By Maxwell Akalaare Adombila
A sustainability bond aimed at integrating artisanal miners into formal supply chains will be piloted by a Canada-based advisory firm and a mid-tier Zambian copper miner this year, the firms said.
Artisanal mining provides livelihoods for hundreds of millions globally. In Africa, it often operates informally on or near company-run mines, hitting their profits, spreading pollution and depriving nations of revenue.
The proposed “stakeholder prosperity bond” developed by the advisory firm Veridicor with Zambia’s Metalex Commodities aims to address that, said Veridicor FD Rob Karpati.
“Instead of pushing artisanal miners off the land, this model professionalises them,” he said.
The instrument links investor returns to predefined social and environmental outcomes for workers, communities and host economies rather than to output.
The debut issuance will raise $100m-$200m by the end of the year to assist Metalex Commodities in integrating artisanal and small-scale miners through regulated offtake agreements, as well as shared infrastructure and equipment investment.
Host of potential investors
Potential investors include European sustainability bond funds, impact and mining investors, banks and private individuals, the firms said.
Zambia, Africa’s second-largest copper producer, hosts tens of thousands of artisanal miners, including around Metalex’s northwestern permit.
“Large mines tend to be the anchor of these [bonds] because it’s got to go on someone’s balance sheet,” said Karpati.
They end up gaining financially because they get offtake from it, and the artisanal miners gain financially because it’s a fair price, not some predatory intermediary.
Industrial mines will be at the centre of each bond structure to support repayment, while sustainability-linked terms will adjust interest rates based on social and environmental performance, Karpati said.
Metalex founder and CEO Ayo Sopitan said the bond will allow the company to run large programmes that integrate artisanal miners into its supply chain.
“We plan to source around 30% of our ore from trained, licensed local miners,” he said. “The bond lets us do that at a much larger scale than our balance sheet alone would allow.”
The bond is also planned in the Democratic Republic of the Congo and Ghana.
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