Foreword:
Potosí's Cerro Rico, discovered in 1545, became the world's largest silver deposit, yielding an estimated 60,000 tons of silver over its lifetime.
This immense wealth transformed Potosí into a bustling city and a crucial economic hub for the Spanish Empire. The silver extracted from Cerro Rico fueled global trade networks, connecting Europe, the Americas, and Asia.
It provided the Spanish crown with unprecedented riches, financing its imperial ambitions and wars. The phrase "vale un Potosí" (worth a Potosí) entered the Spanish language, signifying immense value. Potosí's silver production reshaped the global economy, making it a cornerstone of early capitalism and Spain's dominance in the 16th and 17th centuries
Timeline: Mining in Bolivia since 1952
After 400 years of active mining, in 1952, all of Bolivia’s largest and most important mines, including Cerro Rico de Potosi, were nationalized.
1545: Discovery of Cerro Rico, the world's largest silver deposit
1952: Nationalization of Bolivia's largest mines, including Cerro Rico de Potosi
1985: Tin crisis forces Comibol (state mining company) into bankruptcy, setting the stage for artisanal mining to flourish
2008: Commissioning of Manquiri's San Bartolomé processing plant
2014: Passage of Bolivia's Mining and Metallurgy Law No 535, regulating mining rights and activities
2022: Bolivian government strikes a deal with gold mining cooperativas for a 4.8% tax levy on gross gold sales
Artisanal Mining Creates Great Jobs for Thousands Who Feel Empowered Throughout All Stages of the Mining Process and Connected to the Continuum of a Cause
Global Impact
It is estimated that more than 40 million people globally are directly involved in ASM and that at least a further 130 million others work in related industries that support the sector. In this context, ASM has many positive socioeconomic impacts as it provides jobs for people with limited income earning opportunities in remote areas.
Spotlight on Cerro Rico in Bolivia.
It is estimated that there are up to 18,000 artisanal miners in the Cerro Rico today, (most of whom are descendants of miners, artisan tradespeople and indigenous labourers.)
They operate collaboratively in self-managed groups known as cooperativas, working more than 140 different mines on the mountain.
Taking into account affiliates and downstream services to the cooperativas, it is approximated that more than 150,000 people are involved in artisanal mining on the Cerro Rico.
This group of operators is as strong now as it was back in 2014. Today, there are a total of 2,388 cooperativas, incorporating more than 135,000 individual miners, operating across nine mineral-rich departments in Bolivia.
Artisanal Small Scale Mining (ASM)
Since the passing of the mining code, progress has been made to make ASM activities safer and more environmentally responsible, and to bring ASM ore into the mainstream of Bolivia’s mineral output.
Facilitating this endeavour is Empresa Minera Manquiri S.A. (Manquiri), a wholly owned subsidiary of Canadian public company, Andean Precious Metals.
Andean Precious Metals Corp. (TSXV: APM) (OTCQX: ANPMF)
Small Scale Mining is the Best Practice in this Context
Upon first commissioning, San Bartolomé was structured in association with Comibol and seven cooperativas.
Today, Manquiri (a subsidiary of Andean Precious Metals) maintains a business relationship with 17 cooperativas working on the Cerro Rico.
Collectively, these cooperativas are comprised of 301 small-scale partnerships, each of which consists of about 10 miners per group.
The formalization of artisanal mining in Bolivia, particularly in the Cerro Rico region, has had impressive impacts on local communities:
Economic benefits: The collaboration between artisanal and small-scale mining (ASM) cooperatives and large-scale mining operations has created a more stable income stream for local miners. The San Bartolomé plant, operated by Empresa Minera Manquiri S.A., has been working with ASM cooperatives for 15 years, providing a fair market for their ore.
Job creation: The ASM sector has become a crucial source of employment in remote areas of Bolivia. It is estimated that up to 18,000 artisanal miners work in cooperativas, operating over 140 mines on the Cerro Rico mountain alone.
Improved safety and environmental standards: The formalization process has led to efforts to make ASM activities safer and more environmentally responsible. Large-scale mining companies like Manquiri have been working with cooperativas to improve their practices.
Economic multiplier effect: An independent study by Oxford Economics found that Manquiri's operations, which include collaboration with ASM cooperativas, contributed $71.1 million directly to Bolivia's GDP and stimulated an additional indirect boost of $147 million. Of this, $96 million indirectly benefited the wider mining industry.
Legal recognition: The Mining and Metallurgy Law No 535, passed in 2014, has provided a legal framework for ASM activities, recognizing the rights of cooperativas alongside state-owned mining companies and the private mining sector.
Increased government revenue: The formalization process has begun to generate tax revenue for the government. For example, in October 2022, the Bolivian government reached an agreement with gold mining cooperativas for a 4.8% tax levy on the gross value of gold sales.
Sustainable development: The formalization process has created a framework for strategic objectives that aim to increase production for cooperativas while adhering to clean technologies that allow for sustainable mining practices.
Community empowerment: The formalization of ASM has given local communities more control over their mineral resources and a stronger voice in the mining sector.
Artisanal mining can transform poverty into more prosperous opportunities through several key mechanisms:
Higher income potential: Artisanal mining often provides higher incomes compared to subsistence farming or other rural livelihood options. It is estimated that artisanal miners typically earn more than subsistence farmers, offering a path out of extreme poverty.
Low barriers to entry: The sector's accessibility allows impoverished individuals to engage in economic activity with minimal initial investment, providing an opportunity for those with limited resources to participate in the formal economy.
Rural entrepreneurship: Many artisanal miners operate as rural entrepreneurs, developing business skills and accessing informal or formal financing for their operations. This entrepreneurial experience can be a stepping stone to other business ventures.
Economic diversification: Artisanal mining often complements other livelihood activities, such as agriculture. The 'farming miner' or 'mining farmer' model allows rural people to diversify their income sources, reducing vulnerability to economic shocks.
Local economic development: Artisanal mining contributes significantly to local economies.
Formalization benefits: When artisanal mining is formalized, miners gain access to crucial services such as microfinance credit, grants, and government loan facilities. This financial inclusion enables miners to accumulate wealth and invest in their operations.
Skill development: As artisanal miners gain experience and potentially transition to small-scale mining, they develop valuable skills in mineral extraction, processing, and business management. These skills can be transferable to other sectors.
Transition to manufacturing: With increased productivity and support, artisanal miners can potentially move into other parts of the mineral value chain, such as manufacturing building materials. This transition can contribute to broader industrialization and infrastructure development.
Global supply chain integration: Artisanal miners play a crucial role in supplying critical minerals for the global economy. As demand for these minerals grows, particularly for clean energy technologies, there are opportunities for artisanal miners to become more integrated into formal supply chains.
Community development: When managed responsibly, artisanal mining can drive significant community development. The income generated from mining activities can support local businesses, education, and infrastructure improvements
Read this Brilliant Article published in The Alchemist (by LBMA)
Next week we will be discussing more about this innovative business model that increases productivity and profits.
Andean Precious Metals Powerpoint Presentation (smash the blue button)
Sources:
https://www.un.org/africarenewal/magazine/april-2024/transforming-artisanal-mining-can-be-beneficial-people-and-planet
https://www.pactworld.org/blog/artisanal-miners-hidden-critical-force-global-economy
https://www.sciencedirect.com/science/article/pii/S1462901123002125
https://www.land-links.org/issue/artisanal-and-small-scale-mining/
https://www.atlanticcouncil.org/blogs/africasource/integrating-artisanal-mining-into-the-formal-economy-would-benefit-african-miners-and-economies-alike/
https://www.lbma.org.uk/alchemist/alchemist-108/formalising-silver-artisanal-mining-in-bolivia
https://www.sciencedirect.com/science/article/pii/S2214790X16301733
https://data.fs.usda.gov/research/pubs/iitf/ja_iitf_2021_alvarez-barrios002.pdf
https://agupubs.onlinelibrary.wiley.com/doi/full/10.1029/2020GH000325
https://www.sciencedirect.com/science/article/abs/pii/S2214790X22000399