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Small-Scale Mining: A Review of the Issues

Authors:
  • University of Leoben, Austria
________
________ WTP75
WORLD BANK TECHNICAL PAPER NUMBER 75 November
1987
INDUSTRY AND FINANCE SERIES
Small-Scale
Mining
A Review of the Issues
Richard
Noetstaller
HD
9506
N63
1987
c.2
Public Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure Authorized
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Small-Scale
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A Review of the Issues
- ii -
Industry and
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Volume 11. Fertilizer
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WORLD BANK TECHNICAL PAPER NUMBER 75 -
INDUSTRY AND FINANCE SERIES
Small-Scale Mining
A Review of the Issues
Richard
Noetstaller
SECTORAL LIBRARY
INTERNATIONAL BANK
FOR
RECONSTRUCTION AND DEVELOPMENT
JAN
21 1988
The World Bank
Washington, D.C.
Copyright © 1987
The Intemational Bank for Reconstruction
and Development/THE WORLD BANK
1818 H Street, N.W
Washington, D.C. 20433, U.S.A.
All rights reserved
Manufactured in the United States of America
First printing November 1987
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Richard Noetstaller is head of the Mining Division of AUSTROPLAN, Vienna, and
a consultant to the World Bank.
Library of Congress Cataloging-in-Publication Data
Noetstaller, Richard, 1941-
Small-scale mining : a review of the issues / Richard Noetstaller.
p. cm. -- (World Bank technical paper, ISSN 0253-7494 ; no.
75. Industry and finance series: v. 23)
Bibliography: p.
ISBN 0-8213-0980-3
1. Mining engineering. I. Title. II. Series: World Bank
technical paper no. 75. III. Series: Industry and finance series
; v. 23.
TN145.N64 1987
622--dc 19 87-29581
CIP
ABSTRACT
The paper addresses the principal issues generally associated with
small-scale mining in less developed economies and summarizes constraints and
barriers that adversely affect SSM establishment and self-reliant growth in this
country group. It examines conditions and circumstances under which small- and
medium-scale mining is economically justified or desirable as opposed to large-
scale operations and identifies options for promotional action in support of this
segment of the extractive sector.
Due to the absence of scale-effects, small mines are, ceteris
paribus, high cost producers that require favorable geological conditions, high-
grade mineralizations or an infrastructurally isolated local market to remain
competitive vis-a-vis large operations. Key size-related attributes making the
SSM-operations particularly attractive for the lower-income developing countries
include low investment costs, short implementation periods combined with the
creation of above average employment opportunities for low-skilled labor, fre-
quently in rural areas. In addition, small mines permit the extraction of numerous,
otherwise unexploitable small rrilneral deposits.
The paper concludes that in most LDC's specific promotional
initiatives will be required to strengthen the SSM-segment. The introduction of a
size-neutral policy environment together with extensive technical and financial
assistance provided by multinational lending or development institutions to be
channeled through competent national intermediaries and local commerical banks,
are key elements in programs designed to accelerate small-scale mining
development in LDC's.
- vi -
GLOSSARY OF ABBREVIATIONS
BAMIN = Banco Minero de Bolivia
CADETAF = Centrale d'Achat et de Developpement de la Region
Miniere du Tafilalet et de Figuig
CFM = Consejo de Fomento Minero
COMIBOL = Corporacion Minera de Bolivia
CRM = Consejo de Recursos Minerales
ENAMI = Empresa Nacional de Mineria
FONEM = Fondo Nacional de Exploracion Minera
GDP = Gross Domestic Product
LSM = Large-Scale Mine
MLI = Multinational Lending Institution
MSM -Medium-Scale Mine
Mt -million tonnes
Mt/y = million tonnes per year
n.a. = Data not available
NGO -Non-Government Organization
SMM = Small and Medium-Scale Mines
SSE = Small-Scale Enterprise
SSM = Small-Scale Mine
st -short tons
tpd = tonnes per day
tpy -tonnes per year
UNRFNRE = United Nations Revolving Fund for Natural
Resource Exploration
U.S.A. = United States of America
U.S.B.M. (USBM) = U.S. Bureau of Mines
U.S.$ = United States Dollars
VSSM = Very Small-Scale Mine
- vii -
TABLE OF CONTENTS
SUMMARY
****..***......................**..****************** ix
I. INTRODUCTION ................. 1........................... 1
II. DEFINITION AND SIGNIFICANCE .............................. 3
A. Concepts and Definitions ........... a.......... 3
B. Share of Small-Scale Mining .......................... 6
C. Contribution to National Objectives .................. 7
III. CHARACTERISTICS AND IMPLICATIONS ......................... 9
A. Peculiarities of Commodity Subgroups 9................ 9
B. Attributes and Issues ..... .. .. .. . .
.... ...... o.o.o.o.
.. .... o 11
Deposit Utilization and Wastage .................... 11
Exploration and Risk .... ........................... 12
Employment and Social Impact ....................... 13
Health
and Safety ........ s.o.o ...... 0 .... ...... 14
Environmental
Concerns .. .... .... ...... o.o.o. ...... ... ... 15
Technology and Efficiency ........................... 15
Entrepreneurship and Business Development .......... 16
C. Constraints and Barriers ................. ............ 17
Mining Tradition and Training ............ ....
o o 17
Dependence on Infrastructure 0. ...................... 17
Processing and Marketing ... ................................ 18
Investment and Finance .............................. 20
Management and Organizational Structure ............ 22
Institutional
and Policy Framework ................... 24
IV. CORRECTIVE AND STRENGTHENING OPTIONS ... oo..............o. 26
A. General Considerations .o.o. .* . . ....
... ...
..... ...
.... ... .. . . . 26
B. Experiences and Approaches ........................... 26
C. Policy and Institutional Measures ...... .............. 29
Fiscal Regime ............................................... 29
Mining Legislation ...... o o.... ..........o*............. 30
Institutions and Executing Agencies ................ 31
Do Assistance Options ................. ... .............. 33
Financial Assistance .o.
. . . . . ... .... .... .o.o..o
. ...
o..o. .......33
Non-Financial Assistance .... * ........... ........... 34
E. Operational and Organizational Measures .... ......... .36
Optimum Mine Size .. ... .. *..... ................... 36
Appropriate Technology ............................. 37
Mining and Business Practices .... 00.................. 38
Organizational Options . ............................ 39
- viii -
V. CONDITIONS OF ECONOMIC JUSTIFICATION ....................... 42
A. Basic Economic Aspects .................................
42
B. Target Eligibility Profile ............................. 42
Geological Factors ....... ....... *................ 42
Marketing Factors .........
*****..*............ 43
VI. PROMOTIONAL APPROACH .. .....................
*-se........ 46
A. Role and Promotional Initiatives of Multinational
Lending Institutions .................................
46
B. Profile of Policy Guidelines ........................... 48
ANNEXES
Annex A Share and Estimated Value of Small Mine Production ..... 50
Annex B Developing Countries with Important Recently or
Currently Active Small-Scale Mining Segment ......... 54
Annex C Selected Countries with Important Direct Mining
Sector Contribution ... .............................s 56
Annex D Summary Profile of Commodity Subgroup Typification ..... 57
Annex E Effect of Processing and Upgrading .....................
59
Annex F Policy and Institutional Profiles of Ten Developing
Countries ..............
000*00*
.............
0o0so ..............
0 61
Annex G Fundamental Relationship between Capital-Labor-Cost
Ratio and Mine Size .............
sees ..................
71
Annex H Fundamental Relationship between Capital-Labor-Cost
Ratio and Degree of Mechanization ....... a*.* .... 72
REFERENCES **...................... 73
- ix -
SUMMARY
1. Small-scale
mineral
properties
represent
a segment
of the
extractive
sector
with
a high
potential
to create
beneficial
effects
in the
less
advanced
economies. Major
arguments
in favor
of small-scale
mine
(SSM)-development
are
the
utilization
of otherwise
unexploitable
small
mineralizations,
high
absorptive
capacity
of low-skilled
labor
in rural
areas,
efficient
use
of scarce
capital,
modest
infrastructural
requirements,
opportunities
for
indigeneous
entrepreneurial
development,
conservation
of scarce
high-skilled
manpower,
low
investment
costs
and
short
implementation
periods.
2. In
view
of the
absence
of scale-effects,
small
mines
are,
in
general
however,
high
cost
producers. In a competitive
market
they
can,
therefore,
only
succeed
if they
enjoy
cost-reducing,
comparative
advantages,
sufficiently
strong
to compensate
for
the
under-utilized
scale-effects.
In
metal
mining,
producing
commodities
for
export
markets,
small
mines
are
viable
only
if they
extract
considerably
higher
grade
ore
than
their
large-scale
competitors. Ease
of access,
mining
and
processing
may provide
further
comparative
advantages
to small
operations. For SSM's
extracting
low-value,
high-volume
commodities
such
as
coal
and
industrial
minerals,
proximity
to consumers
together
with
infrastructural
isolation
of
local
markets
provides
the
necessary
comparative
advantage
vis-a-vis
low-cost,
large-scale
producers. A significant
comparative
advantage
moreover,
lies
in the low
labor
costs
of
developing
countries,
provided
appropriate
technologies
are
employed. Moreover,
the
higher
the
capital-labor-cost
ratio,
the
higher
the
comparative
advantage
of
small
labor-intensive
operations.
Low-income
developing
countries,
therefore,
present
particularly
favorable
targets
for
SSM-activities.
3. Apart
from
their
inability
to benefit
from
scale-effects,
small
operations
are
usually
confronted
with
constraints
and
barriers
which
prevent
or retard
their
spontaneous
development
and
self-reliant
growth.
Constraints
frequently
identified
include
a policy
environment
favoring
large-scale
investment
and
discriminating
against
small
enterprises,
an
institutional
framework
inadequate
to support
the
small-scale
segment,
regulations
and
circumstances
that
exclude
small
operations
from
institutionalized
finance
and
lack
of appropriate
marketing
facilities.
The inherent
qualities
of SSM's
and
their
beneficial
impact
on developing
economies
together
with
the
existence
of specific
constraints
discriminating
against
them,
provide
the
fundamental
justification
for
SSM-promotion
and
outside
intervention.
A number
of key
options
have
been
identified
which,
if
combined
in sufficient
quantity
and
quality,
will
result
in
an adequate
promotional
strategy
for the
target
segment.
4. An essential
policy
recommendation
is to
minimize
the
application
to the
target
segment
of tax
duty
regimes
that
directly
increase
costs,
e.g.
production
taxes,
export
taxes
and
royalties,
a measure
which
is
justified
due to its
positive
effect
on increasing
the
domestic
natural
x -
resource endowment. To the
extent that
taxation appears
necessary,
only
reasonably dimensioned
profit taxes
should be levied,
to be applied in
combination with
adequate depletion
allowances. Tax
holidays are not
considered favorable
due to their potential
of temporarily
inducing
highgrading
practices. Similarly, depreciation
allowances for
mining
equipment should
be granted cautiously
in order not to jeopardize the
choice of the appropriate technology. Conversely,
all expenses for
evaluative and operational
exploration
must be made
fully tax-deductible.
5. Licensing
and registration
procedures required
to obtain
exploration
or mining rights have
to be simple, rapid
and inexpensive.
Free
access to public
land and grant of rights
to first applicant
are
powerful
instruments to
enhance interest in SSM-activities.
Free
transferability of concessions to parties
meeting eligibility
criteria is
desirable, while guaranteed
entitlement
to be granted mining
rights once a
prospect
is found viable
is an essential
precondition. Regulations
regarding minimum
concession area,
duration and annual
work program are
considered
important. An appropriate definition
of environmental,
health
and safety standards
and documentation
requirements is also a necessity,
in order to assure
adherence to minimum
standards without
creating unduly
strong barriers
to entry.
6. Institutional
assistance
is one of the
most critical
elements
in
a promotional strategy. It is important
that institutions
which assume the
responsibility
for assistance
in the target segment,
are completely
autonomous,
compact,
competent
and efficient. To reach
this goal,
it must be assured
that agencies
are staffed with highly
qualified and
motivated personnel
by offering attractive
salaries and
adequate fringe
benefits for extended
field assignments. Institutions,
furthermore, have
to act through regional
offices in SSM-districts,
equipped
with field
laboratories
and ore collecting stations,
where appropriate. In its
relationship
with the target
sector, emphasis must
clearly be on the
guiding
and enabling
function of the agency,
rather than
on the controlling
function.
7. In the absence
of private companies
providing these
services, the
installation
and operation
of mobile or regional
concentrators
in metal
mining districts
has to be taken
over by public
agencies. Treatment
charges
should reflect
the full costs
of these services. Additional
functions of these
agencies could include
the provision
of technical
assistance
from property evaluation
through
mine planning and operation,
product
marketing,
and to a lesser
extent, financial
assistance.
8. Financial assistance
should preferably
be provided through
local
commercial banks, which
frequently have
a large branch network
with branch
offices close
to mining districts
and greater lending
and collecting
experience
with small borrowers
than public institutions. Incentives
to
increase
commercial bank involvement
include
the introduction
of
risk-sharing
schemes and
larger spreads during
initial years
while
- xi -
confidence is still lacking, as well as rediscounting arrangements with the
central bank based on the assistance of an apex institution with
specialized experience
in SSM projects. Concessionary interest rates for
the SSM-segment, except temporarily for promotional purposes, should be
avoided since experience shows that these may lead to a misdirection of
funds or to less productive use of capital. Exceedingly high interest
rates are equally undesirable because of their negative effect on resource
utilization. Positiye, real interest rates close to those prevailing on
the money markets and reflecting the cost of lending appear adequate.
9. Repayment conditions of loans should be set in strict accordance
with the cash-flow generating capacity of the project, and lengthy grace
periods are usually not necessary in view of the short development period
of SSM-projects. Lending institutions should be encouraged to accept
demonstrated reserves and physical assets as collateral. This will require
improved documentation which can only
be prepared by SSM's with extensive
external assistance. The installation of a national exploration fund is
appropriate under
specific circumstances, particularly in countries where
large metal mining districts with a high potential for SSM-exploitation
are
known to exist, and where exploration has been limited in the past.
10. The provision of extensive technical assistance aimed at
introducing sound mining and business practices in SSM-districts appears to
be equally important. The most appropriate method is the execution of
on-the-job-training
programs in existing MSM or LSM-operations. In the
absence of suitable
training mines, the establishment of a demonstration
mine by the responsible agency, operating under representative conditions,
appears to be the only other option. The acquisition of sound
mining and
business practices is an essential precondition for self-sustaining
development and growth of the target segment, particularly in places where
mining
tradition is weak.
11. Equally important is the provision of basic infrastructural
facilities to the SSM-operators including
access roads, power
supplies and
process water. These could be provided at no cost (e.g. roads)
or reduced
rates (e.g. power
and process water) where
specific circumstances,
including considerations
of regional development
and employment,
justify
such measures. In metal
mining districts, marketing
assistance in the form
of installation
and operation of ore
collecting stations, transport
facilities and concentrators
by a government
agency may be required
if
adequate private facilities
are not available. In such cases, an attempt
should be made to encourage
private companies
or miners' cooperatives
to
take over such plants
after initial operating
periods have confirmed
their
viability. Assistance
should furthermore be concentrated primarily
on very
small-scale mines
(VSSM's) and SSM's, which
require it most, rather
than on
medium-scale mines (MSM's).
-xii -
12. Other
possible
incentives
suitable
to encourage
SSM-development
comprise
purchase
agreements
with
public
or private
institutions,
the
assurance
of fair
and attractive
prices
for mineral
products
and,
where
necessary,
the admission
of competitive
commodity
purchasing
through
licensed
buyers. The opportunity
of renting
mining
equipment
for limited
periods
of time
and equipment
leasing
arrangements
may
also prove
to
be
highly beneficial,
particularly
in cases where
credit
for equipment
purchases cannot be obtained at reasonable terms. Combined packages
comprising purchase agreements associated with the provision of working
capital and rental equipment are highly attractive arrangements for small
producers.
13. Where ore reserves and geological conditions permit, growth of
mine size
should be encouraged to avoid the smallest, highest-cost
operations
and
to enhance
benefits
resulting
from
scale-effects.
Capacity
increases,
however,
have
to be planned
carefully
and
implemented
cautiously
to exclude
undesirable
losses
of the inherent
beneficial
effects
of the
target
segment. In economies
with
a hith
capital-labor-cost-ratio,
such
as
in lower-income
developing
countries,
the
average
mine-size
should
be kept
smaller
than
in countries
where capital-labor-cost
ratios
are lower. In
the MSM-segment,
further capacity
increases
usually will
not result
in an
additional
overall
net
benefit
so that
growth-promoting
measures
should
be
concentrated
on the
lower
end of the target
segment.
14. The
choice
of technology
is a particularly
delicate
matter
since
potential
beneficial
effects
associated
with SSM-activities
are
highly
related
to
the use
of the
appropriate
technology.
Here again
the
prevailing
capital-labor-cost
ratio
is the critical
quantity. The rule
to
be applied
is that
high
values of the capital-labor-cost
ratio favor
the
use of a mining
technique with
a lower
degree of
mechanization,
as do
smaller
mine sizes,
and
vice versa. The
use of a capital-intensive
technology
in small
mining
is economically
incorrect
and
results
in the
loss
of the potential
benefits
of the
target
segment.
15. Both management
and
organizational
structures
have to be adjusted
to the size
of the enterprise. Full size SSM's
and MSM's
have to
have a
formal
organization
with a one- to two-level
management
organization
and a
departmentalized
structure,
while the
smaller
mines
will usually
have
to be
owner-managed
with
a simple
organizational
structure. Private
companies
are
the preferable
form of
ownership
in small-scale
mining. Of particular
importance appears
to be the
introduction
of adequate
bookkeeping
and
accounting
procedures
in the
target
segment.
16. For
VSSM and
smaller
SSM-operations,
the formation
of miners'
associations
and cooperatives
is the only possibility
of partially
capturing
scale-effects.
In the
absence of other options
available
to
strengthen
the position
of the
small operator,
such
formations
should be
encouraged. While
their usefulness
is disputed,
evidence exists that they
can
operate
successfully
provided
that they
are established
in a voluntary
effort
of individual small
miners, rather than
on the initiative
of
-xiii -
authorities
and that they
limit their
role to providing
certain services
to
their
members
at cost,
rather
than
to
attempt
operating
mines
on a
collective
basis. Functions
of cooperative
organizations
should
primarily
include
maintaining
ore collecting
stations,
assaying
facilities
and
concentrators,
equipment
rental
and
the provision
of operating
supplies
at
cost,
to the extent that
such services
cannot be obtained
from other
organizations at lower cost.
17. Multinational
lending
institutions
(MLI)
can play an essential
role in the
process
of promoting
and stimulating
activities
in the
SSM-segment. In view
of the
repeatedly
demonstrated,
favorable
economic
impact
of SSM-activities,
MLI's
should
continue to expand their
involvement
in supporting
the sector. Low-income developing
countries apparently
offer
the best
targets. Promotional
initiatives
should
be extended
to industrial
minerals
and coal produced
for
local markets,
as these
commodities
create
substantial
domestic
linkages
and carry
relatively
low risks.
18. In the promotional
approach,
MLI's
should
continue
to initiate
policy
adjustments
in target
countries
aimed at creating
an economic
environment
conducive
to SSM-growth
and to expand the
capabilities
of
institutions
acting as executing
agencies. In cases
where severe
distortions
discriminating
against
SSM's
have been identified,
the
effectiveness
of MLI loans
should be
made conditional
upon the
initiation
of adequate
policy
reforms. Increasing
emphasis should
be placed
on
channeling
funds
through commercial
lending
institutions
and on expanding
non-financial
assistance,
particularly
on introducing
sound
mining
and
business
practices through
on-the-job-training
programs in existing mines.
The use of appropriate
technologies
and further domestic
processing should
be
encouraged
in an effort
to enhance
economic
benefits. Where
project
conditions
are not favorable,
a staged
implementation
approach
should
be
followed,
rather
than excluding
a target from
promotional
initiatives
a
priori.
I. INTRODUCTION
1.01 In recognition
of the
essential
role of natural
resources
in
economic
development,
the
mining
sector
has traditionally
attracted
considerable
interest
both
on a
national
and international
level. In this
context
the small-scale
mining
sector
has recently
received
increasing
attention
as a promising
goal
for intensified
developmental
efforts. While
this was
motivated
by empirical
evidence
that
small
enterprises
contribute
significantly
to economic
progress
and
have
considerable
potential
for
development,
di4erse
opinions
exist
regarding
promotional
approaches
to and
economic
justification
of small-scale
mining.
1.02 Responding
to this situation,
this
Small-Scale
Mining
Review
was
initiated. The paper's
objectives
are (i)
to identify
and
evaluate
development
constraints
and issues
of this
target
sector
and
to recommend
strategic
actions
for their
solution,
(ii)
to evaluate
approaches,
policies
and strategies
governments
and private
organizations
have
followed
dealing
with
this
segment
of the
mining
industry
and to derive
and
formulate
policy
recommendations
to serve as
guidelines
for future
Bank
operations,
and
(iii)
to
define
circumstances
under
which
small-
and
medium-scale
mining
is
economically
justified
and to
make recommendations
as to the
Bank's
role
and approach
to support
the
sector.
1.03 The
review
has been
carried
out
as a desk
study,
based
on an
assessment
and
interpretation
of the
relevant
professional
literature
published
within
the past
15 years
as
well
as the
documentation
of
Multinational
Institutions'
(MLI)
lending
experience
to small
enterprises
in general
and the
small-
and
medium-scale
mining
sector
in particular. In
addition,
the elaboration
has
been
greatly
assisted
by two recent
papers
on
the subject
that provided
both
fundamental
insights
into
the problem
and
valuable
direction
in
addressing
it. 1/,2/
1.04 While
an extensive
and valuable
volume
of literature
exists
on
the
subject,
one
major
problem
has been
the lack
of coherent
quantitative
and statistical
material
aggravated
by the poor
comparability
of data
resulting
from the
absence
of
a common,
universally
applied
definition
of
the terms
small-
and
medium-scale
mining. The large
number
of issues
to be
addressed,
the
heterogeneity
of
mineral
commodities
combined
with
the
uniqueness
of individual
mineral
deposits
and
the great
differences
between
nations,
have
further
added
to the complexity
of the
subject. This led to
the necessity
to treat
the subject
on a comparatively
high aggregate
analytical
level
and to frequently
rely
on judgement
in the
evaluation
and
interpretation
of issues,
the
selection
of options
and
the
drawing
of
meaningful
conclusions.
1.05 In Section
II, an attempt
is
made
to arrive
at a broadly
applicable
working
definition
of scale
segments
for the
purpose
of this
study. It also
examines
the
contribution
of the
small-scale
mining
segment
to socio-economic
development
and its
share
within
the
industry. Section
III
explores
the
characteristics
and implications
of small-scale
mining
-2-
while
Section
IV seeks
to
provide
solutions
appropriate
to strengthen
the
sector. Section
V identifies
conditions
and
circumstances
under
which
small-
and
medium-scale
mining
is economically
justified
or superior
and
includes
a delineation
of the
principal
characteristics
of potential
target
areas. In Section
VI
options
for
the promotion
of the
sector
are
investigated
and
an approach
for assistance
by MLI's
is
developed.
-3-
II. DEFINITION AND SIGNIFICANCE
A. Concepts and Definitions
2.01 In spite of the frequent
use of scale concepts, a universally
accepted consensus regarding the definition of the terms small-scale and
medium-scale
mining in quantitative units does not exist. This
is
attributable to the fact, that a number of factors
can basically be
employed for demarcation purposes, each apparently
particularly suitable in
a specific
situation. Generally, definitions
are based on one or more of
the following criteria which exhibit distinct variances as a result of the
scale
of operation, as indicated:
Generally Observed Quality for
Criterion SSM LSM
Mine output in tpy small large
Number of persons employed
per unit of output large small
Gross
annual income of firm low high
Degree of mechanization or
capitalization low high
Labor productivity low high
Size of mining concession or lease small large
Size of reserves small/unknown large/well known
Continuity or intermittence
of operation frequently intermittent continuous
2.02 For reasons discussed in paragraph 2.03, mine output is the only
broadly
applicable and universally acceptable
measure for the delineation
of scale
of operation in the mining industry. To allow for the wide
variations in the content of the valuable mineral components in in-situ
ore, both between individual commodities and deposits, mine output has to
be measured in terms of run-of-mine
(r.o.m.) ore. Of this output, varying
but generally very small
proportions represent the mineral to
be extracted
through the following processing
stages. Since it is general
practice to
report mine production in tons per year, mine output in tpy r.o.m. ore will
be employed
as the main criterion for the definition
of scale segments.
2.03 It is obvious that a small number of employees may be equally
indicative
of a highly mechanized,
large-scale open-pit operation
or a
small underground mine using traditional or intermediate technology,
resulting in different levels of labor productivity. Even if measured per
unit output, the number of persons
employed is strongly variable
in
accordance with the type of operation and the geological features of the
deposit. Gross annual
income largely depends on the
unit value of the
commodity produced which varies widely within the industry. The size of
-4-
the mining
lease
required
to
permit
a
desired
scale
of operation
is
influenced
by geological
characteristics,
such
as the
shape
and
type
of the
mineralization,
while
the
size
of reserves
is dependent,
inter
alia,
upon
ore
grade. Continuity
or intermittence
of operation,
finally,
may
be
caused
by factors
other
than
seasonal
employment
in other
sectors
of the
economy,
e.g.
climatic
aspects
or market
forces. As
a result,
these
criteria
are
suitable
only
as
additional
indicators
and
for
orientation
purposes
in the
demarcation
process.
2.04 In
an attempt
to arrive
at a quantitative
delineation
of scale
segments,
it is
appropriate
to examine
the
economic
consequences
of scale
variations. Ample
evidence
exists
that
the
mining
sector
is characterized
by substantial
economies
of scale.
3/,4/ This
means
that,
ceteris
paribus,
larger
scale
mines
produce
at lower
unit
costs
than
smaller
operations. In
this
context,
the
term
"ceteris
paribus"
refers
primarily
to comparable
geological
conditions
and mining
technology. Theoretical
considerations
supported
by comparative
observations
suggest
that
the
unit
cost
disadvantage
of small
operations
becomes
extremely
severe
in the
lowest
size
segment
that
corresponds
to approximately
10-20%
of the
production
capacity
at which
the minimum
cost
level
can
be attained. From
the
same
relationship
it appears
that
under
comparable
operating
conditions
there
is
little
difference
in the
unit
cost
between
medium-
and large-scale
mines
and even
between
the
lower
and
the
upper
segment
of the
medium-scale
operations.
2.05 A further
narrowing
down
of quantitative
demarcation
lines
is
complicated
by the
fact
that
the
long-range
average-cost
curve,
reflecting
the effects
of economy
of scale,
is
different
for
individual
commodities
and
types
of operation. For typical
large-volume
minerals
extracted
in
open-pits,
e.g.
iron
ore
and
coal,
the threshold
capacity
at which the
minimum
unit
cost
level
is reached,
is higher
than
for
a typical
low
volume
mineral
extracted
in underground
operations. This
appears
to be the
main
reason
why
a generally
accepted,
single,
quantitative
segment
demarcation
has not
been
put
forward
and
may
not be
practical. A brief
review
of
statistical
data
on the
global
distribution
of
Western
World
non-fuel
mine
sizes
serves
to illustrate
the situation.
2.06 Annual
surveys
of the
number
of producing
mines
in different
size
categories
above
150,000
tpy
have
been
published
by Mining
Magazine
for
many
years. A summary
of the
1986
survey
in the form
of the
world
total
is
presented
below.
5/
Number
and Share
of Producing
Mines
Size Range Open
Pit lJnderground
(Mt/y) No. % No. x
0.15 -0.30 89 16 201 30
0.30 -0.50 57 10 135 20
0.50 -1.00 91 16 134 20
1.00
-3.00 123 22 137 20
above 3.00 197 36 68 10
World
Total 557 100 675 100
-5-
According to this survey, which does not include the size category below
150,000 tpy that is thought to contain the small scale mine (SSM) segment,
50% of the underground mines fall into the category 150,000-500,000 tpy,
while 30% have a capacity of 150,000-300,000 tpy. The respective figures
for surface mines are 26%
and 16%. From the large proportion of producers
in the lowest category it can be concluded that this segment already enjoys
the benefits of economy of scale in the form of low unit cost. Thus, the
demarcation line between the SSM- and the Medium-Scale Mine (MSM)-segment
must be well below the 150,000 tpy mark. The data also clearly indicate
that the demarcation lines for underground and open-pit operations should
be set at different capacity levels.
2.07 It, therefore, appears appropriate to select different
segmentation lines for the mining sector depending on the type of
operation. This will be facilitated by reviewing a selection of
classification limits as proposed or adopted by different authors and as
presented below.
Classification Value
in tpy r.o.m. Ore
SSM MSM Source
below 50,000 United Nations, 1972
below 50,000 50,000 to 500,000 P.C. Kotschwar, 1986
below 100,000 J.S. Carman, 1985
below 100,000 100,000 to 1,000,000 G.F. Leaming, 1983
below 100,000 -D.N. De Bord and
W.G. Mikutowicz, 1981
below 100,000 -U.S.B.M., 1983
from 20,000 to 200,000 -D. Ingler, 1983
below 150,000 -Mining Magazine, 1986
and previous years
below 50,000 50,000 to 1,000,000 J.C. Fernandez, 1983
below 60,000 G. del Castillo, 1980
While most authors agree that quantitative classification limits employed
have been drawn more or less arbitrarily, it is interesting to note that
the upper SSM-demarcation line varies from 50,000 tpy to 200,000 tpy with
the 100,000 tpy mark chosen most often.
2.08 If one of the principal motives for selecting quantitative
classification limits is to establish criteria for eligibility evaluation
for assistance programs, demarcation lines have to be set sufficiently
narrow to permit efficient treatment of individual segments in accordance
with the respective needs. As a consequence, the following segmentation is
adopted for the purpose of this study, admittedly also with a certain
measure of discretionary judgement.
-6-
Mine Output
in tpy
r.o.m.
Ore
Size
Segment Underground
Mining Surface
Mining
VSSM below
5,000 below
10,000
SSM 5,000 -50,000 10,000 - 100,000
MSM 50,000 - 500,000 100,000
- 1,000,000
LSM above 500,000 above 1,000,000
In spite of the narrow segmentation, a number of mines with output levels
corresponding
to the
SSM and MSM category
are
not
exposed
to the issues
and
constraints
typical
for
the majority
of smaller
mines
in developing
countries. For
the analytical
purposes
of this paper
and
with a view
to
eligibility
assessment
as well
as assistance
program
design,
further
qualifications
are,
therefore,
desirable. Accordingly,
SSM and
MSM shall
refer
to
mining
operations
with
output
levels
as specified
above,
yet only
to the
extent
that they
are
confronted
with barriers
to entry
regarding
access
to institutionalized
credit
and
marketing
of
mine production.
2.09 The definition
chosen
here is primarily
of an indicative
nature.
It
will
not always
be in full
congruence
with
data
presented
in
the
following
sections
in the form
of quotations
under
the terms
SSM
and MSM.
Conclusions
reached
in the
analysis
would,
however,
essentially
not
be
different
if segmentation
boundaries
were somewhat
relaxed.
B. Share
of Small-Scale
Mining
2.10 A comprehensive
investigation
of the
contribution
of
small
mines
to the
global
output
of all major
metals
and industrial
minerals
has been
conducted
recently.
6/ The analysis
which
covers
the
segment
of mines
with
less
than
100,000
tpy mine
output,
concludes
that
the share
of small
mines
in the global
output
of non-fuel
minerals
is about 16%
in terms
of gross
value,
equivalent
to
US$21.6
billion
in 1982
dollars.
2.11 The share
of small
mines
in solid
fuel
mineral
output
is not
well
documented. Data
on two
leading
coal-producing
countries
may therefore
serve
as an indication. In 1979, China
produced
635
Mt of coal of which
43.7%
came
from some
20,000
small
mines.
7/ Of these
only
1,600
had a
capacity
of over
30,000
tpy. Another
source
reports
that
in 1983,
the
share
of national
coal
output
of approximately
700 Mt, from
small
mines
with an average
capacity
of 100,000
tpy amounted
to 49.2%.
8/ Even
in the
highly
competitive
environment
of the
USA
small
coal
mines
still
play an
important
role. In 1977,
a total
of 20%
of US coal production
of 700 Mt
came
from
mines
with
an output
of less
than 100,000
tpy, practically
unchanged from previous years.
9/
2.12 Similarly
significant
is the share
of small
mines
in the
global
output
of precious
stones. It is estimated
to be in the
range
of 75-80%
for semi-precious
stones
and 10-15%
for diamonds.
10/
-7-
2.13 The
shares
of small
mines
for individual
commodities
of the
commodity
groups
metals
and
industrial
minerals,
both
in terms
of
mine
production
and
estimated
value
are
presented
in
Annex
A. Based
on data
contained
there
and
material
discussed
in the
preceding
paragraphs,
the
following
shares
of small
mines
in global
production
by
major
commodity
groups
can
be estimated.
Global
Share
of Small
Scale
Mining
(below
100,000
tpy)
in Terms
of
Commodity
Group Mine
Production Estimated
Value
Metals 12% 11%
Industrial
Minerals 31% 25%
Coal 20% 20%
Precious
Minerals
Diamonds 10% 10%
Gemstones 75% 75%
2.14 The
figures
presented
clearly
indicate
that
the
share
of small
mines in
world
mineral
production
is considerably
higher
than
the
10%
generally
assumed. Particularly
impressive
are
the
proportions
of small
mines
in the
output
of industrial
minerals
and
gemstones. More than
1/2
of
the
major
industrial
minerals
and
nearly
1/5
of the
major
metals
are
mined
predominantly
on a small
scale. Developing
countries
for
which
an
important
small-scale
mining
activity
has
been
reported
are
presented
in
Annex
B.
C. Contribution
to National
Objectives
2.15 Under
favorable
circumstances,
SSMs
have
the
potential
of
contributing
significantly
to economic
progress
in developing
countries.
Traditionally,
SSM
activities
have
played
an important
role
in the
development
of
many
nations'
mineral
resources
by substantially
contributing
to
new discoveries
and permitting
the
exploitation
of limited
deposits.
11/,12/ Still
today
SSM's
have
or can
have
a significant
impact
on employment
creation,
development
of
regions
with
otherwise
little
economic
potential,
skills
formation
and creation
of export
revenues.
2.16 The true
importance
of the
extractive
industry
lies
in its
strong
linkages
with
the secondary
and
tertiary
sectors
of the
economy,
particularly
in its
role
as a supplier
of production
inputs
for
a large
number
of other
economic
activities. Practically
all
services
and
goods
marketed
in a modern
economy
require
energy,
machinery
or
material
inputs
that
can
be traced
back
to
minerals. Furthermore,
establishing
and
operating
mines
creates
demand
for
large
quantities
of capital
and fixed
assets,
transportation
services
and
energy. This
is documented
by the
values
of
multipliers
which
have
been
determined
for
a number
of states
in
the
USA that
have
an important
small-scale
mining
segment.
13/ There,
output
multipliers
for
mining
and
mineral
processing
range
from
1.3-2,
while employment
and
income
multipliers
reach
values
from
3-5
and
2-3.5
respectively.
2.17 For
a large
number
of developing
countries,
notably
the
minerals
led
economies,
mineral
production
can
also
provide
a substantial
direct
contribution.
A selection
of countries
in
which
non-fuel
mining
provides
an important
share
of GDP
and employment
is presented
in
Annex
C. Of
equally
great
significance
is the
contribution
of the
non-fuel
mineral
industry
to the
export
earnings
of the
developing
countries
which
amounted
to 16%
of total
exports
from
this
country
group
in the
mid 1970's
compared
to 12%
in the
mid 1950's. Moreover,
mining
can
have
an important
indirect
foreign
exchange
effect
in the
form
of substituting
commodity
imports
that
would
be necessary
in the
absence
of indigenous
mineral
extraction.
-9-
III. CHARACTERISTICS
AND
IMPLICATIONS
A. Peculiarities
of Commodity
Subgroups
3.01 While
minerals
are
an extraordinarily
heterogeneous
group
of
earth
materials,
certain
characteristics
can
be identified
that
are
specific
of major
commodity
subgroups. Broad
commodity
groupings
most
frequently
referred
to
comprise
(i) metals,
(ii)
precious
minerals,
(iii)
industrial
minerals,
and (iv)
solid
mineral
fuels
(mainly
coal).
Characteristics
of particular
relevance
in the
present
context
include
grade-volume-value
relationship;
type,
quantity
and
location
of end-use;
mode
of occurrence
and
regional
distribution
of resources;
complexity
of
mining
and processing
requirements;
and stability
of
market
parameters.
3.02 Small
metal
deposits
require
a combination
of higher
ore
grade
with
higher-unit-value
ores
and/or
favorable
geological
conditions
to
compensate
for
the
cost
disadvantages
of small-scale
operation. These
are
the
main reasons
why
metal
ores
that
frequently
meet
these
conditions,
such
as antimony,
chromite,
tungsten,
mercury
and
beryllium
are
mined
on a
predominantly
small-scale
while others,
such
as
gold,
silver,
lead,
zinc
and
tin
have
important
small-scale
components. For the
vast
majority
of
metals,
the
proportion
of the
valuable
constituents
in the
in-situ
and
the
run-of-mine
ore
is very
small. The
concentration
factor,
representing
the
reduction
ratio
of the
volume
of r.o.m.
ore
to that
of the
traded
metal
or
concentrate
is correspondingly
high. Inversely
this
also
applies
to the
ratio
of the respective
unit-values. As a general
rule,
the
larger
the
mineral-specific
concentration
factor,
the
more
urgent
is the
economic
necessity
for concentLrating
the
ore close
to the
point
of extraction.
3.03 Another peculiarity of metal ores is that they require pyro-or
hydrometallurgical processing for the production of tradable metal. As a
consequence, investment costs per
unit
output
are
considerably
higher
for
metals
than
for
other
mineral
subgroups. Moreover,
modern
smelting
operations
are
highly
energy-consuming
and
demanding
in terms
of
skilled-labor,
all
factors
that
have
special
implications
for
small-scale
projects
in developing
countries. On the
other
hand,
smelters
usually
are
the
least
profitable
element
in the
mining
cycle. A special
characteristic
of some
metals,
their
potential
of being
recycled
and
substituted
by other
materials,
will
have
dampening
effects
on the
growth
of primary
demand,
international trade and depletion. Noteworthy is also the tendency of the
price of many metals for short-term fluctuations and its sensitivity to
changing
levels
of economic
activity. In addition,
short-run
price
elasticities
of
metals
are
generally
low
due
to the
fact
that
metal
demand
is a derived
demand
from
a multitude
of end-uses
and lead
times
for
increasing
productive
capacities
are
long. For the
same
reason,
metals
are
of strategic importance to most modern industrial economies. Local demand
for metals in developing countries is generally
low,
production
therefore
primarily
serves
export
and
foreign
exchange
earnings
objectives.
-10-
3.04 With
precious
minerals,
the
outstanding
characteristics
compared
to other
commodity
subgroups
are
their
exceptionally
high
unit-value
and
their
usually
extremely
small
fraction
of the
total
deposit. A
characteristic
favoring
small-scale
mining
of precious
stones
from
many
small
alluvial
and
vein
deposits
is
the
applicability
of simple
processing
methods
such
as gravity
separation
which
does
not require
special
skills
or
expensive
concentration
facilities. Most
important,
however,
although
large
quantities
of ore
have to be
processed,
the final
product
is obtained
in extremely
small
quantities
of very
high
unit-value. This
practically
eliminates
the
physical
efforts
in product
marketing
since
volume
transportation
problems
do not exist,
a quality
that
is equally
important
in small-scale
precious
metal
mining. These
peculiarities
are
factors
in
favor
of small
operations
that
will
be effective
to reserve
small
mines
a
significant
role
in this
commodity
subgroup. As local
demand
in developing
countries
is negligible,
output
of these
commodities
is
almost
exclusively
exported
to
earn
foreign
exchange. Another
special
feature
is
a relatively
easy,
albeit
strongly
fluctuating
market
in which
the
finished
product
is
sold
to end
consumers
virtually
without
further
processing
steps.
3.05 Within
the
industrial
minerals
subgroup
and
in comparison
to all
other
minerals,
construction
materials
are characterized
by abundance
and
a
very
low
unit
value
which
results
in an extremely
strong
market
orientation
and the
need
for
lowest
possible
production
costs. Production
is therefore
almost
exclusively
by open-pit
and
producers
are located
close
to the
points
of demand,
i.e.iurban
areas
and
infrastructural
construction
sites,
since prices do not permit long hauls. Other characteristics are their
evenly distributed wide-spread occurrence throughout the world and the
simplicity
of exploitation
and processing
methods
associated
with
little
or
no volume
reduction. These
qualities,
particularly
the
small
marketing
radius
resulting
in
a dispersed
pattern
of small
operations,
make
construction
materials
natural
candidates
for
small-scale
extraction
where
local
demand
is limited,
although
physical
marketing
requires
certain
basic
facilities
due
to quantities
involved. Demand
for
construction
materials
exists
in developing
countries
already
in early
stages
of
development,
increasing
as the
economy
advances. Output,
therefore
is
used
locally.
3.06 For
a variety
of other
industrial
minerals
serving
a large
number
of end-uses,
the
unit-values
are
considerably
higher
resulting
in
a
correspondingly
large
marketing
radius. In addition,
quantity
demand
is
lower
so that
requirements
in terms
of large-volume
transport
infrastructure
is reduced. Many of them,
such
as fluorspar,
graphite,
talcum,
vermiculite,
feldspar,
clays,
gypsum
and
barite
are
produced
predominantly
on a small-scale,
either
because
they
occur
in small
deposits
or because
they
are
produced
for
a limited
local
market. Volume
reduction
usually
is
much lower
than
with
metals
although
processing
and
quality
requirements
can
be quite
demanding. Considerable
local
demand
exists
already
in
moderately
advanced
developing
countries,
growing
with
increasing
economic
activity. Production,
therefore,
is equally
important
for local
consumption
and
export.
-11-
3.07 Coal, as the most
important solid
mineral
fuel, is comparable
in
economic
characteristics
more readily
to industrial
minerals
than to
metals. Occurrence is fairly wide-spread and the unit-value lies between
the construction
materials and
the variety industrial
minerals. Processing
is frequently comparatively
simple and volume
reduction through
processing
is small. In the absence of other low-cost energy sources, the
availability
of coal is
of vital importance
to economic
development
in its
early
phases and to the continuance
of economic activity
in modern
industrialized countries. While coal is mined predominantly on a large
scale, the
examples of China,
Pakistan, Colombia,
Philippines
and the USA
demonstrate
that
small coal
mines can
competitively
supply local
markets
within
a limited transport radius.
3.08 A synoptic
profile
of the commodity
subgroup
typification
developed
above is presented
in Annex
D. It contains
a summary
of the
relevant characteristics
and their associated implications
in the present
context. It should
be emphasized that
a binding,
all-inclusive
typification
is impossible
in view
of the uniqueness
and heterogeneity
of
individual commodities
and that qualifications used have to be interpreted
in a comparative sense. In spite of this
limitation, the
profiling is
helpful in demonstrating
that considerable differences in the
significance
of development issues and constraints
between commodity subgroups can be
expected which
necessitate variations in the evaluative
and supportive
approach.
B. Attributes and Issues
3.09 Depdsit
Utilization and Wastage. One of the negative
aspects
frequently
associated with
SSMs is the
inclination of the small miner
toward highgrading (mining only the best parts
of the deposit) resulting in
the poor
utilization
of mineral
deposits and the wastage
of natural
resources. Reasons
for this shortsighted and
damaging practice are
lack of
knowledge of the
deposit worked, combined
with the intention to
make a
quick profit.
14/
3.10 While the extreme form of highgrading is without
doubt
economically undesirable, there
is reason to believe that both
its damaging
effect and its extent in SSM is overestimated. Its practice
is largely
limited
to narrow,
vein-type
metal ore
deposits
which constitute
only
one
category of mineralizations
worked by SSMs. Highgrading
is less applicable
in mining
of coal or industrial
minerals
and in placer
deposits. Moreover,
the transition
from selective
mining,
which is a generally
accepted
and
frequently
employed form of extracting mineralizations,
to highgrading is
gradual
and qualifications,
therefore,
are a matter
of subjective
judgement. Strictly
speaking,
any advanced
degree
of selective
mining
can
be
interpreted
as highgrading.
3.11 On the other side, numerous mineral deposits with complicated
geometric
conditions
and limited resources
can only
be extracted by small
operations. These
resources would
remain unutilized
unless they
were
-12-
exploited by SSMs. Examples range
from tungsten
and tin mineralizations
in
Rwanda to coal mined from steep, faulted
seams in China, Colombia
or the
Philippines. The small miner, thus, frequently
acts as a scavenger. 2/
Comparative observations
of this nature
lead to the conclusion
that ln
total the positive
effect
of the
utilization
of marginal
natural resources
through SSM by far outweighs the damage
done by localized
or occasional
highgrading. Even
so, measures to reduce highgrading should
be introduced
into
projects designed
for mining districts,
where severe damaging
effects
are expected.
3.12 Apart
from highgrading,
poor recovery of mineable
in-situ mineral
can
be caused in cases where uncoordinated
small-scale
mining
by a large
number
of individual small
operators results
in the fragmentation
of
orebodies of a size and nature that
would permit exploitation
by a single
larger operation. Suboptimal utilization
of the mineral potential
also
occurs if small operators
lacking the financial
resources for
optimum-scale
mine development,
are allowed
to tie-up large deposits
that could
be
exploited economically
at higher output
levels. Such practices
are clearly
undesirable and
have to be corrected
through encouragement
toward organized
systematic
exploitation or excluded
a priori by the
authorities by means
of
appropriate
provisions in
national mining codes. The same applies
to
situations in which
small operators
create safety hazards
for adjacent or
subsequent
full-scale mines
in the form of
unsecured and unreported
mine
workings,
water and
gas accumulations,
etc.
3.13 Exploration
and
Risk. Traditionally,
the small,
independent
prospector
has played an important
role in the exploration
of the earth's
surface for interesting
mineralizations
and his contribution
to the
identification of workable
mineral occurrences
has been significant
in many
industrialized
nations. It is estimated that
more than 50% of the major
mines currently
operating in the USA derive from exploration
targets found
by small
prospectors. 13/ Generally however, small
prospectors and
miners
in developing
countries lack
both the knowledge
and the means required
for
extensive
target exploration
and evaluation. Confirmation
of
mineralizations
is based
frequently only
on a few randomly
collected
surface samples
that are not representative
and exploitation
is started
primarily
on faith
with little
or not pre-operational
exploration
and
mine
planning. The typical small
mine thus follows
the ore immediately
in
sight. It is apparent
that the entrepreneurial
risk
such miners face
is
enormous
resulting in a high frequency of failures. Even when
a long
tradition
of mining provides
evidence of the
existence of wide-spread
areal
mineralization,
the miner has little
control over the
quality of r.o.m.
ore
without prior exploration. As a result, the erratic
occurrence of values
in the ore
mined will always
be a marketing constraint
and a serious
threat
to profitability
and ultimately
existence.
3.14 With the possible
exception of VSSMs
worked by purely artisanal
methods, a certain minimum
amount of professional,
pre-operational
exploration,
therefore is a necessity for
systematic mining,
regardless of
-13-
scale of operation. In the individual
case, the adequate
amount of
exploratory work
is highly dependent
upon the complexity
of the deposit and
the financial
resources required
to establish
a mine. Larger
operations
extracting
complex ore from
an unfavorable geological
environment
thus
necessitate substantially more
detailed exploration than small units
extracting homogeneous
material from a uniform
undisturbed deposit. As a
consequence, SSM operations
in industrial minerals and coal generally
require less pre-operational exploration than SSMs and MSMs in metal
mining.
3.15 In order
to reduce the risk
element of SSM
and MSM in developing
countries to acceptable
levels, the
national mining legislation
has to
contain provisions
that make the
issuance of mining
licenses contingent
upon the
submission of an adequate mining plan
for all prospective
operators. The degree
of detail of such a
mining plan has to be set in
accordance with the individual requirements
depending on
mine size and
nature. Since, however, exploration is both costly and inherently risky,
such mining
legislation has to be accompanied by a framework
of incentives
sufficiently
attractive to
keep an active exploration
process alive. For
the
same reason SSMs will only
be able to conduct pre-operational
exploration work to the extent that they receive
outside financial
assistance at acceptable terms. Similarly, mining legislation has to
include
provisions that link the continued
validity of exploration
permits
to a minimum level of annual exploration
conducted, to exclude the
possibility of indivi1uals maintaining exploration rights for speculative
purposes without
the genuine intention of establishing
a mine, thus
delaying the utilization
of natural
resources.
3.16 Employment
and Social
Impact. A highly
beneficial attribute
of
small enterprises for developing
countries is that they are more
labor-intensive
than large firms and thus
account for an appreciably larger
share of recorded
employment. 15/ The same is true for small mining
operations which frequently emproy large numbers of workers in rural mining
districts, where job opportunities are particularly scarce. 16/ Examples
of the employment capacity of the SSM-segment are provided for selected
developing countries below.
Country Persons Employed Percentage of Mining
in SSM Sector Employment Source
Bolivia 23,800 30% U.S.B.M. 1981
Chile 11,000 15% U.S.B.M. 1980
India n.a. 47% UNITAR 1980
Mexico 25-30,000 20-22% UNITAR 1980
Morocco 39,400 40-50% UNITAR 1980
U.S.B.M. 1984
Peru 40,000 50% UNITAR 1980
U.S.B.M. 1981
Philippines 200,000 78% Metro
Manila Times 1986
Rwanda 11,000 n.a. UNITAR 1980
Zaire 20-50,000 20-35% U.S.B.M. 1985
-14-
3.17 Data
presented
illustrate
that SSMs
can contribute
significantly
to national
employment
objectives,
reducing unemployment
and
underemployment
primarily
in rural areas,
thus
helping
to control
rural-urban migration. Labor intensity is particularly great in VSSM
operations of artisanal mining districts, where engagement in mining is
frequently
intermittent
in accordance
with seasonal
work in agriculture.
Comparative
data
consistently
show
that with
increasing
mine
size,
labor
intensity
decreases
as
a result
of increasing
mechanization
and associated
labor
productivity.
In underground
mining,
employment
per unit
output
may
differ
by a factor
of
30 between
mines
using
traditional,
artisanal
methods
and
highly
mechanized
operations.
17/ In surface
mining,
such
technology-related
differences
in labor
intensity
can
even be considerably
larger. Including,
moreover,
indirect
and induced
employment
resulting
from
SSM-activities,
it is obvious
that
the total
social
and economic
impact
in a small-scale
mining
district
can be highly
beneficial.
3.18 Moreover,
mining
operations,
regardless
of size, offer
an
excellent
opportunity
for
transforming
unskilled
labor
into semi-skilled
or
skilled
industrial
labor. Here
again,
SSMs and MSMs,
employing
comparatively
more persons
contribute
more to basic skill
formation
objectives
than
LSMs. In addition,
the
smaller
operations
using
less
sophisticated
technology
tend to conserve
on highly
skilled
labor that
is
generally
scarce
in developing
countries.
3.19 Negative
aspects
are that
small
enterprises
operating
outside
the
formal sector
usually do not provide
the standard
of social welfare
offered
by larger
firms. Particularly
in the VSSM--and
the lower SSM--segment,
earnings
of workers
are frequently
below
the legal
minimum
wage level
and
social
welfare
programs
are not
made available. Most
often
this can
be
observed
in regions
where
mining is the only
or major local
source
of
employment. In such cases,
again local administrative
authorities
have to
ascertain that
a minimum
standard of
workers renumeration
and
benefits is
maintained
and
that additional