Aris Mining Shows Colombia How To Achieve Gold-Miner Formalization
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Canada-based Aris Mining – owner and operator of Colombia’s biggest, historic gold mining operation at Segovia, Antioquia – wowed attendees at the annual CGS 2024 conference here in Medellin with impressive examples showing how to convert hundreds of illegal or informal gold miners into cooperative, safe, mutually profitable contract miners.
CGS attendees at the October 29-30 conference – principally focused on copper, gold and silver (hence “CGS”) exploration and production – heard these reports first-hand from Aris CEO Neil Woodyer and Aris General Manager Giglio Barlaro, as well as from several recently formalized, now-much-happier, more profitable and much-safer contract miners.
Colombia historically (and currently) has suffered from clashes between informal, illegal, ecologically ruinous and (sometimes) criminal gold miners in competition with relatively large-scale, professional, tax-paying, environmentally and socially responsible corporate mining companies.
A striking example of one such catastrophe is at the former Continental Gold mining operation at Buritica, Antioquia, which Continental developed with praiseworthy dedication to environmental, social and community progress (see Medellin Herald September 27, 2016).
Unfortunately — after Continental sold the operation to Chinese miner Zijin in late 2019 — the formerly cooperative, usually peaceful, mutually beneficial relationship between the corporate miner and non-affiliated miners has since collapsed into chaos and violence — threatening the financial viability of Zijin’s investment.
Zijin subsequently filed a US$500 million damages lawsuit against the Colombian national government for what it describes as the government’s failure to stop illegal invasions by the “Clan del Golfo” mining mafia into some 70% of the Zijin mining-claim area — along with extorsions and armed attacks against both informal and formal Zijin miners and security officers.
But in sidebar conversations with Medellin Herald here, CGS attendees noted that while Zijin has suffered terrible consequences of the uncooperative, anti-corporate-mining bias of the current Gustavo Petro presidency — unlike the truly cooperative prior governments that helped Continental at Buritica — a contrast between Zijin’s style of operations and Aris’s style can’t be ignored.
Aris has apparently avoided such violence via innovative, cooperative agreements with informal and non-affiliated miners — and by cultivating overwhelming support from local communities where it operates.
This strategy apparently has (to date, at least) effectively stifled attempts by violent, illegal miners to invade or wreck Aris mining areas or hobble operations via access blockades, which arose in recent miner strike actions around Colombia.
As Aris’s Woodyer noted both here and in recent public statements to its shareholders, the Segovia operations – along with Aris’s other major mine project at Marmato (Caldas department) — are as a result now on-track to produce between 220,000 to 240,000 ounces of gold this year.
“Our goal is to reach production capacity of approximately 500,000 ounces per year in 2026,” Woodyer explained.
“This ambitious expansion plan would not be feasible without the unwavering support of our local communities and miners, who have actively embraced these projects.
“It is worth highlighting that currently over 40% of our current production stems from partnership models with formalized miners in our areas of operations.
“We have named these stakeholders ‘Contract Mining Partners’ (CMPs) and they are pivotal to our success in Colombia.
“When informal and small-scale miners partner with an industrial miner like Aris Mining, we develop a shared value initiative that not only generates profitability for both parties, but also presents a solution to the environmental and social complexities arising from informal and illegal mining historically presented in Colombia.
“To date, we have helped formalize more than 3,000 miners, with plans to formalize an additional 500 to 1,000 miners in 2024.”
What’s more, this formalization process further benefits hundreds of local families or neighbors of contract miners and suppliers at both Segovia and Marmato operations — and it’s also being extended to Aris’s 51%-owned Soto Norte mine project in Santander department, he said.
Because Aris employs environmentally safe and highly efficient gold extraction and recovery methods, it recovers about 95% of the gold in mined ore, versus about 50% recovery by informal and illegal miners who dump toxic mercury into the environment, he explained.
This higher recovery rate benefits both Aris and its contract miners, who are paid favorable percentages of all the gold they produce, pegged to global gold prices – minus hold-backs for taxes, royalties, shipping, services, provision of required explosives (at a relatively favorable price), safety training, access to heretofore-inaccessible, legal bank accounts, legal loans and legal home mortgages, along with favorable contributions to Social Security and mine-infrastructure safety upgrades, all provided by Aris.
By contrast, illegal miners typically have relatively poor recovery rates and suffer massively higher accident rates (too-often fatal), although such miners typically receive a higher payment per ounce — since the illegal buyers don’t pay any taxes or royalties, unlike corporate miners.
“Colombia has some 300,000 small miners — not supported or monitored by the government — but it would be far better to partner with responsable, industrial mining partners,” Woodyer emphasized here.
At Marmato alone, some 3,000 small miners are currently operating without any training in safety or environmental practices, he noted.
So to help overcome this problem, Aris is sponsoring some 2,500 miners for university-style courses in responsable mining practices. Many of those students are likely to become contract miners for Aris in future, so it’s mutually beneficial.
“We believe this is the way forward for mining in Colombia,” Woodyer concluded.
Aris General Manager Giglio Barlaro further explained here that 43% of Aris gold production is now by contract miners, who not only are enjoying financial benefits from the contract arrangements but also vastly reducing accident rates — down 62% year-on-year.
Beyond just the financial and safety benefits for Aris contract miners, the local communities are benefitting from:
— corporate investments in road paving;
— school infrastructure upgrades;
— micro and small-scale business-startup assistance programs;
— reforestation projects in degraded areas;
— drastic reductions in lead, zinc and mercury pollution;
— renewable power generation;
— training in proper use of explosives;
— elimination of child-labor abuses;
— ecological beneficiation of third-party ore, and;
— favorable, legal alternatives to the historic, abusive loan-sharking and money-laundering by illegal operators, he concluded.