The Alliance for Responsible Mining (ARM) has launched the English version of the analysis report “Supply Chains of Artisanal Gold in West Africa”. The publication is also available in French: “Filières de Commercialization de l ‘or artisanal in Afrique de l’Ouest”.

The study was performed within the framework of “Creating a fair gold chain and reducing mercury use in extractive processes in West Africa“, a project implemented by ARM, coordinated by the United Nations Industrial Development Organization (UNIDO), and financed by the Global Environmental Facility (GEF) and the Fonds Français pour l’Environnement Mondial (FFEM). The project was carried out in Burkina Faso and Senegal between 2013 and 2016.

One of the objectives of ARM was to influence public policy in Senegal, Burkina Faso, and Mali towards fostering the creation of responsible supply chains. During the project, the commercialization of artisanal gold was selected as a priority after detecting that the majority of the gold was sold on the informal market. It was identified that the prices offered by this market approximate global prices, which attracts a very large portion of the artisanal gold. To analyze the context and consider solutions, it was crucial to understand the mechanisms that create the appeal for informal marketing chains.

The key conclusions from this publication are the following:

  • In both Burkina Faso and Senegal, the majority of the gold is informally traded and exported.
  • In Burkina Faso, merchants use gold to circumvent trade laws and exchange foreign currency abroad by informally exporting artisanal gold. This currency is used to purchase their foreign import goods and thus reduce custom taxes. The route of artisanal gold passes mainly through Togo, and from there it is officially exported to Dubai.
  • In Senegal, a large proportion of artisanal gold is bound for Mali, due to its proximity to the mining region. For the most part, the rest is purchased by jewelers in Dakar who mix it with recycled gold and export the whole blended batch as recycled gold. The next step in the process is to reimport the recycled gold in the form of jewelry, for which very low tariffs and VAT have been paid.
  • The Senegalese jewelry market is significant, but their heritage of jewelry production is dying out in the face of cheap, low-tariff imports from Dubai.
  • Miners are utterly dependent on this type of market chain, since there are currently no competitive offers from formal traders. Miners are not the ones who organize the informal market, but rather abide by it. Miners concentrate their efforts on gold extraction, and this gold is sold at the mine entrance to the highest bidder.
  • In both countries, the current fiscal environment and regulatory procedures are not favorable for attracting artisanal ore to legal markets. This is mainly due to a system in which the miner incurs a high royalty, despite not being the main actor in the market chain, and the fact that the extensive documentation required for exporting discourages buyers who would want to pursue the legal route.

The study focused on two research areas: an analysis of the current legal and fiscal context in each country, with a particular focus on the procedures that must be followed to trade and export artisanally produced gold; and a field mission that traced the path of gold from its source (the project’s pilot territories) to the export point. The study methodology involved conducting individual interviews with actors across the chain: men and women miners, local buyers, intermediaries, regional buyers, smugglers, freight forwarders, and authorities in mining, financial, and customs offices, among others.

The authors of this publication are Yves Bertran, project coordinator in Burkina Faso and general director of ARM, Baptiste Coué, project coordinator in Senegal and head of the ARM monitoring and evaluation department, and Patrick Schein, an expert in artisanal gold supply chains and co-founder and board member of ARM. Mr. Schein presented the report on Wednesday, April 18, at the twelfth Forum on Responsible Supply Chains organized by the OECD.

The report’s conclusions lead us to reflect on the fact that what is required to create responsible and legal supply chains is to establish low taxation, not require the repatriation of funds, and liberalize the gold trade. By not doing so, locally available artisanal gold will always be used to circumvent foreign currency exchange laws, just as gold has always been used as a form of currency.

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