Artisanal and small-scale mining (ASM) supports over 200 million people globally but remains largely informal, with only 15 per cent formalized. During COP16 in Cali, Colombia, a digital marketplace was introduced to democratize ASM financing and enhance transparency. CNBC Africa’s Tabitha Muthoni spoke to Rob Karpati, Partner at The Blended Capital Group, about how formalization, capital access, and global collaboration are unlocking ASM’s potential for sustainable development and improved governance.
Artisanal and small-scale mining supports over 200 million people globally but remains largely informal, with only 15 per cent formalized. During COP16 in Cali, Colombia, a digital marketplace was introduced to democratize ASM financing and enhance transparency. I spoke to Rob Karpati, Partner at The Blended Capital Group, for more. I guess ASM from a scope point of view, there's 15 million miners in Africa, 45 million miners worldwide. And when you include their families, there's over 200 million people fully supported by the sector. So it's a massive opportunity. And only about 15 per cent of the sector is formalized. For the most part, it's informal, outside of official economies. So what formalization does is, it increases the possibility of connecting miners with capital, so that there's all of a sudden the ability to equip miners, the ability to train miners, and shift governance, so that there's a robust underground governance. The result of all of that is increased productivity. Why? Because of equipment training and transitions to good practices. And along with that, there's social gains. So from a miner perspective, it's an opportunity to increase dignity and reduce poverty and safety risks. While environmentally, it changes practices, so there's less deforestation and less biodiversity impacts. All of that comes together with potential sustainable development, as co-ops take hold in the region and impact the broader economy around it. So it's really a win-win opportunity, where working with miners and transitioning to the right governance creates a whole series of impacts along with financial value. Yes. And the Blended Capital Group, you are in partnership with the Alliance for Responsible Mining, Capital Hubs Canada. So let us look at how best we can raise capital for ASM initiatives, and also help us highlight the ongoing capital raising efforts that you've put in place to fund the consortium's work in formalizing ASM, and at the same time enabling broader access to some of these resources. Artisanal miners have traditionally been devoid of capital. It's been a fundamental gap to success. So what the Blended Capital Group, what we've done together with Capital Hubs Canada, the Capital Coalition, and the Alliance for Artisanal Mining, is we're standing up a digital marketplace that opens the door for capital at scale for miners. So it's going to connect miners with investors in an online marketplace, where there's visibility around the social, environmental, economic, and financial implications of project by project. And by doing that, it's going to be able to combine different kinds of investors and different kinds of projects into combined capital stacks, if that makes sense. So you think about it, you may have something partly funded by a value investor, a traditional mining investor, along with that an environmental investor or a social investor, all coming together towards success, given a digital toolkit. The digital marketplace for democratized capital, Rob, there's quite a lot that we're seeing here. But let us look at ASM and COP16. What is the interlink or some of the highlights that we're seeing? So COP16 is all about biodiversity. It's all about reforestation. It's all about environmental oversight. And ASM formalization allows miners to transition to forest smart mining standards, which basically means standards and practices that allow them to improve the environmental touch that they have. So part of the work we're doing with the digital marketplace, and part of the financing we're putting in place is very specific around the positive impacts that are environmental. So of course, going to COP16 and the forum, which is focused on that, it's a natural opportunity for us to talk about that, engage investors accordingly, and to increase awareness. And yes, I am then keen, Rob, on creating investment structures that connect miners with investors in fair and at the same time non-exploitative ways. You know, at the same time, we're looking at benefiting the sector's sustainability. Yeah, the whole challenge miners have historically had is they don't have access to non-exploitative capital. So what we're doing through the digital marketplace is we're going to have multiple financial instruments, both debt and equity oriented, that are fair, that are fundamentally sustainable, and allow miners to stand up long-term sustainable businesses, which benefit them and nearby communities. That's not to say it's charity, it's still business, but it's non-exploitative business and non-exploitative investment. So of course, part of what enables that is transparency. So both the transparency of marketplace in general, but also the transparency of clear standards and expectations and validation processes that allow impact investors, as well as value investors, to see the benefit that they're generating on ground. And let us now look at this from a global collaboration perspective, and also shared intent. So what are we seeing when it comes to international partners in reshaping ASM through formalization? By definition, this is about collaboration in a broad stakeholder way. Of course, everything starts with miners and neighboring communities, and then investors who enable the work. But mining is the front-end value chain, which means refineries are involved in the work, large-scale miners are involved in the work as well, because land is fundamentally shared. Artisanal miners were often on large-scale land concessions before large mining companies arrived. So of course, standards and practices need to reflect that. And we're talking to organizations like ICMM, like the Mining Association of Canada, and so on, as broader mining standards converge to make sure there's the right intersection points dialed in around ASM, and what does collaboration and positive relationships look like.
Theme: Unlocking the potential of artisanal and small-scale mining through formalization, capital access, and global collaboration
Artisanal and small-scale mining (ASM) is a significant sector that supports over 200 million people globally, yet it remains largely informal, with only 15% of operations formalized. The lack of formalization not only hinders the sector's potential for growth but also poses challenges in terms of governance, safety, and environmental sustainability. However, recent initiatives such as the introduction of a digital marketplace during COP16 in Cali, Colombia, are paving the way for ASM formalization and sustainable development. CNBC Africa's Tabitha Muthoni recently spoke with Rob Karpati, a Partner at The Blended Capital Group, to delve into how formalization, access to capital, and global collaboration are key factors in unlocking the potential of ASM for sustainable development and improved governance. Karpati highlighted the immense scope of ASM, with 15 million miners in Africa and 45 million globally, supporting a network of over 200 million individuals when including their families. The formalization of ASM is crucial as it enhances the connection between miners and capital, enabling them to access resources for equipment, training, and governance improvement. This, in turn, leads to increased productivity, social gains, and positive environmental impacts such as reduced deforestation and biodiversity loss. By transitioning to formalized structures, ASM operations can contribute to sustainable development by establishing cooperatives that uplift local economies and communities. The Blended Capital Group, in collaboration with partners like the Alliance for Responsible Mining and Capital Hubs Canada, is spearheading efforts to bridge the gap in capital access for artisanal miners. Through the establishment of a digital marketplace, miners can connect with a diverse range of investors and secure funding for their projects. This innovative platform offers transparency on the social, environmental, economic, and financial aspects of each project, enabling the creation of combined capital stacks from different investors. The intersection of ASM with COP16, focused on biodiversity and environmental conservation, underscores the importance of formalization in promoting 'forest smart mining' practices. By adhering to higher environmental standards facilitated by the digital marketplace, ASM operations can align with global sustainability goals and attract investors seeking impactful and ethical investments. Karpati emphasized the significance of creating investment structures that are fair and non-exploitative while ensuring the long-term sustainability of ASM initiatives. By offering a range of financial instruments that prioritize sustainability, the digital marketplace aims to support miners in building resilient and responsible businesses that benefit both the miners and their communities. Transparency plays a key role in attracting impact investors and value investors, showcasing the positive impacts generated on the ground. From a global collaboration standpoint, reshaping ASM through formalization requires a shared intent among stakeholders across the value chain. Collaboration extends beyond miners and investors to include refineries, large-scale mining companies, and international organizations such as the International Council on Mining and Metals (ICMM) and the Mining Association of Canada. Aligning mining standards and practices to accommodate ASM operations fosters positive relationships and ensures that the sector's development is sustainable and inclusive. The journey towards formalizing ASM is a win-win opportunity that not only unlocks the sector's potential for growth and sustainability but also promotes responsible mining practices, fosters community development, and contributes to global sustainability goals. With continued efforts in formalization, access to capital, and international collaboration, ASM has the potential to transform into a thriving sector that drives sustainable development and uplifts millions of livelihoods worldwide.
"The journey towards formalizing ASM is a win-win opportunity that not only unlocks the sector's potential for growth and sustainability but also promotes responsible mining practices, fosters community development, and contributes to global sustainability goals."
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