Ghana - Small Scale Gold & Diamond Mining Project : socio-economic impact study executive summary

Environmental Assessment/Analysis Reports _____ Report E0049 G -. Ghana - Mining Sector Management &. Envionment. Project . EA Category B Environmental Analysis June 1994 This report has been prepared by the Borrower or its Consultant  ENVIRONMENTAL ANALYSIS GHANA MINING SECTOR DEVELOPMENT AND ENVIRONAMENT PROJECT PROJECTIFORMAATIONDOCUAMENT Emrvnme,xAmess=e Caftgory B hIsued by the Environental Protection Council (EPQ Govmwnt of Ghana anne 2,91994  Environmental Anlsis GHANA Overview 1. The objective of the above project is tD establish capacity in the Government to ensure the sustainable development of the country's mining sector. This is expected to be achieved through the setting up of an effective regulatory framework to carry out all mining activities in an envir y sound manner. Pilot tesfting of different mechanisms and techniques will be used tD improve the productiviy and financial viability of small-scale miners while at the same time reducing environmental impact of these activides. The aim is to provide incentives to small-scale miners to contain their activities tD clearly demarcated areas of land, providing them with access to geological inmormation and technology as well as extension services to enable mining activities to be carried out in an environmentally sustainable manner. In addition, the project will address the environmental impact of past mining activities through the pilot testing of different techniques and mechanisms for reclamation and -. rehabilitation of priority areas. 2. The project aims to provide assistance to the Goverment to achieve the following objectives with regard to environmental management in the mining sector: (i) minimization or pre-emption of envirommental impact of new mines; (ii) contaiment of the impact of established mines; and Ciii) assessment of best practices and options for ensuring the reabilitation of disturbed land. In order to achieve these objectives, the project will provide technical assistance and capacity building support to the mining sector agencies. In addition, the project will carry out pilot testing of alternative techniques including equipment and processing technology which will increase the productivity of small-scale miners while at the same time containing the environmental impact of these activities. The equipment and technology to be pilot tested, will be limited to those that are already operational and have been approved as being environmentally responsible in the source countries. They will be tested for applicability to local conditions and acceptability by the small-scale mining communities. The project will also address the reclamation and rehabilitation of land degraded through past small-scale mining activities. The reclamation and rehabilitation activities will be carried out on a pilot basis, to test best practices and cost-effective mechanisms. 3. Ihis project has been classified as Category B, according to the Bank guidelines pertaining to environmental review procedure. The design of the project benefitted from several studies that were carried out by the Minerals Commission of Ghana, to ascertain the impact of small-scale mining activities on the ecology and on communities. These studies have assessed the social, environmental, health and safety impact of small-scale mining. Summaries of two of these reports (Socio-economic Impact of Small-sale Mining and Environmental Audit to Study Effects of Small-scale Mining Activities on Vegetation), are attached to this document, as Annex I and Annex IL  -2- Nature of the Project and Environmental Analysis 4. The project is mainly a technical assistance project and the only investments are of a pilot nature. The project contains a significant degree of flexibility in design, unlike a traditional project where the type of investment and the resulting impacts on the eco-systems and communities could be asessed during the preparatory stages of the project. In this project the equipment to be utilized would be detrmined during the course of project execution, depending upon the applicability to local conditions and acceptabBity by the communities concerned. Likewise, the reclamation of land would be carried out on Lands detemined by the Govemment and by communities, as being priority. Reclamation will be carried out using community involvement and participatory methods. Once the types of equipment and processing techniques are determined under the project, and the reclamation methods and locations are demined in consultation with the recipients, specific envtironmentalanalysis will be carried out as part of project implementadon, to determine best practices and midgation measures. 5. During appraisal of the project, a Beneficiary Particpation Workshop will be held, in a location where small-scale miners are active to enable inputs of all stakeholders to be incorporated into the details of project design and arangements for implementation. Ideas of beneficiaries will be sought, particularly with regard to the implementation of the pilot acivities. Prject Components as they address Enviromnental Management in the Mlnii8g Sector 6. A brief description of the project components in the context of how they address environmental management in the mning sector is provided below: Strengthing of Mning Sector Institutions 7. This component comprises four sub-components: (a) hnproved Regulatory Framework. Under this sub-component, the project would provide assistance to the mining sector agencies to review existing legislation, regulations and monitoring and enforcement activities in order to determine modifications for the improvement of the institutional and regulatory frmework. Guidelines and standards would be developed for environmental monitoring and control of all mning activities. This activity would be carried Out by the Minerals Commission (MC) in Ghana, in close collaboration with and under the guitance of the Environmental Protection Council (EPC). (b) Improvement in Enforcernent. Support will be provided under this sub- component to the Mines Department (M) to caury out inspection, monitoring and enforcement responsibilities, particularly with regard to environmental inpact and health hazards. Equipment will be procured for the Mines Deparanent to carry out monitoring and sampling of air, soil and water in and around mine sites.  -3- (c) Environmental Informatdon. Assistance under the project would extend to the setting up of a mining/environmental data base which would be part of a comprehensive mineral information system. The environmental data gathered by the Wmes Department, petaining to soil and water quality in and around mine sites and information pertaining to mine effluents would be fed into the data base. This data base would fully consistent with and compatible to the Environmental Information System being developed at the EPC. (d) Studies. Studies to be carried out under this component include an analysis of appropriate mechanisms to enforce regulations, including (i) an assessment of the applicability of performance bonds and other measures to ensure that mine operators carry out eavironmental mitigation; and (ii) a pollution abatement, water and sanitation strategy for the township of Obuasi, where past environmental degradation is especially severe. Assistance to Smalkscale Mining Enterprises 8. Under this component, equipment and technology known to be environmentally responsible, would be pilot tested to determine their acceptability to local small-scale miners. The dissemination of these as well as processing technology which is environmentally sustainable is aimed at reducing the environmental impact of small-scale mining activities. The project aims to provide incentives to small-scale miners to contain their activities to specific locations in order to minimize environmental impact on extensive land areas. Extension services would be provided under the project to carry out mining activities in a responsible manner, which would include traWing in activities such as the safe disposal of mine wastes, handling of toxic or hazardous materials, safety in mne operations and the restoration of the land utilized to an acceptable state. 9. Under this component, degradation of lands through past mining activities of small- scale miners would be addressed through the pilot testing of methods to reclaim and rehabilitate priority areas. The MC has already commenced the idetification of priority land areas that have been degraded, in consultation with the EPC and with the departments of land and forestry. Reclamation work has already begun on some priority areas in the Greater Accra area. The project would build upon the work already carried out, and carry out pilot testing of different mechanisms for rehabilitation including participatory approaches where community involvement would be sought in the reclamation and reforestation activities. The aim of this sub-component would be to determine cost-effective methods for future reclamation activities. Reclamation activities will include the closure of abandoned shafts and surface dumps and filling of mined out areas. Rehabilitated land will be planted with fast- growing indigenous vegetation, mobilizing community participation in the selection of plant varieties as well as with regard to the methods of afforestation. PID.M&E  &A X 06 SMALL SCALE GOLD AND DIAMOND MINING IN GHANA SOCIO-ECONOMIC IMPACT STUDY.. EXECUTIVE SUMMARY Prepared For THE MINERALS COMMISSION AND GTZ (TECHNICAL COOPERATION FEDERAL REPUBUC OF GERMANY) by L Dr. M. Y. Boateng (Team Leader) Ms. E. Ofei-Aboagye Mr. T. K. Nsiah January, 1993  -- .- - --~ -~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .- ~~. * ~EXE-CU!ZXYE SmuXN RE 0 MYE SYUDY 1.0 INTROD=NT W 1.1 Small Scale Mining had been fraught with illegalities due mainly to foreign exchange restrictions. Resulting from the t cStructural Adjustment Programme (SAP) the sector was legalized in May 1989 by PNDCL 218. The Minerals Commission was charged with the responsibility of implementing the law, thus the -Small Scale Mining Project. The purpose of this study is to conduct a socio- economic impact study of the project and to provide guidelines f'or- the second phase. 1.2 Study Area and Tarcet Group and Kethodologa The study area comprised all the Small Scale Mining areas (except Kibi and Konongo areas), and the target groups were considered to be the Project Management Unit (PMU), the Extension - Officers (Field Officers), and importantly, the Concession Owners, Workers and the Licenced Buying Agents (LBA's). The study used both Primary and Secondary Data. 2.0 GENERAL CHARACTERISTIC8 OF THE S8 MINERS 2.1 Family Size Age and Marital Status General characteristics of the target group (the Miners) are III very vital for planning purposes. The average age of the Miners (including the Buyers) is 38; however the Workers seem to be much younger, with an average age of 33. Eighty-eight percent of the target group are married with a family size of seven persons, five of whom are dependants. xiii ml I-  pl~ 2.2 ocaupation ad Re119i@n The major occupation for about 65% of the respondents is mining business, the rest have farming as their major occupation. Those who have mining as their major occupation have farming as N their minor occupation and vice versa. There are two main N religions at the target area, namely: Christian and Muslim. About 77% of the Survey are Christians while 19% are Muslims, the rest being pagans. N 2.3 Education It is interesting to note that about 89% of the respondgnts PU have had formal education ranging from Middle to Post Secondary a School. The LBA's have all had formal education that will enable them to read and write some English. About 87% of the Workers have N had Middle School education. Just 11% of the respondents have not had any formal education. 2.4 EthnicitY Most of the operators are Akans (84%), followed by North- ;l erners (12%), and then Ewes (4%). About 63% of the LBA's and the Workers respectively are migrant operators however 64% of the N concession owners are indigene. On the whole less than half (43%) of the operators are indigene while majority (57%) are migrant operators. N. . ~~.rn-. ~~~~~~xiv N-  3. 0 DENEIICTCRY PERCEPTION OF THE PRQJECT 3.1 The Minerals Commission was charged with the responsibility of implementing the SSM Project which made the PNDCL 218 operative. The most important beneficiaries of the law, viz-a-vis the project, are the Small Scale Miners, which comprise the Concession Owners, the Licence Buying Agents, and the Workers. In order to ascertain the authenticity of their responses, the study tested the miners awareness of the project/law. 3.2 Awareness* The study indicated that virtually all the three groups of respondents were aware of the project and the Law, except-some 3% of the Workers who expressed unawareness of the project. They all got to know about the project/law mostly through the radio and through friends; and most of them got to know about it in 1989. 3.3 Peroeetion The first impression the miners got was that the project was going to make them rich because they could then operate without apprehension and going through cumbersome registration procedures. They perceived the project to be job creating, also. xv a-  3.4 P*resnt Situation Several responses were recorded from the respondents concerning the benefits of the project. The Concession Owners and the LBA's h'ave similar responses, ranging from (top priority) "I now have enough money to look after my children in school; I am able to expand my farm and other jobs" to "I am able to build a hoUse". As regards the workers their first relief was that they had no fears in working since they could now operate under 0 Licenced Concession Owners. Their main benefits can be read from their responses. "I can now get a regular source of income to look after myself and family; My living conditions have changed for the better, "and, "I have been able to improve upon my farming business". Few of the workers however expressed negative feelings about the project, alleging that they saw no improvement in the'ir lives because the mineral content in the land where they worked was very low, so they got very little after hard work. 3.5 Work Problem There is some light animosity between the LEA's and the Concession owners since each operator is under different entities. Thus the linkage between the LBA's and the Concession Owners is one of uneasy Co-existence through the Workers/Diggers. 'qZ " ~~~~~~~~~xvi U1.  4.0 * CZNLfi&UBDNx 4.1 The marketing function is performed by the Precious Minerals Marketing Corporation (PMMC), although under the Minerals . Commission, but outside the project domain. The study observed very pertinent marketing problems from the Miners. 4;2 Differeaces in Valuation The Cencession Owners and the LBA's find vast differences in valuation between them and PNMC. The LAB's complained that when M they sent their minerals to PMKC the valuers would not allow them to see toe process of carat determination. The Concession ouners 5J see another difference from the type of machines or Scales-, both parties use, in addition to the LBA's observation. - _ Both the LBA's and the Concession Owners feel the present M -mariEgtIig arrangement is too expensive and risky. They all have to travel to Accra to sell their stuff, incurring very high transportation cost, hotel bills and exposing them to risks of keeping their stuff and money safe. This encourages illegal buying _ and selling of the minerals, since the risk of selling at Accra is = higher than selling a chunk of the stuff to illegal buyers. The * ! Workers alleged that there are fewer buyers in their areas of " operation so the buyers dictate the price and thus makes the business unlucrative. There is always the temptation to find illegal buyers to ;ell to them. PMMC's monopoly position is _ therefore hurting the project. xvii rn- '  4.3 PN0C4 PriCing PrOgAt=r The basis for forecasting weekly prices by PMMC is by using the weekly prices on the world market, and supplementing with their perception of the future price trends. Using the estimated and real prices documented by PMMC, the consultants observed that the procedure was not based on scientific method of forecasting where econometric or simulation methods are employed. Thus any increase in price is due to the depreciation of the local currency not on demand and supply of gold in the world market. 4.4 gold and Diamond Pur-chases During Proieat Pariod One of the objectives of the project is "to increase-the official earnings from the sector". The available data indicate that the SSM produced (or sold) 7,717 ounces of gold valuing P984 million in 1991 only, while the PMMC purchased 548,782 carats of diamonds worth p6.5 billion in the same year. It is estimated that an average of J5 billion or US$13.3 million could be realized each year during the project life. (This estimation is very conservative), from production of gold and diamond from the Small Scale Mining. There is therefore a high prospect for the second phase of the project if management would implement sone very important suggestions by the Consultants. xviii T.  5.0 ISOCIO-EcONOKZC 5.1 Nmg thu obi.atiTia or the Proiect axm: - To create employment in the rural and urban areas, especially to absorb the retrenched labour; - To improve mining skills of the Small Scale Miners and to improve the production process or techniques; - To improve Small Scale Miners' access to equipment, capital and marketing outlets. 5.2 EmblovUent The study revealed that about 1,200 retrenched workers-were absorbed by the project, while the total estimated employiient by the project is in the range of 24,000 and 30,000 if we consider those operators who are not yet registered but are operating behind some association names. It was thus observed that each Concession owner employed an averaged of over 60 workers, while an LBA _ employed an average of 4 people. The the project therefore, has fulfilled the first objective. 5.3 !mproovem9at of Minig Slcills Mining Skills were measured in our study through training and types of training attended by or given to the SSM's. Although very few SSM's were trained in adulterated gold, health aspects, Safety aspects and Operation of Simple Equipments and Methods of N * working, as well as Emergency and First Aid Procedures, the xix N-~~~~~~~~~~~~~ _U  number is so negligible that it can be concluded that the trainings wie not effective. Perhaps the second phase will consider this objective very seriously. 5.4 Sourc. of Iinance/Credit One of the important aspects of the project was to improve SSM access to equipment and capital. The study tried to find out where the operators obtained finance/or credit. The main source of finance at the target area is Private Money Lender, followed by Family Money, and Own savings. Sometimes they obtained some money- from fiends. None of the respondents obtained credit from :the project or the bank. The study revealed that the objective quoted above has not been addressed. It is hoped that the second phase of the project will tackle it seriously, if the miners are to adopt new technology and improve their mining skills. 6.0 HOUSEHOLD INCON END WELFARE OF THE S SAL c 89AI"MNERS 6.1 The ultimate aim of any project is to make the beneficiaries better off. Among the terms of reference of the study is one which * requests for determination of (household) income, consump-tion, and welfare patterns of the target group of the project. S -~--  6.2 No.s.hold Incomes in the 8urvey area - The household incomes were measured via expenditure pattern -||g and how much respondents were prepared to sell their services. The LBA, on the average, spends