Towards a Fair Value! A Report of Study on the Fair Value Distribution Analysis in the Gold Supply Chain in Kenya and Uganda
Mine-site gold prices (about US$35.5-36.8 per gram) are close to the open-market price for raw 18-karat gold (US$39.5 per gram). Miners' low returns come mainly from inefficient recovery (25-40% of gold), high costs and ore-sharing arrangements, not from unfair prices at the point of sale.
Overview
Fair Value Distribution study under Reclaim Sustainability! on artisanal and small-scale gold mining in Kenya (Kakamega, Migori, Narok, Turkana) and Uganda (Busia, Namayingo, Buhweju, Moroto, Nakapiripirit; Kassanda through stakeholder interviews only). Fieldwork took place in September and October 2022 at 18 mining sites. The study looked at bottlenecks to equitable profits, where gold is sold and at what price, which nodes give the best return, business models, local consumption, market avenues, gender and inclusion, and advocacy, to inform policy advocacy.
Key findings
- Gold sells at mine sites for about UGX 135,000 (US$35.5) per gram in Uganda and KES 4,750 (US$36.8) per gram in Kenya, against open-market prices of about US$52.6-52.7 per gram for 24-karat and US$39.5 for 18-karat raw gold. Mine-site prices are therefore only about three dollars below the raw-gold price.
- Despite this, 85.6% of miners in Kenya and 83.88% in Uganda said the price they receive is not fair, and 82.6% (Kenya) and 76.8% (Uganda) said miners do not earn enough profit. Most key informants (16 of 23) believed dealers and exporters earn far more, but the costs of aggregating and refining are unknown.
- Middlemen and traders account for close to 90% of buyer mentions, and cooperatives or miner associations for under 3%. 55.4% of Ugandan miners and 15% of Kenyan miners did not know where their gold ends up. An average of 8-9 players per site share the value.
- Under investor arrangements, miners keep a small share of the ore. The report gives about 20% (executive summary), 25% against 40% for the landlord and 35% for the investor (one Uganda case), and about 30% each (average). Processing then costs Kenyan miners about US$7 per load before amalgamation.
- Artisanal methods recover only about 25-40% of the gold, leaving the rest in tailings that could yield up to 90% with better processing. Tailings are sold cheaply to a few buyers using PPM tests that miners neither understand nor witness. One site reported spending over US$5,000 a month on diesel.
- Only 21.9% of miners in Uganda and 37.2% in Kenya had internet-capable smartphones, and miners rely on local traders for market information. Close to two-thirds of miners estimated that about 10% of the gold they mine is consumed locally.
- Women work mainly in sluicing and amalgamation and face stigma, harassment, exclusion from leadership and harmful cultural beliefs that bar them from mine sites. Child labour was widely seen in Ugandan mines and was less common in Kenya.
In figures
35.5 US$ per gram
36.8 US$ per gram
39.5 US$ per gram
52.6 US$ per gram
Data table
| Item | US$ per gram |
|---|---|
| Mine-site price, Uganda | 35.5 |
| Mine-site price, Kenya | 36.8 |
| Open market, raw 18-karat | 39.5 |
| Open market, 24-karat | 52.6 |
85.6 % of miners
83.88 % of miners
Data table
| Item | % of miners |
|---|---|
| Kenya | 85.6 |
| Uganda | 83.88 |
Recommendations
- Sensitise miners to organise themselves so that resource ownership at mines is better structured and more value stays with them.
- Support gold consolidation through a practical framework, for example by piloting product advance payments through cooperatives to reduce costly trader credit.
- Design business models that focus on processing efficiency and local gold consumption, not only on routes to market.
- Train miners to measure gold concentration in tailings (PPM tests) and support registered cooperatives to process tailings themselves.
- Deliver timely gold market information through text messages and local radio.
- Promote self-regulation through gender and safety champions to tackle harmful beliefs about women and improve occupational health and safety.
- Authorities should explore registering gold traders to improve traceability and support standard operating procedures.
Methodology
Mixed methods at 18 mining sites (2 per county or district): a survey of 438 miners (Kenya 196: 107 male, 89 female; Uganda 242: 201 male, 41 female), focus group discussions with miners and community members, 19 key informant interviews, observation and document review. Analysis used SPSS and NVivo.
Limitations
- Kassanda District could not be visited because of the Ebola outbreak in October 2022; it was covered only through stakeholder interviews.
- Mining sites were identified with county and regional mining leaders rather than at random, so selection bias cannot be ruled out.
- In some areas all community members were miners or benefited from mining, so independent community views on gender and inclusion were hard to obtain.
- No upstream trader had been interviewed when the report was written, so returns beyond the main urban buyers are not known.