Two chains, not one
Understanding which chain a quotation comes from tells you most of what you need to know about the risk you are being offered.
| Large-scale mining | Artisanal and small-scale (ASM) | |
|---|---|---|
| Producer | Licensed industrial operations with published reporting | Individual and small operator production, often at varying degrees of formalisation |
| Route to market | Direct offtake to accredited refiners under long-term agreement | Local buyers, aggregators, dealers, then export |
| Documentation | Institutional, auditable, continuous | Assembled at aggregation; quality varies sharply |
| Availability to a new buyer | Rarely available — output is contracted | This is what is offered to most new international buyers |
| Principal risk | Commercial and price risk | Provenance, documentation, counterparty and authenticity risk |
The practical implication is uncomfortable but important: if an unfamiliar counterparty is offering you spot availability of African gold, it is almost certainly aggregated ASM material rather than mine output. That is not disqualifying — a large share of the world's gold has ASM origins, and formalising it is an explicit policy objective in several producing countries — but it does determine what due diligence is required.
Where the risk concentrates
- Aggregation. Material from many small sources is combined, and individual provenance is lost unless it is deliberately recorded at each step.
- Cross-border movement before export. Gold that has moved between countries before reaching the stated exporter is materially harder to document, and destination refiners will probe it.
- Documentation assembled retrospectively. A file created to support an export, rather than accumulated during the chain, is thin under inspection.
- Informal payment. Cash-based purchasing upstream leaves no trail, which is a compliance problem at the destination even where nothing improper occurred.
The OECD Due Diligence Guidance exists precisely because these are structural features rather than individual failings. Its five-step framework — management systems, risk identification, risk response, third-party audit at identified points, and public reporting — is the shape any credible answer to a provenance question takes.
What this means for a buyer's requirements
- Ask which chain the material comes from, and expect a direct answer.
- Where the answer is ASM, ask what was done about the risks the OECD framework identifies, and what records exist from the point of purchase forward.
- Confirm in advance that your destination refinery will accept material of this origin under its own responsible sourcing policy. Refineries decline consignments, and a decline after arrival is an expensive problem.
- Treat documentation depth as a commercial variable. Material with a thin file is worth less, takes longer to place, and may not be placeable at all.
- Prefer counterparties who volunteer the difficult parts of the chain. Selective silence about upstream steps is a finding.
Verify: Country-level rules on ASM formalisation, export licensing and beneficiation differ substantially and change. Confirm the current position for each origin country with local counsel before contracting.