Companies urged to engage with small-scale miners

CAPE TOWN Feb 5 (Reuters) - Governments and large companies must improve relations with small-scale artisanal miners to guarantee the future sustainability of the mining sector, a senior mining analyst said on Tuesday.

Jon Hobbs, chairman of the World Bank-hosted Communities and Small Scale Mining Initiative said as many as 100 million people worldwide were directly involved in or depended on the proceeds of small-scale mining.

Driven by hunger and poverty, many of these small-scale miners grind out a living in Africa and elsewhere, sifting for elusive minerals and gems in old, disused mines, often with rudimentary tools.

"We can't ignore them," Hobbs told Reuters at the annual Indaba African mining conference in Cape Town.

"If sustainability in the mining sector is going to be successful and not fatally flawed, you have to engage with the artisanal miners ... rather than trying either to ignore them or worse still, treat them with hostility," Hobbs said.

Hobbs said the number of artisanal miners was increasing thanks to high commodity prices, changes in land use policy and changes in climate.

Artisanal and small-scale mining accounted for 12 percent of the world's production of metals, 21 percent of industrial minerals, 20 percent of coal, 10 percent of diamonds and 75 percent of other gem stones.

There have been accusations that some of the small-scale miners are engaged in criminal activity, with funds generated supporting violent conflict in Africa, parts of which have only recently emerged from decades of conflict.

In the Democratic of Republic of Congo, which has just returned to democratic rule, the trade in illicit diamonds has helped fuel violence between rebels and government forces.

Hobbs suggested early successes of the Kimberley certification process, which was designed specifically to keep illicit diamonds out of circulation, would be "short-lived" unless a developmental rather than "policing" approach was taken when dealing with small-scale miners.

The plea to cooperate with small-scale miners is getting a good hearing from the sector, which has realised that the effort is also good for the bigger mining companies' operations.

"We recognise that these (small) miners are a key stakeholder group," Alexander Davidson, executive vice president of exploration and corporate development for Barrick Gold Corp. (ABX.TO) said in a presentation at the conference on Tuesday.

"Barrick is committed to be a key player in these efforts," Davidson said. Barrick, the world's largest gold producer, has operations in Africa, South America and other parts of the developing world.

(Reporting by Wendell Roelf and Paul Simao; editing by Chris Johnson)