Brodie Noga is in his second year of law school and is interested in everything to do with mining. When not busy studying how rocks are taken out of the earth he enjoys climbing on them as well.
Dry-drilling in Bolivian mining cooperatives.
Photo credit: Brodie Noga, 2011
Outside of war, few other human activities are the site of as much strife as mining. From the mit’a of 16th century Upper Peru, the gold and silver rushes of the 19th century, to the Ok Tedi mine in Papua New Guinea, the history of mining is a tale of human struggle over who will profit, who will be harmed, and who will live with the consequences. This history persists despite the staggering engineering problems we’ve overcome. If there is ore hidden too far away we will literally move mountains to reach it, but a just and equitable system of mining remains elusive.
A solution is needed. With the world’s population rapidly industrializing and the mines that feed the global commodity chain growing rapidly in both number and scale, the question of how we can create an ethical and sustainable practice of mining is among the most pressing we face as a species.
While conducting ethnographic research in Bolivian mining cooperatives, I became convinced that a critical aspect of an answer to this question will depend on re-thinking the fundamental structure of how we do the business of mining. Cooperatives are no silver bullet -we’ll slay no monsters today- but they offer real and tangible means of addressing the root causes of mining conflicts, in particular by giving local communities real power and real stakes within a mine’s operation.
The Mining Cooperative
Mina Rosario cooperative in Potosí, Bolivia.
Photo credit: Brodie Noga, 2011
The earliest Bolivian mining cooperatives emerged in the 1930s out of the blood, dust, and thirst of the Chaco War. The war weakened the power of the ruling elites, allowing men and women to take over abandoned mines in the once famously wealthy city of Potosí. Working independently was a way to escape the exploitative labour practices of private mining companies and provided a steady source of income. Cooperatives provided a simple organizational structure for individual miners to designate who had rights to what section of a mine and to share common costs; though unlike other cooperatives, revenues were not shared among members. However, cooperatives remained relatively small players until the successive failures of the Bolivian state-owned mining company, COMIBOL, through the 1950s–1990s, which forced families dependent on mining to take over recently closed mines on their own.
Today, mining cooperatives represent the majority of the workforce in Bolivia’s mining sector, are represented by a national federation FENCOMIN, have votes on COMIBOL’s board of directors, and operate numerous small to mid scale mines. While the mining cooperative model is strongest in Bolivia, it is not endemic to it, and cooperatives form an important part of the resource sector in countries across the world, including Ecuador, Mali, Ghana, Sierra Leone, and Papua New Guinea.
What do cooperatives have to offer?
Even the most modest of modern mining operations require significant high-risk investments and as a result must offer high rates of return to attract financing. Because of this, mining companies are overwhelmingly headquartered in the centres of mining financing (Toronto and Vancouver) where they are able to consolidate global capital flows. This has several implications for communities affected by mining operations. First, the ultimate decision making power is located thousands of miles form where impacts are felt. Corporate structure also provides no formal means of incorporating local political agency outside of voluntary Community Social Responsibility (CSR) policies. The effects of weakened political agency are exacerbated in situations where the community affected is politically marginalized and vulnerable to state violence. Second, while companies can feed profits into communities by ways of revenue sharing, employment and service procurement, by necessity the majority of profits must flow back to investors. The result is that even in Quebec, where there is a sophisticated taxation regime, the economic benefits of mining are negligible. It is these two issues, the lack of control and the lack of benefit, which is at the heart of many, if not most, mining conflicts across the globe.
By granting flexibility over who is allowed to participate in decision-making and who profits from mining activities cooperatives can benefit from greater local legitimacy. In Bolivia, workers run the cooperatives, they annually elect an executive council and representatives in regional and national mining organizations. Each miner has significant discretion over how and when they will work. The cooperative model can be easily modified to include community members within its umbrella. The reality is that by giving individuals formal institutional rights, cooperatives offer far more power, and by extension far more legitimacy, over even the most generous of CSR consultation schemes. Second, cooperatives have greater flexibility in how they distribute profits. While mines in Potosí only provide minimal redistribution of revenues, the cooperative model can easily adapt to distribute revenues evenly among members or develop a more sophisticated scheme of distribution. More importantly, regardless of how revenues are distributed, they remain within the community, as there are no foreign investments that need to be recouped. It is for this reason that a number of international development agencies have funded mining cooperatives as vehicle of local development.
Mining cooperatives also offer a number of potential incidental benefits. First, small-scale mining is a critical source of employment in many developing nations, but as it is largely in the informal economy, it is very difficult to regulate. By providing a consolidated institutional structure, cooperatives make the regulation of small-scale mining far more efficient. Second, cooperatives offer an important way of increasing women’s participation in extraction industries and their benefits from it. In Bolivia, Palliris and other women are important actors within cooperatives—though significant gender disparities persist—and in Sierra Leone, women dominate the artisanal gold mining industry.
What are the challenges to the cooperative model?:
Lack of Capital
While cooperatives have flourished in Bolivia and are increasingly being supported as an alternative model of mining development, they are far from perfect and pose substantial challenges. The most significant of these is the lack of capital. Individual miners have no hope of accessing sufficient security for large investment, and even if they did, small-scale mining activities rarely yield enough profits to pay these loans back in the short-term. In Bolivia this lack of capital is the root cause of a number of serious issues. First, cooperatives are unable to participate in secondary industries, such as milling, transportation and refining. As a result miners are limited to profits from selling raw ore and do not benefit from any added value. More seriously, they are left vulnerable to the predatory practices of private companies who can dictate the rents miners will pay for equipment and services. Lastly, miners are often unable to afford the basic tools to perform their work safely and effectively; in Potosí a large number of miners worked with hand drills, and those with powered drills had no water to cut down on the hazardous clouds of dust. The lack of investment also makes environmental protection initiatives difficult to implement, and tailing runoffs and mercury contamination are serious issues in many mining cooperatives.
Other Forms of Social Division
Another serious issue is that the effectiveness of mining cooperatives as an alternative model is highly dependent specifically on how the cooperatives are structured. In Bolivia cooperatives have created their own significant forms of social stratification. First, income is not always redistributed; rather individual members are able to keep whatever profits they generate out of their work. Second, cooperative members frequently hire wage labourers who have no institutional power and do not benefit from the social services provided to members. Third, while women can become members of cooperatives, they are more often relegated to low paying and precarious work with minimal institutional power within the cooperatives themselves.
**Lastly, while many have written about cooperatives as vehicles for formalizing the artisanal mining sector, the Bolivian example demonstrates that cooperatives alone are no solution. There remain numerous environmental concerns about dumping of tailings into rivers; unsafe employment practices that result in frequent collapses, silicosis or gas poisonings; and the practice of hiring children as young as thirteen to work underground. There are laws on all of these practices but they are rarely enforced even though there is a comprehensive institutional structure surrounding the cooperatives.
Adapting the cooperative model:
Alternative financing models
While these problems are all significant, none of them are insurmountable. The problem with capital financing will either need to be dealt with directly by the state or by social financing initiatives. The Bolivian state has financed cooperatives to take over mid sized operations, whose work is facilitated by the higher levels of cooperative organization. Micro-financing is another possible alternative, however even the most basic of mining equipment can be exceptionally expensive and given lower rates of return any loans can only be paid off over a multi-year period, which poses challenges to the traditional micro-finance model. In Bolivia another novel situation has arisen where junior mining companies have begun joint ventures with cooperatives. In these arrangements the cooperatives perform exploration work and once a viable claim has been found the juniors purchase the site in order to develop it.
Changing the cooperative structure
The issues of exclusivity and inequality are more complex and solutions will be affected by existing community dynamics. However, Nicaraguan coffee cooperatives have implemented community wide decision-making processes with mechanisms for wealth redistribution and environmental management. While there may be challenges in translating this model into the other social contexts, it offers important lessons for crafting more equitable cooperative structures.
Creating national cooperative structures
Improving the effectiveness of regulations will be highly dependent on a number of factors. But states can aid the means of managing potentially thousands of cooperatives with the aid of regional and national cooperative organizations. These structures are already in place in Bolivia, with numerous regional bodies and a singular national federation of cooperatives that lobbies and supports the development of cooperative mines. Goverments will also need to implement effective enforcement mechanisms and development policies to address the poverty that underlies many of the issues in small-scale mining.
Repaying our Debts
The miners I worked with in Bolivia believed that to take minerals from the earth meant incurring a debt with la Pachamama (mother-earth). This debt was unavoidable; it was inherent to the nature of mining. This has always stuck with me. We will never sanitize mining, human conflict and environmental damages may always be unavoidable. However, we are all dependent on the products of mining, and as such we are all morally implicated in the harm it causes. An answer to mining conflicts is needed, and it is needed now. Perhaps mining cooperatives will be part of that answer.