests. Gabriela Flores Zavala, International Institute for Environment and Development. 13 October 2017. were left with a barren landscape of little or no productive value they mobilised and collectively acted to reverse these impacts and transform the post-mining landscape.
International good practice standards incorporate mine closure and remediation as a condition of licensing. This standard is being adopted by more and more countries into their national minerals policy frameworks.
RESPONSIBLE SOURCING AND COLOURED GEMSTONE MINING
The growing demand for responsibly-sourced gemstones
As competition to find and extract coloured gemstones intensifies in the mining fields of Africa, Asia and the Americas, conversations on responsible sourcing, human rights regulations and compliance are increasingly frequent in the board rooms of luxury brands, jewellery manufacturers and gemstone traders.
Buyers and marketers of coloured gemstones, once content with warranties or lab reports on the qualities of a gemstone, are now also requiring guarantees of origin, asking for information on the social and environmental aspects of their supply chains, and requiring verification of suppliers’ compliance with international standards for responsible production.
The final article in this series covers the governance of the coloured gemstone industry. It discusses the implications of the emergence of new voluntary human rights and environmental standards for coloured gemstone mining, driven mostly by consumer-facing businesses under customer and regulatory pressure. The idea that technologies, such as blockchain, can accelerate the flow of information along the supply chain for fully responsible and compliant sourcing is taking hold, a topic that is addressed in the third article in this series, Glimmers in the Shadows: The Complex Web of Coloured Gemstone Trading.
Artisanal gemstone producers and corporate sustainability
This mounting attention to corporate accountability and sustainability has two sides. Many see it as a positive indicator of an industry coming into the light of a more transparent and inclusive economy. Others warn that careless implementation of these initiatives could exclude many small producers unable to immediately meet unrealistic expectations.
Studies on the effectiveness of initiatives that seek to have artisanal and small-scale mines adopt environmental and social standards to access international markets – like those for conflict-free diamonds and fairly-mined gold – conclude that uptake is gradual and expensive to implement. This is because most producers do not immediately experience the benefit of such ‘soft’ regulations and face a steep climb to achieve the rewards of compliance.
One analysis of surveys and interviews with artisanal mining groups and buyers of artisanal-produced gold completed by TDI Sustainability, a specialist management consultancy, explains that this is partly because of a mismatch of incentives. Artisanal operators are incentivised by the prospect of improving their businesses and income, while downstream users of corporate standards are driven by the need to protect reputation, to secure supply and to bolster their corporate social responsibility strategies.
Considerable effort has already been channelled into establishing sourcing standards for artisanal miners that help manage risk for consumer brands, and to set up verification programmes that foster credibility for responsible supply chains. While these efforts support the compliance requirements of brands downstream in the supply chain, they do not help small producers develop capacity, build business fundamentals and increase resiliency. The responsible sourcing initiatives that are likely to endure are those that can successfully combine expectations for behaviour alongside efforts to enable improvement.
Meeting international standards of operation can also be out of reach to many small producers. For the last three decade, the corporate accountability movement has set its focus on large, multi-national players and on the operating and disclosure practices of well-resourced and sophisticated companies. These assurance systems rely heavily on documentation, forensic audits and continual reporting. Many companies now have compliance departments dedicated to reporting against complex sustainability frameworks. This capacity is far out of reach of most small-scale producers active in the coloured gemstone mining industry, and so few artisanal mines seek out certification. This results in an under-supply of assured responsible material for a market keen to demonstrate its ethical credentials45A discussion on the inclusion of small gold producers in voluntary supply-chain initiatives and standards. Responsible Jewellery Council and Swiss Secretariat for Economic Cooperation. July 2016.
Establishing an artisanal mining-specific framework of responsibility
To transform artisanal gemstone mining from an under-regulated activity associated with social and environmental harm to a formalised and responsible sector there is a place for standardised reporting on operating practices and greater transparency on performance. Yet the standards used in other sectors are not easily transferable, and those designed for larger companies are unlikely to be appropriate.
An alternate framework of responsibility more suited to the scale and circumstances of producers in the coloured gemstone sector – one that focuses not only on social and environmental aspects – is required, and initiatives that seek to strengthen artisanal enterprises are underway.
To build viable responsible small enterprises that support families, communities and local economies, resources and technical assistance needs to be deployed to improve productivity at operations.
The story of coloured gemstone mining has, until relatively recently, been a story of artisanal mining. The traditional craft of finding, recovering and finishing coloured gemstones has remained unchanged for hundreds of years and continues to provide livelihoods for individuals, families and whole communities the world over.
But times are changing. Large-scale mining and big business are beginning to play a role. And while it’s important not to overstate the significance of large-scale mining – the impact of mechanisation will always be limited by the geology of gemstone deposits – it is now firmly part of the story, a modern player entering a traditional industry.
A driving force for sustainability
Impactful too is the global rise of the responsible sourcing movement, driven by brands responding to international and domestic legislation and looking to demonstrate – to consumers and shareholders – a proactive approach to corporate responsibility. At their end of the supply chain, these companies seek to apply standards on upstream producers that many artisanal miners struggle to comply with.
Responsible sourcing reveals some uncomfortable truths – and elicits strong feelings. Artisanal mining can be associated with unhealthy working conditions, impoverished communities and uncontrolled impacts on the environment. Large-scale mining can disturb large areas of land and displace families from their homes.
These effects may be more or less evident, depending on the mine, the community and the country. Yet the entire coloured gemstone mining sector cannot be dismissed because of them, not least because it represents an irreplaceable part of the supply chain for an important and growing industry. This sector provides a living for hundreds of thousands of people, generates tax revenues for national governments, and nurtures traditional skills and innovative technologies that transform natural resources into significant economic value.
A path to practical solutions
From mine to market, greater transparency is required. The mining industry and its supply chain participants need to take time to understand the varied nature of artisanal and small-scale mining, be willing to adjust preconceptions, and be flexible in its approach to developing an agenda that can support this traditional mining sector.
The truth is that one set of standards will not fit all mining businesses. The industry needs to find realistic and practical solutions that help both large-scale mines and small artisanal producers meet supply chain goals – in their own ways – and allow them to coexist as harmoniously as possible.
The role of governance and its players
Acknowledging and respecting the individuality of both small- and large-scale mining within a framework of shared sourcing expectations is challenging. Huge in scale and reach, this task also demands a nuanced approach.
Already, local and national governments in some countries have made significant steps to establish legislative frameworks that protect small-scale mines, reward entrepreneurial integrity and satisfy brands and consumers.
Equally important are the complementary forms of artisanal mining governance such as voluntary standards, generally developed by private enterprise.
As we move forward, there is a role for both.
Governments are best placed to regulate ways that give so-called illegal artisanal miners a viable route to formalise their businesses and establish sustainable sourcing and production methods.
At the same time, large mining companies and industry bodies have a duty to adopt recognised best practices for engagement with artisanal mining. International organisations, too, can use their reach to promote innovative ways for artisanal mines to improve sustainability through education and investment.
Interesting times are ahead but this is not an academic exercise. The livelihoods of hundreds of thousands of people almost certainly depend on how effectively and sympathetically governance – in all its forms and from all parties – is able to integrate ancient artisanal mining traditions into the modern world.
In the final article in this series, Honing the Sparkle: Governance in Coloured Gemstone Supply Chains, we explore ways miners can be supported by others in the supply chain. In the next article, Glimmers in the Shadows: The Complex Web of Coloured Gemstone Trading, we look at what happens to a gemstone after it leaves the mine, and enters the complex web of trading hubs on its journey to a retail customer.