The collaboration between SigraFi, a UK-based provider of responsibly sourced gold, and PeaceGold Trading Company seeks to increase the amount of traceable artisanal gold supplied by the eastern regions of the Democratic Republic of Congo (DRC) to the international market, as well as to provide financing opportunities for small-scale miners.
This agreement will see SigraFi supply structured working capital, logistical support, and refine and deliver the gold in return for an agreed supply of fully traceable gold doré coming out of mining cooperatives in the province of Ituri.
The deal is considered to be an important move in legitimising the artisanal mining industry in the DRC, since most gold mining in the country is conducted informally and is subject to smuggling. According to Reuters, over 50 percent of the country’s gold production is smuggled out in April.
PeaceGold was established in 2013 by fair trade gold founder Greg Valerio alongside Centre Résolution Conflits, which is a local organization. The company has been working with mining communities in the eastern part of the country for over ten years to legalise artisanal mining, decrease the use of mercury during the gold mining process, reintegrate war veterans into society, and set up export channels.
Currently, the program is engaging with approximately 11 artisanal mining cooperatives in Ituri province, totaling roughly 25,000 miners and auxiliaries. The idea here is to create a legal avenue to help legitimize the gold trade in the region as well as foster the development of peaceful communities.
In the new structure, Sigrafi will help the miners scale up their production activities through the use of working capital financing based on anticipated future deliveries of gold. In the process, it is likely that miners will have better access to international markets for their products.
Zara Shirwan, one of SigraFi’s founders and director of strategy, sees the partnership as an example of how responsible sourcing systems can create value in the artisanal mining space. As she put it, too many artisanal miners are hindered by their lack of access to appropriate export routes, refinery partners, and financial systems. According to her, commercial partnerships in the long term would facilitate the integration of responsible operators into the international gold trading system.
As Greg Valerio explained, the joint project can be viewed as a successful example of how peace-building activities and responsible sourcing systems can complement each other. As he stated, mining communities in eastern DRC are ready to meet international requirements but do not have access to relevant processes, and, therefore, access to finance would enable them to get more value from their production.
“This partnership comes at a crucial juncture when there is increasing interest in responsibly sourced minerals, ” SigraFi noted. In its press release, SigraFi stated that artisanal and small-scale mining contribute to about 20% of total global gold output. This is an increase from 4% reported in the early ’90s. Artisanal and small-scale mining contributes up to US$100 billion yearly in revenues while supporting more than 15 million lives worldwide.
“This PeaceGold agreement represents just one component of our broader strategy to develop responsible sourcing and growth-capital relationships with artisanal gold miners around Africa and Latin America, ” SigraFi explained.
