Towards an LBMA Good Delivery List for Artisanal and Small-Scale Responsibly Mined Gold
1. Why the Current Level of GDL Refining of ASM Gold Should Increase
In 2020/21, GDL gold refiners reported that they refined 5,038 tonnes of gold. Of this, 2,746 tonnes were reported as recycled gold, 2,271 tonnes were from large-scale mining (LSM) operations, and 21 tonnes were reported to be from ASM. According to these figures, therefore, 0.4% of all the gold refined by LBMA GDL refiners, and 0.9% of the newly mined gold, was from ASM. 2.4 tonnes of the ASM gold refined by GDL refiners was from Africa, 13.6 tonnes from Central and South America, and 6 tonnes was from Mongolia.2
It has been separately estimated that 20% of global gold production is from ASM.3 With global gold production estimated at 3,580 tonnes in 2021 by Metals Focus for the WGC,4 it would imply that around 700 tonnes of gold were produced by ASM that year. This in turn would suggest that around 3% of global ASM gold production is currently refined by LBMA GDL refiners, and that LBMA refiners refined 63% of the total of newly mined gold produced globally in 2021.
21 tonnes of gold, or 740,753 ounces, annually is not an insignificant amount. With gold currently trading at USD1,874/ounce5, it means that the ASM gold passing through the LBMA GDL annually is worth a hefty USD1.38bn.
The figures imply that 97% of the ASM gold produced annually is currently not traceably refined by GDL refiners. This does not in itself mean that all this 97% has not been responsibly mined. This is, indeed, highly unlikely. But it does mean that we do not know whether this gold was responsibly mined or not. This uncertainty need not necessarily in itself be of reputational concern to LBMA members. Yet multiple interviewees affirmed to us that despite the best intentions of GDL refiners, and the imposition of increasingly stringent rules requiring the identification of the sources of recycled gold, it is still possible for ASM gold – however irresponsibly it has been produced - to enter the recycled gold market and then to pass at some point through GDL refiners. Combined, the facts that most ASM gold has not, or may not have been mined responsibly, and that this gold can and does enter the international market, including GDL refiners, via recycling, are damaging for the reputation of the gold industry as a whole and for the LBMA and its membership in particular. This reputational damage is despite a number of LBMA members having for some years invested time and resources into increasing their uptake of responsibly mined ASM gold.
If there was a growing volume of ASM gold that had demonstrably been mined responsibly and that was then traceably refined by GDL refiners, this would be reputationally positive for the gold industry in general and for the LBMA membership in particular. This is because, it would indicate – though admittedly it would not prove – that more ASM gold was being mined responsibly, and because it would demonstrate the practical commitment of GDL refiners and the LBMA to engage with and to support responsible ASM mining.
Concern has been expressed in some quarters that it is insufficient to highlight to the gold industry the reputational case for working towards the increased flow of responsibly mined ASM gold to GDL refiners, and that the ‘business case’ must also be made. The distinction is, in a sense, artificial, since reputation is a critical business issue for gold producers and refiners. If it were not, there would, after all, be no LBMA. Furthermore, luxury goods brands, which are an important sector of the gold consumer market, care a great deal about reputational issues. So, though in a rather different way, do bullion banks. Still, it is true that the prospects for change are greater where conditions are such that GDL refiners can approach their sourcing of responsibly mined ASM gold not only in terms of reputation management, but also as a financially competitive way for them to gain access to significant volumes of cost-effective new sources of gold that meets their own high standards.
Beyond the business and reputational interests of the gold industry and the LBMA are the interests of artisanal miners themselves. Artisanal and small-scale gold mining (ASGM) is a significant employer. The WGC, Inter Governmental Forum6 and PlanetGold7 estimate of between 15 and 20 million for the number of miners and twice that number for livelihoods associated with ASGM, may be too high or too low. What is clear though, is that the number of livelihoods supported by ASGM is far higher than for LSM. US-listed mining giant Newmont, for example, produced 171 tonnes of gold in 2021 and had 14,400 employees and 16,600 contractors. This meant that Newmont produced 5.5kg of gold per worker per year.8 Toronto-listed Barrick produced 125 tonnes of gold in 2021 with 20,000 employees and 10,000 contractors, working out at 4.1kg of gold per employee per year. 9 At Barrick and AngloGold Ashanti’s Kibali mine in Haut Uele, Democratic Republic of Congo (DRC), the figure is 3.3kg of gold per employee per year. If we take the industry average to be 3-4kg of gold per LSM employee per year, this means each tonne takes 250-333 employee years to produce. With LSM annual gold production recorded at 2,880 tonnes, this suggests a total gold LSM workforce of a little under one million.
ASGM productivity varies, but we estimate that it ranges between 60-120 grams of gold per ASM mine worker per year, based on our own fieldwork in DRC and from data about the volumes mined by ASM groups on some LSM sites. If our estimate is accurate, then each tonne of gold takes between 8,300 and 16,600 ASM miner years, and annual global ASM production of 700 tonnes of gold supports about 6-12 million direct livelihoods, roughly fifty times more livelihoods per tonne of gold with ASM than is achieved by LSM.
More responsibly mined ASM gold should result in less mercury use, but it would not necessarily mean higher revenues for ASGM miners, since the overall level of gold production may be left unchanged. However, particularly if increases of production of responsibly mined ASM gold are secured through supply chain engagement focused on a continuous improvement in standards, higher revenues for ASM miners are possible. This would have a direct beneficial impact on global poverty levels, and would at the same time serve to mitigate the negative ESG and conflict-financing impacts of ASM. We accept, however, that revenue gains for miners might not be gender neutral, and might in some cases exacerbate gender inequality. This risk would need to be addressed through the supply chain engagement process.
2 LBMA Responsible Sourcing Report 2021 Appendix 1. Gold Country of Origin and Country of Destination Matrix.
3 DELVE, ‘State of the Artisanal and Small-Scale Mining Sector’, 2019, cited in Lessons Learned on Managing the Interface between Large-Scale and Artisanal and Small-Scale Gold Mining, World Gold Council, 2022,
4 https://www.gold.org/goldhub/d...
5 Spot price, June 14, 2022
6 IGF report on Minerals Metals and Sustainable Development. ASM Global Trends p.2
7 Planet Gold Annual Progress Report 2020-2021 P.10
8 P15. https://s24.q4cdn.com/382246808/files/doc_downloads/sustainability/2021-report/newmont-2021-
sustainability-report.pdf
9 P3.https://s25.q4cdn.com/32281491... 1.pdf