Blockchain in Mining; Combating Child Labour
Up to 50% of miners in Africa are children
The Borgen Project, a nonprofit organization addressing extreme poverty, says in regards to the facts about child miners in the world, gold mining deserves a special mention as it exposes children to mercury-poisoning. High levels of poverty force families to send children under 18 to work in the mines. They constitute 30 to 50 percent of the entire gold-mining workforce.
A Global Problem
Unfortunately, Africa is not the only place where child labour in mining takes place. In 2019 in certain regions, child labour accounts for up to 50% of the work force. The article states that ‘of the 2 million miners in the Democratic Republic of Congo (DRC), 40% are children and their earnings range from $0.75- $3 a day.’
Child Labour in Ecuador
CEO of Karuschain, Richard Verkley spent almost 6 years mining in Ecuador and was surprised by the level of poverty and the number of children who through necessity, were working in the markets or on the street.
Though he never saw any large scale child labour issues while working in the mining sector, he did see child labour on a large scale daily. On a smaller scale, children were certainly working the artisanal mines, however, most of the ones were alluvial so working conditions weren’t as poor as the underground mines.
The Necessity of Working
Poverty and the need to put food on the table means many children miss out on education or have to start work at an early age.
Ecuador, and many other developing nations, have yet to strike a better balance between responsibly extracting natural resources and investing that opportunity back into improved quality of life for their children, starting with education. Such a balance could go a long way in ensuring children are in school and not on the street.
When it comes to child labour many Central and South American countries like Honduras, Colombia, Chile and Peru deal with similar issues and there has to be a better way.
Doing it Right
Mining companies like IAMGOLD, and others who had interests in Ecuador, struggled with similar issues of environmental and labour compliance. They put a large focus on corporate social responsibility, providing education and resources for workers, their families and the local community but were still challenged to meet all the required regulations and political back channels.
While Ecuador isn’t perfect, it’s certainly not the worst. When it comes to other countries and child labour, the situation is even more compelling.
Child and Forced Labour; the Numbers
This chart from the US Bureau of International Labour Affairs shows some startling statistics.
How can we solve a global problem of this size?
The answer is complicated but with technology, solutions are becoming clearer.
Using Technology to Stop Child Labour
One of the reasons child labour is so difficult to stop is the challenge of monitoring who is doing the work. Artisanal mines seem to be some of the worst offenders.
Small mines are often run by families or companies that are more lax about labour, safety and environmental practices. They sacrifice compliance, safety and better working conditions for higher earnings.
Incentivizing Compliance
Part of the reason child labour is so prevalent in developing nations is because of the economic need of the family. What if governments and regulating bodies financially incentivized these artisanal and small mines to comply with labour and environmental standards?
What if, through adopting a transparent system like blockchain that cannot be tampered with, more companies found it economically advantageous to make a change? If they knew they could sell their gold at a better price, because they could prove green practices had been employed- would they change their ways?
Ethical Gold; the Rising Demand
Chopard, world class jewellers, state ‘We are committed to demonstrating industry leadership in the responsible sourcing of gold for all collections. As evidence of this, we have committed to sourcing 100% ethical gold. This means that 100% of the refined gold we purchase comes from sources that are verified as having met international best practice environmental and social standards.’
Compliance is King
Each year, tougher legislation is enacted forcing greater compliance and transparency. Ethical gold is now fast becoming the new standard, requiring proof that the gold has been responsibly mined every step of the way, including avoidance of child labour.
Forward thinking mining companies are using blockchain to create greater transparency. Their leadership in the industry helps fight irresponsible mining practices and put an end to child labour.
Making the Hard Easier
Most people think of blockchain as being represented by Bitcoin but this technology is being adapted within all industries including the mining industry. Blockchain is an immutable (unchangeable) chain of records that records each interaction and can be tracked through each set of hands it touches. With regard to mining, this means blockchain can track and trace the provenance (origin) of the conflict mineral and the organizations who are involved with it every step of the way. The data cannot be altered or cheated, as it is decentralized, meaning no one organization has total control over the data.
Blockchain and child labour
What that means for child labour in mining then, is that governments, environmental and labour organizations can require stricter reporting to prove that responsible mining practices are used.
Companies employing poor labour and environmental practices won’t be able to sell their gold if they cannot provide proof of compliance because the next link in the supply chain will not be able to buy from an unproven source.
Disruptive Technology in Mining
For mining companies who want to ‘do it right’, blockchain is the technology solution they have been waiting for. It can track the provenance of the material right from extraction to showroom so it is clear every step of the way that is was mined and refined responsibly, with proper labour practices. That level of transparency has been almost impossible to achieve, up until the invention of blockchain.
As compliance in the areas of environmental practices, labour laws and safety regulations continues to increase, miners, refiners and other participants in the industry will be forced to adopt these more transparent practices, which benefit everyone in the long run.
Since 2017, blockchain has taken the world by storm, with the banking, agriculture and mining sectors leading the charge in applying the technology and rapidly integrating all it has to offer in terms of greater security, compliance, transparency and automation.
LBMA; Setting the Gold Standard
Even LBMA, the world’s largest gold trading organization is adopting blockchain. The LBMA serves as the body for enacting the Gold Trading Standards Policy, which determines standard gold trading prices. LBMA is looking at blockchain to address two key areas:
1. supply chain provenance to ‘help mitigate the risk faced throughout the life cycle of the bar, and help to securely record bar specific data (i.e. brand, origin, custody, location) on a trusted platform.’
2. tracking based security feature adopted for bars to ensure ‘that any bar can be registered and subsequently be reliably and uniquely identified’
When Mining is Transparent, Everyone Wins
The LBMA, governments, regulatory bodies and mining organizations are embracing the transparency that blockchain provides. It shines a light on corruption, human rights abuses and poor business practices. Mining organizations are adapting blockchain en masse and in 5 years the general consensus is that blockchain will become a backbone of supply chain systems.
Think Globally, Act Locally
As Mahatma Ghandi said ‘be the change you want to see in the world’. I believe that’s true. In 2010 when CEO Richard Verkley moved to Ecuador, the level of poverty was something he had not been so closely exposed to before. So together with his family and some expat volunteers they began to help in small ways, holding raffle draws and doing a food and toy drive for Ecuadorian children at Christmas. Hearts of Gold was born and has been growing and evolving ever sense to serve over 20 nonprofit organizations in Cuenca, Ecuador and surrounding areas . It doesn’t take a lot to make an impact, but it does take cooperation and strategic thinking.
Test Drive the Blockchain
Incentivizing is one way to end child labour, poverty and other poor mining practices. Karuschain offers a select number of miners, refiners and other sectors of the precious metals mining industry the opportunity to work with us to see how blockchain can help transform their business and create transparency, easily and at no expense. Contact Karuschain to learn more.
Conclusion
Though far from winning the child labour battle, together governments, consumers and mining industry participants can use blockchain as a tool to eliminate irresponsible mining practices. Together we can make a difference. Support organizations who support transparency. Technology that brings greater transparency to mining can help end child labour, environmental devastation and other irresponsible mining practices is a technology worth investing in.
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Karuschain is a blockchain technology platform for the precious metals mining industry, giving mining companies a powerful tool to ensure data integrity, safeguard human rights, reduce risks and improve environmental regulations in their supply chain.
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