Blood and treasure: breaking the bonds between small-scale mining and terrorism
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Blood and treasure: breaking the bonds between small-scale mining and terrorism

By JP Casey 07 Jun 2021 (Last Updated June 7th, 2021 03:10)

The OECD has a number of plans to tackle relationships between small-scale mining and terrorism, but how effective can they be?

Blood and treasure: breaking the bonds between small-scale mining and terrorism
“Criminal organisations have been targeting the production and trade of minerals, in particular gold, for a while,” said Louis Maréchal. Credit: Waldo Swiegers, via Bloomberg Finance LP

Mining remains one of the most lucrative industries in the world, and demand shows no sign of falling for every type of mineral under the sun, from coal and iron, the cornerstones of industry, to rare earths and speciality minerals needed in high-tech equipment. Yet not all of this wealth, and potential wealth, is owned by global corporations, value neatly ring-fenced by international law and reputations that need maintaining.

A range of reports from inter-governmental bodies and independent thinktanks have pointed to a growing connection between artisanal and small-scale mining (ASM) and terrorist activities in West and Central Africa. 

From Nigeria to Niger, and Mali to Burkina Faso, small-scale miners face a profound challenge: they need buyers for their products in order to make ends meet but are shut out of the legal mineral trade by governments that refuse to acknowledge their work. 

Terrorist groups, meanwhile, require a source of funding for their operations, and so are eager to prey on such miners, who are desperate for any trading partners, entrenching economic ties between small-scale miners and terrorist organisations.

Untangling these relationships requires a deft touch and considerable influence, comprising, as they do, elements of economic inequality, mineral ownership, and national security. Considering this complexity, a number of international organisations have taken it upon themselves to offer solutions to the countries affected by mining-funded terrorism, with the Organisation for Economic Co-operation and Development (OECD) among them. 

The OECD has published a range of materials containing advice on how best to clean up the mineral supply chain, from working to formalise artisanal mining to offering guidelines for those at the end of the supply chain. However, a key question remains: can such a macro-level approach effectively tackle such a local challenge?

In search of gold, in search of buyers

“It’s been well-documented, and we have also uncovered this in our own investigations, that terrorist groups, in particular and now in West Africa, are increasingly interested in controlling areas of production of gold,” explains Louis Maréchal, minerals and extractives sector lead at the Centre for Responsible Business Conduct at the OECD. “[These are] mostly ASM, but terrorist groups are also active in regions and areas where large-scale operations are active.

“I would definitely say this is something that we are witnessing.”

In recent years, a number of investigations have highlighted the relationships that Maréchal refers to. Last year, for instance, HumAngle reported that in Nigeria’s Zamfara region, local gold miners responded to a state ban on gold mining by selling their products directly to terror groups, and in return would be left alone by the latter’s armed groups.

“When you talk about terrorist groups in West and Central Africa, it’s also important to keep in mind that these are often ‘opportunistic terrorists’, criminal groups that tend to organise terrorist actions when it’s timely and when it suits them,” says Maréchal, highlighting the opportunistic nature of terrorist activities exemplified by their activities in Zamfara. 

“My point here is to underline that criminal organisations have been targeting the production and trade of minerals, in particular gold, for a while, so it’s quite natural that terrorist groups are also interested in that.”

The opportunistic nature of these activities ties strongly to the fact that gold is often the favoured mineral of the terrorist groups involved. Maréchal noted that the primary motivation of many of these groups is to secure a source of funding for future operations. 

To that end, gold is an ideal commodity: a bar weighing one kilogram is worth around $51,625 and is easy to smuggle across borders, Furthermore, its value is immediately apparent to those interested in trading, unlike, say, diamonds, where the cut and quality of the stone can cause its final price to fluctuate.

Recent discoveries of gold deposits in West and Central Africa have only intensified the issue of terrorism. A report from Crisis Group found that in the Sahel, a region of desert that stretches across Burkina Faso, Mali, and Niger, the discovery of a new gold vein in 2012 caused the countries’ gold production to soar to new heights. Mali and Burkina Faso produced more than 130 tonnes in 2019, enough to place them fourth and fifth out of all African countries.

Legal and financial solutions

The widespread and often entrenched nature of these relationships can make breaking these bonds difficult. Considering Burkina Faso, Mali, and Niger again, unregulated gold mining accounts for up to $4.5bn of value per year across the three countries, and more than two million people directly employed in ASM activities. 

The combination of intense terrorist interest in gold, and the widespread nature of ASM gold mining in West and Central Africa, has created the perfect conditions for links between terror groups and unregulated mining to flourish. Challenging these relationships will be as much about changing these conditions as tackling individual terror groups or mines.

“Ideally, formalisation and legalisation certainly are mitigation strategies, as we call it,” says Maréchal. 

Legalising ASM certainly offers benefits on paper, including the protection of mines by government forces, and allowing small-scale miners to access a much wider range of customers, all of which is done above board.

However, the struggle for recognition and formalisation has dragged on for decades in much of the world, with the cost of securing mining licences and the need for effective safety and environmental policies making formalisation a costly and logistically impossible proposition for many small-scale miners. 

Some of Africa’s largest mining jurisdictions, such as South Africa, have set up task forces and bodies to help those involved in ASM transition to legal mining. These have met with limited success however, and often run into the problem that underlines many of these challenges: the close bonds between ASM and terrorism.

“The other [option] is to close the trading opportunities as much as possible for terrorist groups,” continues Maréchal, a solution driven by economics that could help eliminate the need for miners to sell products to terrorist groups, and cause these relationships to evaporate. 

“What that means is that the international buyers abroad should be conducting what we call due diligence to make sure that they’re not sourcing from mines controlled by those terrorist groups, and challenging that is very difficult for a number of reasons.

“That’s very challenging,” he continues. “As you can imagine, you will always find buyers that are interested in gold, either because they’re buying it cheap or because they don’t have to fill any kind of paperwork. One thing that’s certain is that trying to ban artisanal mining doesn’t work, has never worked and will never work.”

An international body and a big picture approach

The OECD’s position as an international organisation, and one separated from the specific legal and security situations in countries affected by terrorism and ASM, means it can afford to take a big picture view of the challenges. Maréchal discusses the origin of much of the group’s recommendations in academic research, and talks about how its push for due diligence has been adopted by actors across the mining supply chain.

“We started working on gold, tin, tantalum, and tungsten (3TG) in 2011 and it has now extended far beyond that,” says Maréchal. “We have a very strong relationship with many international industry associations, for instance, with the London Bullion Market Association or the London Metal Exchange. An increasing number of jurisdictions have decided to turn our voluntary standard into legal obligations and/or industry requirements.

“That was the case in the US about ten years ago, and then the EU adopted a regulation that covers the import of 3TG. The UK, after Brexit, has decided to implement that regulation as well. Switzerland is also about to adopt it.”

Much of the OECD’s work takes the form of a five-step framework to encourage responsible sourcing at all levels of the supply chain. This framework includes initiatives to identify, assess, and minimise risks and effectively communicate on all stages of the assessment process, a move that is itself an innovation considering that many of the terrorist threats to ASM operations are under-reported in international media.

However, there are inherent limits to this influence. The OECD’s position allows it to take a balanced, holistic view to dealing with this challenge, but its lack of direct influence over individual regions and countries means its role is confined to that of reporting and recommendation, rather than direct action.

“Points where we have less leverage and influence are at the producing level,” says Maréchal. “The OECD does not have any representation on the ground in producing countries, so it’s harder for us to do work on the ground.”

Yet this does not mean that the OECD is content to sit within its sphere of influence, with Maréchal referring to a number of initiatives that could see the OECD expand its influence through direct collaboration: “We managed to [work with] local international agencies or donor agencies of our member states; we work a lot with the UN and regional organisations; we are increasingly working with other international initiatives such as the EITI, or the voluntary principles on security and human rights.

“We try as much as we can to develop partnerships and synergies with organisations that have presence on the ground that we do not have.”