Innovating for Financial Inclusion: Specialized Loan Product gives Artisanal Miners a Boost

The lack of formalization of the artisanal and small-scale mining sector remains a barrier to improved working conditions and access to market for miners. In Peru, a new financial product, the Artisanal Mining Entrepreneurial Loan, is helping miners acquire tools to improve their work and creating a pathway to formalization.

Ever Quisocala is an artisan miner who received the first ever credit to acquire new technology

The Artisanal Mining Entrepreneurial Loan is the first financial product in Peru specifically designed for artisanal and small-scale miners (ASM) seeking to acquire new technology. Los Andes, a financial organization specialized in microfinance, granted the first credit of its kind to Ever Quisocala in June. Ever is an artisanal miner who supplies ore to Minera Orex, one of the main mining companies in Arequipa, a region in southern Peru. Solidaridad has provided technical assistance to Ever, who identified the equipment needed to improve his productivity and applied for the credit.

Formalization with Tangible Benefits

Ever is just one of 70 artisanal miners that Minera Orex works with under a scheme of collaboration and coexistence. In this model, the mining company offers technical and legal support to artisanal miners, which enables them to develop professional skills and access formal markets. Additionally, the company offers transparent and convenient conditions for purchasing their ore.

Minera Orex has been working with artisanal and small-scale miners for several years.

In the lead up to establishing the loan product, Los Andes reviewed the historical performance and financial records of the trust-based relationship between ASM miners and Minera Orex. They saw the potential of artisanal miners as an emerging market opportunity and designed this first credit line to meet their specific needs. Showing trust in artisanal miners is a major milestone, as formal institutions are typically hesitant to venture into this high-risk and negatively perceived sector.

This step will provide artisanal miners with the opportunity to access credit in the formal financial system instead of relying on informal lenders. In the next few months, approximately 10 new miners supplying the Minera Orex should be able to benefit from this credit line, with a total amount close to S/500,000 (EUR 125,000). This initiative is a stepping stone towards increased acknowledgement and support for artisanal mining in Peru.

Helping the ASM sector to access formal financial services enhances their professionalization, which ultimately supports the acquisition of the necessary working capital.

What Role Does Each Institution Play?

Solidaridad and Los Andes present the artisanal mining entrepreneurial loan to miners in Minera Orex, Arequipa

Building a bridge to financial inclusion for miners is complex. Los Andes, Minera Orex, and Solidaridad signed an agreement earlier this year to promote financial inclusion for artisanal miners in Peru. Each actor plays a crucial role in the initiative.

  • Minera Orex facilitates the collection and transfer of loan installments from artisanal miners to streamline payment management.
  • Los Andes offers personalized financial advice to miners who are interested, ensuring that they meet all the necessary requirements to qualify for loans.
  • Solidaridad provides miners with advice on selecting equipment and supervises its delivery and installation through pre-selected suppliers. Solidaridad also provides training to miners on safety practices, mining production, financial education, and bookkeeping.

This intervention is part of the RECLAIM Sustainability! programme, implemented in strategic partnership with the Dutch Ministry of Foreign Affairs. The programme strives to foster genuine and inclusive sustainability in global value chains, where the voices of farmers, miners, workers and citizens are represented in decision-making, and civil society is strengthened. 

This partnership is also backed by the PlanetGold programme, an initiative from the Global Environmental Facility (GEF), implemented by the Peruvian Ministry of Environment (MINAM) in collaboration with the Ministry of Energy and Mines (MINEM), and with technical assistance from UNDP. The programme promotes financial inclusion for artisanal miners and women miners through the development of financial mechanisms and products tailored to the needs of ASM.