The downturn in commodity prices has hit the mining industry globally but in Madagascar, it coincided with the end of a five-year period of turmoil, precipitated by a coup in 2009. Any hopes for the sector to propel itself back on the development track were dashed.
“Lots of mining companies came to Madagascar to explore [before 2009] but then we had the political crisis, with all the uncertainty and lack of visibility it brought, and even though we had elections in 2013, that uncertainty has not really lifted,” said Willy Ranjatoelina, executive secretary of the Madagascar Chamber of Mines.
In the mid-2000s, Madagascar had given the green light to two large-scale mining projects: Ambatovy, a $8bn (£6.4bn) nickel and cobalt project developed by a consortium led by Sherritt International, and QMM, a $1bn ilmenite project developed by Rio Tinto. Since then new projects have dried up.
While the downturn in fortune in large-scale mining is bad news for Madagascar’s revenue forecasts, it offers the authorities an opportunity to turn their attention to an alternative: artisanal and small-scale mining.
A hidden mining sector
Although artisanal mining has been practised in Madagascar for centuries, it’s been neglected as a formal activity – a “missed opportunity”, says Ranjatoelina, considering that around a million people work in the sector, second only to agriculture.
Formal recognition by the government, it is argued, could bring greater tax revenue and lead to improvements in health and safety and use of child labour in the sector.
Most artisanal mining focuses on gold and precious stones (Madagascar is famed for its sapphires, rubies and emeralds) and production isn’t insignificant – at its peak, Madagascar was thought to produce about 40% of the world’s sapphires and its annual gold production is reckoned to be about 15 tonnes, worth about $450m, but virtually all of it remains under the radar.
Officially, 2016 will be the first year that Madagascar exports gold (Anor, the national gold agency set up in 2015, hopes to export 500kg, about $15m), yet in 2011, foreign countries (mainly the United Arab Emirates) reported importing $250m worth of gold and gemstones from Madagascar.
One of the reasons why the sector has been overlooked is its poor image: much of the artisanal mining takes place in protected areas [pdf], with serious consequences on Madagascar’s unique biodiversity. Artisanal mining is also associated with various socio-economic problems such as child labour, poor health and safety conditions, limited education and health facilities, trafficking and security issues.
Why gold is so valuable
Despite these shortcomings, artisanal mining, for gold especially, is a lifeline for many. Gold panning is often a seasonal, family activity, one that complements a miner’s main activity and adds a level of resilience to their livelihood, says Brian Klein, a doctoral researcher at the University of California, Berkeley.
It is slow and steady work, with an average day’s work producing about $2-$2.50 worth of gold, whereas gemstone mining is all about striking lucky with an exceptional stone.
With turbulent commodity markets, gold also holds a special place as a reliable monetary alternative, says Vololona Rakotonomenjanahary, head of Anor: “With gold, you can’t go wrong. With gemstones, there are issues of quality and size, but with gold, there is just one product.”
There are signs that Madagascar is starting to pay more attention to artisanal mining. One of Anor’s mandates is to improve the skills and professional standards of those working in gold, including miners and local officials who issue permits and collect tax.
“Artisanal mining creates employment in rural areas and the revenues it generates can help finance local socio-economic infrastructure,” says Rakotonomenjanahary. “Improving our tax collection would allow artisanal mining to boost local development.”
Anor is also working on setting up a national gold refinery that will be responsible for certifying and hallmarking gold for export.
A number of donors and NGOs are active in this space, including the World Bank, which is supporting artisanal mining in Madagascar to the tune of $1.8m as part of its public sector performance project.
A future for fairtrade gold
Ranjatoelina says Madagascar expects more interest from donors and potential investors in the months ahead, with a major donor conference scheduled for early December.
This is good news, although Hermann Fickinger, head of the environment programme at the German development corporation GIZ, says that all these efforts will only be as good as their implementation. Madagascar already has a basic legal and regulatory framework for the sector – it just isn’t implemented across the board.
Klein also sounds a note of caution. “Formalisation is seen as a panacea – bringing people out of the shadows will reduce all negative impacts of artisanal mining – but it could be a vehicle for dispossession,” he says. “There is a danger of not taking into account the impact it could have on the livelihood of people and the power dynamics between small scale mining, the government, NGOs and corporate players.”
What Madagascar ultimately wants is to be able to commercialise its gold and gemstones under an ethical label such as Fairtrade or the Responsible Jewellery Council. There is still a long way to go, says Fickinger, but the process has started.