SCALES OF RESPONSIBLE GOLD MINING: OVERCOMING BARRIERS TO CLEANER ARTISANAL MINING IN SOUTHERN ECUADOR A Thesis Presented by Sara Beth Lovitz to The Faculty of the Graduate College of The University of Vermont In Partial Fulfillment of the Requirements for the Degree of Master of Science Specializing in Natural Resource Planning May, 2006 Accepted by the Faculty of the Graduate College, The University of Vermont, in partial fulfillment of the requirements for the degree of Master of Science, specializing in Natural Resource Planning Thesis Examination Committee: _____________________________ Advisor Saleem Ali, Ph.D. _____________________________ Jon D. Erickson, Ph.D. _____________________________ Chairperson Jeffrey Sasha Davis, Ph.D. _____________________________ Vice President for Frances E. Carr, Ph.D. Research and Dean of the Graduate College Date: April 7, 2006 Abstract Gold mining by itinerant miners is acknowledged by the International Labour Organization (ILO) as the means of livelihood for more than 13 million people in the developing world. Though there are many potential socio-economic benefits of small- scale mining, there are also negative impacts from these small and inefficient operations due to wasteful extraction and processing techniques, often involving mercury amalgamation. Environmental planners are thus confronted with the prospect of regulating this sector to reduce the ecological impact of mining while preventing large scale unemployment in some of the most impoverished areas in the world. This thesis explores some of the barriers to formalizing the artisanal gold mining sector and how to overcome these from a policy perspective. The overarching research question may be stated as follows: What is the range and scale of barriers to cleaner production of artisanal gold mining and why have they not been overcome by existing policy intervention? Various development agencies have recommended that artisanal mining be formalized as a legal enterprise as the primary means of overcoming these barriers to cleaner production. In the early 1990s the government of Ecuador was among the first regimes to legalize all de facto informal mining settlements, an essential component of the formalization process. This study empirically tests the hypothesis that the process of formalization in Ecuador has led to better mining practices and contributed toward sustainable development in mining communities. The findings first challenge the conventional wisdom about the improved environmental performance of small-scale enterprises. Unskilled artisanal gold miners prefer using mercury for amalgamation because it does not require special skills and is inexpensive, fast and effective. The study used ethnographic methods, observational fieldwork and archival research to ascertain the perspectives of miners, government officials, mining consultants, NGO leaders, and non- mining community members from the mining regions of Bella Rica/Ponce Enriquez and Portovelo-Zaruma. The study finds while progress has been made in reducing environmental impact, there remain numerous challenges to sustainable development in the small-scale gold mining sector. The roles of the government as enforcer of laws and regulations and promoter of mining development need to be better defined. The lack of enforcement and control has allowed environmentally destructive mining practices to persist. Miners also need to take responsibility for the negative impacts from their livelihood; however, they need improved access to financial resources and more incentives for conservation. There are some positive examples where miners have organized themselves and formed cooperation systems with local and regional governments. The future of artisanal and small-scale gold mining in Southern Ecuador remains uncertain as gold deposits become increasingly more difficult to extract and government resources are focused on larger scale investment. Alternative development strategies will thus need to be considered in the long-term and plans for transitioning miners to other livelihoods are important to consider. Acknowledgements First, I would like to acknowledge all of the people in Ecuador who took the time to participate in this study. I would like to thank those who facilitated my travel throughout Ecuador and to the many mines, mills, and processing plants I visited. This study would not have been possible without their help. I would also like to thank my advisor Saleem Ali for supporting me in my research endeavors and allowing me to chose a topic I am truly interested in and passionate about. I will like to thank my entire committee, including Jon Erickson and Sasha Davis, for their patience, flexibility, and support as I worked to finish this masters thesis. I would like to acknowledge both Jeffrey Davidson and Gotthard Walser of the Communities and Small-Scale Mining (CASM) Group at the World Bank who provided me with a summer internship. This internship was integral in developing a background in artisanal and small-scale mining issues worldwide and ultimately in selecting to undertake my field research in Ecuador. This masters thesis would not have been possible without my experiences at CASM. My family has been an incredible source of support for me throughout my masters program, and I could not have done it without help especially from my sisters, Rebecca and Jessica. Their help in reading over my work, helping with translations, and listening to my ideas has been appreciated greatly. I would also like to thank my friends and housemates who have helped keep me motivated both academically and encouraged me to maintain a balanced life. Lastly, I would like to thank my golden retriever, Osito, for dragging me outside everyday whether rain or shine! ii Table of Contents Acknowledgements.............................................................................................................ii List of Tables.......................................................................................................................v List of Figures...................................................................................................................vi Introduction........................................................................................................................1 Comprehensive Literature Review.....................................................................................5 Part 1: ASM Background.........................................................................................................5 Artisanal and Small-Scale Mining (ASM) Overview............................................................................5 Impacts of Mercury Use........................................................................................................................7 Alternatives to Mercury Amalgamation..............................................................................................11 Artisanal and Small-Scale Gold Mining in Ecuador............................................................................15 Formalization.......................................................................................................................................20 Barriers to Cleaner Production.............................................................................................................22 Part 2 – Large Scale Mining and Sustainable Development................................................25 The Debate...........................................................................................................................................25 Yanacocha Case Study.........................................................................................................................34 Literature Cited.......................................................................................................................45 Scales of Responsible Gold Mining: Overcoming Barriers to Cleaner Artisanal Mining in Southern Ecuador........................................................................................................50 Introduction.............................................................................................................................50 Methodology.............................................................................................................................53 Overview of artisan and small-scale gold mining in Ecuador.............................................57 Legal context.......................................................................................................................................57 Study regions.......................................................................................................................................58 Organization........................................................................................................................................62 Progress and Challenges – Stakeholder Perspectives...........................................................65 Mercury and cyanide use in processing...............................................................................................65 Current environmental impacts............................................................................................................72 Barriers to cleaner production..............................................................................................................77 I. Miners...............................................................................................................................................80 II. Government monitoring and control...............................................................................................91 Achieving cleaner production...............................................................................................101 Whose Responsibility?......................................................................................................................101 Discussion...............................................................................................................................109 Future of gold mining in Ecuador......................................................................................................109 Alternatives to Mining.......................................................................................................................112 Conclusion..............................................................................................................................115 Literature Cited..............................................................................................................121 Comprehensive Bibliography........................................................................................124 Appendix A: Interview Questions for Miners...............................................................131 iii Appendix B: Interview Questions for Government and Third Party...........................132 Appendix C: Reported Gold Production for 2003 by Province....................................134 Appendix D: Processing plants along the Calera River in Portovelo..........................135 Appendix E: Photos of Bira extraction and processing operations.............................136 Appendix F: Ecuador Urban and Rural Poverty Statistics..........................................137 iv List of Tables Table 1. Extraction and Processing Techniques for Alluvial and Primary Deposits.......11 Table 2. Alternatives to the Amalgamation of Gold Bearing Concentrates....................13 Table 3. Advantages & Disadvantages of Cyanide Leaching Methods in S-S Gold Mining ...................................................................................................................................14 Table 4: Schematic comparison between the conditions of small-scale/artisanal mining and typical large-scale, industrial mining.................................................................43 Table 5. Interview Sampling Strategy..............................................................................55 Table 6. Roles and responsibilities of stakeholder groups in the small-scale gold mining sector.......................................................................................................................108 v List of Figures Figure 1. Map of Ecuador demonstrating location of mining regions in the provinces of Azuay and El Oro......................................................................................................59 Figure 2: Processing plants located along the Calera River in the sector "El Pache"......61 Figure 3: Processing plant and town center of Bella Rica mining concession.................62 Figure 4. Scales of mining operations: top - artisanal, middle - small-scale semi- mechanized, bottom - small-scale industrialized......................................................64 Figure 5: Examples of different retorts used in Southern Ecuador gold mining.............67 Figure 6: Barriers to cleaner production: a. Among group barriers, b. Within group barriers......................................................................................................................79 Figure 7: Stakeholder cooperation needed to achieve cleaner production....................102 Figure 8: National production of gold reported for the years 1991-2003 ......................112 vi Introduction Common perceptions of mining practices tend to exclude artisanal and small-scale mining (ASM). Most people are aware of the conflicts over environmental and social impacts from large scale mining; however, an area that has not been as extensively studied is the impacts from artisanal and small-scale mining in developing countries. This is despite the fact that artisanal and small-scale mining employs a greater number of people than large-scale mining worldwide. There are numerous environmental and social impacts from this sector of the mining industry which are now gaining more interest. For example, the negative impacts from the use of mercury in ASM on human and environmental health have been well documented; mercury contamination makes nearby water resources unsafe for drinking and fish stock unsafe for consuming by local peoples who rely on these resources for their sustenance. Thus, the reduction of mercury pollution is necessary in order for the mining communities themselves and surrounding communities to be more sustainable. There are currently many projects and programs led and conducted in cooperation by international and national aid agencies, governments, private organizations and local, national and international NGOs worldwide to address these issues (UNIDO 2001). If conducted in an appropriate manner, artisanal and small-scale gold mining can generate significant benefits in developing countries. However, the poor health and safety record and use of environmentally destructive mining and processing practices have drawn much negativity and criticism to the sector (Nöestaller 1997). There are numerous barriers to cleaner and safer production and processing techniques which have 1 already been well documented (Bermeo 2001; GEF et al. 2003; Hinton et al. 2003). There has also been much research done in the development of technological alternatives or solutions to the environmental problems. It is believed that all the necessary alternatives to the use of mercury exist today; now the difficulty lies in implementing them (Wotruba 2003). In recent years, a number of international experts have proposed that the introduction of appropriate legislation and policies could contribute to breaking down some of these barriers and enhancing the positive contributions, while reducing the negative impacts of unregulated artisanal and small-scale mining. Formalization of the sector should improve access to the financial, technical and educational resources necessary to remove the barriers to the implementation of these cleaner methods and technologies for small-scale gold mining. The creation of small miners associations or cooperatives will help provide technical assistance and improve economies of scale (Bugnosen et al. 2000). Thus, in the early 1990s the government of Ecuador legalized all de facto ASM settlements, an essential component of the formalization process. The goal of this study is to evaluate the effectiveness of the formalization of the artisanal and small-scale gold mining sector in Ecuador in achieving cleaner and more sustainable production of gold. The objectives of this study are to identify from the experiences of the mining communities in Ecuador, both positive and negative lessons which can provide input to improve formulation and implementation of policies and programs which work to achieve cleaner production of gold at the artisan and small scale level. It is especially important to gain the miners’ perspectives for what practices have been most useful to them in overcoming these barriers and what barriers remain the most 2