The Economist: Inside Ivory Coast's Hidden Gold Rush

A boom in artisanal mining offers lessons in development.

This story first appeared in the Economist. 

ON THE outskirts of the western Ivorian town of Angovia, Joseph Bado hunches over a pile of gold-laced stone, pulverising it with a hammer. Mr Bado, who is in his mid-30s, was born in a farming village in central Ivory Coast. Frustrated by his meagre earnings in the cocoa fields, he left in 2003 to become a miner. His travels took him to neighbouring Ghana and Mali before he returned to Ivory Coast in 2013, drawn by its own nascent gold boom. “You can work for years in cocoa and not get anything. You won’t even have food,” says Mr Bado.

Informal mining settlements like Angovia’s, a series of hills dotted with tattered tarpaulin-covered shelters and pockmarked by deep pits, have been unexpectedly popping up in recent years across the west African country. For many years Ivory Coast’s economic fortunes were tied to agriculture. After independence in 1960 it became the world’s largest producer of cocoa. Few gave much thought to what treasures might lie deeper in its ochre-red soil.

But a slump in cocoa prices and a jump in those of minerals prompted a boom in artisanal mining. From a base of virtually nothing at the turn of the century, the government reckons there are now some 500,000 small-scale gold miners.

Ivory Coast was one of the last guests to the African mining party, arriving just before the music was turned down. Yet across the continent there has been a surge in small-scale mining. The World Bank reckons that the number of artisan miners in Africa has grown from about 10m in 1999 to perhaps 30m today. Among the minerals they dig out with rudimentary tools are gold, diamonds and emeralds.

Angovia’s filth and grime may not, at first glance, commend it. But researchers are concluding that small-scale mining may offer a more attractive path out of poverty than either farming or moving to already overstrained megacities. In Tanzania, for instance, liberalisation of the country’s once dismal socialist economy in the 1980s helped spark the spectacular growth of towns in the country’s gold- and emerald-mining regions.

In the Tanzanian town of Kahama, once a sleepy trading outpost, the population has more than trebled to about 250,000 in the past 15 years, town officials say. An industrial mine that started commercial operations in 2009 has contributed jobs and infrastructure, but locals say small-scale gold mining has driven the town’s explosive growth. Today, the mayor boasts, there are ten banks, 40 petrol stations and more than 300 guesthouses.

For many governments and do-good development agencies, informal mining towns are the very definition of unsustainable—dirty and disorganised, with transient populations. Most miners work clandestinely, since they do not have a legal right to dig. Working conditions are generally poor. Young men, and sometimes children, may be lowered down a flimsy mine shaft 60 metres deep on a rope. Deadly accidents are common. So is the use of mercury, a pollutant, to extract gold.

Some informal mines support killers. Many militias in the Democratic Republic of Congo’s lawless east at least partly finance themselves with proceeds from illicit mining. Some towns, including Angovia, have seen violence between newcomers and existing residents. And sometimes conflict can break out with formal mining companies. AngloGold Ashanti, a South African mining firm, said its plans to invest in rehabilitating Ghana’s Obuasi gold mine, one of Africa’s oldest, have been put on hold since illegal miners invaded it earlier this year.

Governments have responded to the growth of informal mining settlements in two ways. One is to evict the diggers. Ivory Coast’s government, for instance, says it has shut down more than 280 illegal sites since last year. More common, however, is for governments and aid agencies to pretend these new mining towns do not exist. The UN agency and NGO signs that line so many roads in rural Africa are conspicuously absent when the scenery turns from verdant fields to mines.

Both responses are misguided. Small-scale mining is not a curse. On the contrary, it creates jobs in some of the poorest places on earth. Globally, artisanal mines employ about ten times as many people as industrial ones. Moreover, small mining towns are less affected by the commodity boom-and-bust cycle than are towns that depend on large-scale capital investment. Big foreign mining firms tend to retrench quickly when markets turn down; small local miners tend to keep digging. Also, small miners’ earnings tend to be spent locally. In central Mozambique, for instance, increased legalisation of formerly illicit gold mining over a decade has led to a farming renaissance in many villages, alongside booms in construction and trade.

Governments that allow miners to legalise their operations see several benefits. They can keep a closer eye on labour and environmental conditions, and collect millions of dollars in taxes that would otherwise not be paid. In return, they sometimes offer miners basic services such as water and sanitation.

Other bodies are pitching in. The World Bank is working with the African Development Bank to make geological data available to African miners. The American government and European Commission are financing projects to help miners obtain advanced equipment. Some recall that small-scale mining has been an engine of development before. Among other things, it created the cities of San Francisco, Johannesburg and Melbourne.