R 021007Z JUL 09
FM AMEMBASSY BAMAKO
TO SECSTATE WASHDC 0524
INFO ECOWAS COLLECTIVE
DEPT OF COMMERCE WASHDC

UNCLAS BAMAKO 000441 
 
 
E.O. 12958: N/A 
TAGS: ECON EAID ETRD EINT EAGR ML
SUBJECT: THE RISKS AND REWARDS OF ARTISANAL GOLD MINING IN 
MALI 
 
¶1. (U) Summary: Artisanal gold mining accounts for four 
percent of Mali's total gold production.  In contrast to 
industrial mining, artisanal mining is unregulated by the 
Malian government and plagued with problems such as the use 
of child labor as well as the use of mercury in the process 
of gold refining.  A program funded by the U.S. Department of 
Labor and implemented by the International Labor Organization 
(ILO) aims to eliminate the worst forms on child labor in 
Mali, including mining.  On May 27-28, the Embassy visited 
several artisanal and one industrial mine in Kenieba, the 
largest gold producing region.  There was no evidence of 
child labor during this visit, though numerous health and 
safety risks remain.  End summary. 
 
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Artisanal Gold Production in Kenieba 
------------------------------------ 
 
¶2. (U) On May 27-28, the Embassy visited several artisanal 
and one industrial gold mine in Kenieba, in western Mali. 
The Kenieba Valley is Mali's primary gold producing region, 
the site of Mali's largest industrial gold mines and most 
intensive artisanal production.  In 2006, artisanal miners 
produced 2,100 kilograms (kg) of gold, or four percent of the 
total 51,957 kg produced in Mali that year.  According to the 
Prefect of Kenieba, more than 90 percent of the adult 
population in the region is involved in mining.  Gold 
prospectors, who are generally villagers in the same region, 
dig holes in zones that have not already been delineated in 
mining concessions.  In these "couloirs d'orpaillage", there 
is no requirement to register mining activity; as a result, 
the Kenieba landscape is littered with abandoned mining pits. 
 
¶3. (U) Men and women are equally involved in mining 
activities.  Men's operations, however, tend to be larger in 
scale, with pits measuring more than 70 meters deep and often 
involving a network of horizontal shafts.  These also tend to 
be more capital intensive, with crews of more than 20 
individuals working a single shaft, whereas women usually dig 
their pits, measuring one to two meters, individually. Miners 
typically use mercury to refine the gold dust they find, 
which is more common than gold nuggets that need only to be 
washed with water.  One entrepreneur we interviewed, who 
employed a total of 40 people at two different sites, was 
insistent that all of the mercury he used was subsequently 
recuperated and did not seep into the ground.  He 
acknowledged, however, that all of his workers handled 
mercury and he could not oversee each aspect of the 
operations at both sites.  The lack of regulation of 
artisanal mining makes it difficult to assess the extent of 
negative health impacts of the use of mercury on the local 
population.  The Prefect of Kenieba said that, in spite of 
the fact that almost the entire adult population in his 
district was involved in gold mining, he was not aware of any 
systematic or unusual health problems.  The Prefect's 
reticence is telling of the general lack of awareness of this 
issue. 
 
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Is Child Labor Disappearing, Or Just Less Visible? 
--------------------------------------------- ----- 
 
¶4. (U) Because of the intensity of mining activity, Kenieba 
is one of the sites targeted in a USD 3.5 million project to 
combat child labor.  The "Support for the Preparation of the 
Mali Time-Bound Program" (TBP) is funded by the U.S. 
Department of Labor (USDOL) and implemented by the 
International Labor Organization and the International 
Program for the Elimination of Child Labor (IPEC).  The TBP 
seeks to develop a national strategy to eliminate the worst 
forms of child labor in Mali.  This includes the adoption of 
legislation enumerating and criminalizing the worst forms of 
child labor, the creation of statistical databases, and the 
formation of institutions designed to implement and oversee 
Mali's child labor policies.  The program also sets out to 
prevent 9,000 children from participating in the worst forms 
of child labor, including both those who have already been 
laborers and those who are at risk. 
 
¶5. (U) No child labor was evident during the visit to 
Kenieba.  In a June 9 meeting, Technical Advisor of the TBP 
in Mali, Michel Gregoire, was optimistic that the TBP had 
made some headway in combating child labor in the region.  He 
cited a February 2009 survey funded by the USDOL called the 
Direct Beneficiaries Monitoring and Reporting study (DBMR), 
which verified the TBP's tally of how many children had been 
prevented from entering the workforce.  The study tracked the 
children listed as success stories to confirm that they were 
attending school.  Ultimately, the DBMR revealed a ten 
percent margin of error, which Gregoire felt was indicative 
of the TBP's success to date.  This measure of success is 
problematic, however, as children sometimes serve as laborers 
for several hours after returning from school, on weekends, 
or between school sessions.  In reference to mining, Gregoire 
said the real measure of success of the program would be seen 
when school was out of session.  Thus, the fact that no 
children were working in mining during our visit may have 
been the result of a combination of factors, including the 
success of the prevention program, the time of day, and 
seasonality. 
 
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The Economics Of Artisanal Gold Production 
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¶6. (U) For most of those involved in artisanal mining, income 
is unreliable.  One year may be profitable, allowing for the 
purchase of a motorcycle or television set, while other years 
may yield no returns.  For those entrepreneurs who have the 
means to invest some capital, the economic calculations can 
be quite a bit more favorable.  A Malian entrepreneur, Issa 
Camara, said he had produced 4.29 kg of gold, worth USD 
103,000, in four months using a team of 40 people.  Three 
years after starting his mining operation, Camara had far 
surpassed the initial CFA 35 million (USD 70,000) investment 
he made and he continued to expand his operation.  In another 
instance, a Malian worker managed an operation that was 
financed by a Dubai businessman, who had provided the costly 
pump and generator.  This worker said his team typically 
produced between 3-7 kilograms of gold per year, worth an 
average of USD 72,000 - 182,000.  The Dubai businessman did 
not visit the mine and received his payment in gold during 
periodic trips to Bamako. 
 
¶7. (U) There are three qualities of gold produced in Mali: 
20.70, 21, and 22 carats.  Once purified, the first could be 
sold for 9,500 CFA (USD 19) per gram, the second for 10,500 
CFA (USD 21) per gram, and the third for 11,500 CFA (USD 23) 
per gram, which increased by an additional 500-1000 CFA (USD 
1-2) per gram once it reached the Bamako markets.  Prices 
wereset according to the second fixing of London.  Camra 
generally sold the gold he produced to a handfl of buyers 
with whom he had a relationship, somtimes directly to buyers 
coming from abroad or t middlemen in Bamako. 
 
¶8. (U) Asked about the exort of gold, Camara described the 
two most common scenarios for transporting gold from Mali. 
In the first, gold was purchased at a gold "comptoir" in 
Bamako, which took care of gathering the requisite paperwork 
from the National Office of Geology and Mines (DNGM) and 
customs office, and ensured that duties were paid.  The 
second, and more common, scenario was that a buyer purchased 
directly from a producer or middleman.  Once at the airport, 
the buyer was responsible for paying customs duties. 
Camara's description revealed the murkiness of exporting gold 
from Mali.  Malian law allows for the export of gold only in 
the form of bars.  As evidenced by Camara's description, 
however, gold dust is exported routinely.  This corresponds 
to the Embassy's experience in answering commercial inquiries 
from U.S.-based buyers who are almost invariably negotiating 
transactions to purchase gold dust from Mali.  One U.S. buyer 
said that dust was preferable to bars because it was more 
difficult to substitute with a non precious metal. 
 
----------------------------------- 
Canadian Company Resumes Operations 
----------------------------------- 
 
¶9. (SBU) Avion Resources Corp, a Canadian based company, has 
restarted production at the Tabakoto and Segala 
gold mines in Kenieba through its purchase of Nevsum, the 
Canadian firm that previously operated the two mines.  Avion 
Acting Director Lyndon Blackberry said the company was poised 
to double production from the current 100,000 oz per year 
from the two pits.  Avion's relations with the neighboring 
communities were smooth, according to Blackberry, due in 
large part to the fact that the company consulted the Prefect 
of Kenieba when hiring workers from the area.  This allowed 
the Prefect to recommend individuals in return for favors or 
support.  Asked about the greatest challenges to doing 
business in Mali, Blackberry said unequivocally that it was 
the time and expense to clear goods and materials through 
customs.  This was in spite of the fact that the Malian 
government allows the duty-free import of machinery and other 
inputs for the first three years of a mining operation, and 
Blackberry said delays and requests for bribes were common. 
 
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Comment 
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¶10. (SBU) It was heartening that we saw no evidence of child 
labor during this visit.  Even if this was due, in part, to 
the seasonal nature of child labor in the artisanal mining 
sector, it also seems clear that the U.S. Department of Labor 
funded program to combat child labor has had a discernible 
impact in the region, evidenced also by the signs advertising 
the program in and around Kenieba.  What was troubling, 
however, was the lack of awareness of both workers and 
officials of the health risks posed by mercury use, as well 
as the lack of oversight with regard to the most basic of 
safety standards.  Given the prospect of striking gold, 
however, it is clear that the risks have been outweighed by 
the potential reward. End comment. 
 
MILOVANOVIC