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Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
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Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains

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The OECD Due Di‌ligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas provides detailed recommendations to help companies respect human rights and avoid …

The OECD Due Di‌ligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas provides detailed recommendations to help companies respect human rights and avoid contributing to conflict through their mineral purchasing decisions and practices. The Due Diligence Guidance is for use by any company potentially sourcing minerals or metals from conflict-affected and high-risk areas.

It is one of the only international frameworks available to help companies meet their due diligence reporting requirements.This presentation gives an overview on the OECD Due Diligence Guidance and industry programmes in the gold mining sector.

It is the first sectoral guidance that draws on the OECD Guidelines for Multinational Enterprises in practice.

Find out more at http://mneguidelines.oecd.org/mining.htm

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  • Good morning, I’m Shivani Kannabhiran
    Policy Analyst with the Organisation for Economic Cooperation and Development, and have been associated with this programme since it was launched in 2011. Today’s presentation is to introduce those of you who are new to the work of the OECD Guidance to the context of our work, the 5 steps of the framework (Guidance), the implementation programme and our key implementation partners. ICGLR and sector initiatives in gold and 3T.

    Please help yourself to a copy of the Sector Guide for gold
    Ask questions – and welcome to the session
  • Adopted in 2011 by 43 OECD and non-OECD countries that pledged to ensure that companies operating in or based in their borders use the Due Diligence Guidance
    Supported by the UN Security Council
    Endorsed by ICGLR in Lusaka Declaration and integrated into ICGLR Certification Mechanism!
    Referenced by U.S. SEC in final rules for section 1502
    Integrated into, referenced and/or relied on by multiple industry programs (e.g. DMCC, EICC-GeSI CFS Programme, iTSCi, LBMA, RJC, World Gold Council)
    Legal requirement to operate in the DRC
    Support from EU for future initiative / legislation
  • Adopted in 2011 by 43 OECD and non-OECD countries that pledged to ensure that companies operating in or based in their borders use the Due Diligence Guidance
    Supported by the UN Security Council
    Endorsed by ICGLR in Lusaka Declaration and integrated into ICGLR Certification Mechanism!
    Referenced by U.S. SEC in final rules for section 1502
    Integrated into, referenced and/or relied on by multiple industry programs (e.g. DMCC, EICC-GeSI CFS Programme, iTSCi, LBMA, RJC, World Gold Council)
    Legal requirement to operate in the DRC
    Support from EU for future initiative / legislation
  • So, what exactly what do we mean when we talk about due diligence for conflict-free supply chains, and what is the OECD Due Diligence Guidance?

    OBJECTIVE OF THE GUIDANCE IS TO PROVIDE CLEAR AND PRACTICAL DIRECTION FOR COMPANY’S TO ENSURE THAT….

    THE GUIDANCE USES A 5 STEP RISK-BASED DUE DILIGENCE APPROACH, MANY COMPANIES ARE ALREADY FAMILIAR WITH RISK-BASE DUE DILIGENCE PROCESSES AND THUS CAN INTEGRATE THIS PROCESS INTO THEIR PREEXISTING SYSTEMS AS THEY SEE APPROPRIATE

    The Guidance applies to ….
    THAT THEREFORE INCLULDES companies which do not know if the gold in their supply chains comes from a conflict area like the DRC

  • One set of expectations: common framework for due diligence expectations throughout the entire mineral supply chain from mines until end users

    Progressive approach: Couple points – Constructive engagement to avoid potentially harmful impacts, LIKE A DE FACTO EMBARGO FROM THE REGION. THE OECD GUIDANCE RECOGNISES THAT RESPONSIBEL MINING AND TRADE CAN BE AN IMPORTANT FACTRO TO STIMULATE GROWTH AND DEVELOPMENT, AND SEEKS TO provide the tools for companies to engage responsibly in conflict-affected and high-risk areas

    ALSO, the GUIDANCE RECOGNISE THAT COMPANIES AT DIFFERENT POINTS IN THE SUPPLY CHAIN HAVE DIFFERENT AND COMPLEMENTARY RESPONSIBILITIES, and therefore offers complementARY DUE DILIGENCE RECOMMENDATIONS

  • The Supplement on Gold, like the rest of the Guidance, applies to all companies in the gold supply chain, frtom the mine to consumer

    It differentiates between “upstream” and “downstream” companies:

    “Upstream companies” refers to all the companies between the mine and the refiner, e.g. mining companies, local exporters, traders of unrefined gold, recyclers, refiners.
    “Downstream” companies refers to all companies after the refiner until the consumer, e.g. jewellers, bullion banks, industrial users of gold.
  • That brings us to the Third DD step, which deals with how companies should manage the risk once identified.
    Key points: You‘re in Step 3 if you‘ve identified red flags or can‘t rule them out. The aim of Step 3 is to mitigate the risks in the relevant gold supply chain/s that have been identified.

    Please note for step 3 there are no general recommmendations.

    Specific Recommendations

    Upstream companies should:

    Report findings to designated senior management, outlining the information gathered and the actual and potential risks identified in the supply chain risk assessment

    Enhance engagement with suppliers and the internal systems of transparency, information collection and control over the gold supply chain from Step 1(C). Upstream companies should:
    Establish a chain of custody and/or traceability system that collects and maintains disaggregated information outlined in Step 2, Section I and II, (C) for all gold input and output from a red flagged supply chain.
    Enhance physical security practices as appropriate to the circumstances (e.g. security of transport, sealing in tamper-proof containers, etc.) over any discrepancies noted in mine production and capacity, processing production and capacity, or information provided by suppliers on gold shipments.
    Physically segregate and secure any shipment for which there is an identified risk of association with conflict and serious abuses of human rights.
    Incorporate the right to conduct unannounced spot-checks on suppliers and have access to their relevant documentation into commercial contracts and/or written agreements with suppliers which can be applied and monitored.See steps 2-5 for information on monitoring suppliers and managing non-compliance.
    For every gold input, share the following information gained and maintained by the assessment team throughout the upstream supply chain

    Devise and adopt a risk management plan. Companies should adopt a supply chain risk management plan that outlines the company responses to risks identified in Step 2 in conformity to Annex II of the Guidance.

    Companies may manage risk by either
    (i) continuing trade throughout the course of measurable risk mitigation efforts;
    (ii) temporarily suspending trade while pursuing ongoing measurable risk mitigation; or
    (iii) disengaging with a supplier in cases where mitigation appears not feasible or unacceptable.

    To determine and devise a risk management strategy, companies should:
    Review the model supply chain policy on gold from conflict-affected and high-risk areas in Annex II of the Guidance to determine whether the identified risks should be mitigated by continuing, suspending or termination of the relationship with a supplier through measurable risk mitigation. Measurable risk mitigation should aim to promote significant and measurable improvement within six months from the adoption of the risk management plan.

    The model policy in Annex I DEFINES THE PROPER RISK MITIGATION STRATEGY FOR COMPANIES TO TAKE IF ANY CIRCUMSTANCES INCONCSITENT WITH THE POLICY ARE FOUND IN THE SUPPLY CHAIN.

    3 SITUATIONS WHERE A COMPANY IS EXPECTED TO DISENGAGE COMPLETELY WITH A SUPPLIER OR CERTAIN SUPPLY CHAIN
    Sourcing from suppliers that provides direct or indirect support to illegal armed groups
    Sourcing from suppliers that contribute to “serious abuses” associated with the extraction and trade of minerals in conflict areas

    THE POLICY RECOMMENDS THAT COMPANIES DEVELOP AND IMPLEMENT A RISK MITIGATION STRATEGY, WORKING WITH SUPPLIERS, IN ALL OTHER RISKS ASSOCIATED WITH MINERAL EXTRACTION AND TRADE IN CONFLICT AREAS, INCLUDING DIRECT OR INDIRECT SUPPORT TO ARMY. THIS IS PART OF THE “CONSTRUCTIVE APPROACH” I MENTIONED – CONTINUING ENGAGEMENT IN THE REGION TO AVOID AHRMFUL CONSEQUENCES OF A DE FACTO EMBARGO

    Key points: work out how to manage the risks and keep monitoring the situtation.

    Further recommendations for Upstream companies are to:

    D. Implement the risk management plan, monitor and track performance of risk mitigation, report back to designated senior management and consider suspending or discontinuing engagement with a supplier after failed attempts at mitigation, in conformity with the recommended risk management strategies outlined in Annex II.

    implement, monitor and track performance of risk mitigation in cooperation and/or consultation with local and central authorities, upstream companies, international or civil society organisations and affected third parties as appropriate.
    Upstream companies may wish to establish or support the creation of community- monitoring networks to monitor or track performance of risk mitigation.

    E. Undertake additional fact and risk assessments for risks requiring mitigation, or after a change of circumstances.
    Supply chain due diligence is a dynamic process and requires on-going risk monitoring.
    After implementing a risk mitigation strategy, companies should repeat Step 2 to ensure effective management of risk.
    Additionally, any change in the company’s supply chain may require some steps to be repeated in order to prevent or mitigate adverse impacts.
  • THE fourth step of the OECD DD is to Carry out independent third-party audits of smelter’s due diligence, or in the case of downstream co’s ensure that the smelter audit is carried out.
    Key points: Step 4 audits are aimed at refiners. An audit of refiners’ due diligence practices aims to verify the key suppliers to downstream supply chains. Industry programs are developing audit standards / certification programs for refiners to provide the relevant assurance.

    The scope of the audit

    Audit criteria:

    Audit activities:

    AS WITH ALL RECOMMENDATiONS IN THE GUIDANCE, THIS AUDIT MAY BE CARRIED OUT THROUGH INDUSTRY INITIATIVES, LIKE THE CFS PROGRAM OR THE ITRI SUPLY CHAIN INITIATIVE, SO LONG AS THOSE INITIATIVES ARE consistent WITH the standards and processes of the OECD DD Guidance


    Please note, even though the OECD DDG has put step 4 as a general recommendation, it is only addressed to the refiner

    In addition, although the OECD DDG requires an audit at the refiner level, it is not intended to be an auditable ‘Standard’. This is why one rather talks of conforming to the OECD DDG rather than complying with it.

    General recommendations:
    Plan an independent third party audit to verify the implementation of refiner’s due diligence practices for responsible supply chains of gold from conflict-affected and high-risk areas.

    The publication recommendation comes from a sub-item of A. and is the only difference between the OECD DDG and the RJC CoC.
     
    Implement the audit in accordance with the audit scope, criteria, principles and activities set out above. All actors in the supply chain should cooperate to ensure that the auditing is carried out in accordance with audit scope, criteria, principles and activities.

    Step 4 specific recommendation for upstream companies
    Allow access to company sites and relevant documentation and records of supply chain due diligence practices

    Facilitate contact and logistics with transporters and suppliers selected by the audit team (including on-site visits)


  • Finally, the last step of OECD DD recommends that companies Report annually on supply chain due diligence

    BASICALLY, THIS SIMPLY MEANS REPORTING ON THE EFFORTS MADE from

  • The five steps include:

    Establish strong company management systems

    2. Identify and assess risk in the supply chain.
    Type of Gold - 3 types
    Identify origin – 3 types, Mined Gold (Mine origin); Recyclable gold (point where turned back for value), Grandfathered Stocks
    With that information, identify the exitence of red flags in the supply chain – listed in the Supplement on gold

    If red flags identifed, further and in-depth risk assessment on those sources. Mined Gold Supplement has an array of informaiton to be collected on the gold, specific to ASM or LSM gold, mine of orighin, points where gold is traded, entities in the supply chain and KYC info, and qualitiative cricumstances of minein and trade – look for risks as per the model policy

    Recyclable gold – use a risk based approach to look for posisbloe laundering through recyclable channels.
    3. Design and implement a strategy to respond to identified risk. In the Gold supplement, this step has also been further segmented to

    4. Carry out independent third-party audits of refiner/smelter’s due diligence.

    SO it’s important to distinguish between the type of audit recommended in the Guidance and the ICGLR audit

    5. Report annually on supply chain due diligence
  • Focus is Gold – please refer to the booklet “Gold Sector industry Guide” – available in English and French
    Folks are on hand from the gold and 3T initiatives to answer your questions


  • BUT All industry and sector initiatives work under the principle that responsible sourcing is everyone’s responsibility

    On-going efforts aim to establish mutual recognition between industry and sector initiatives to reduce confusion and the burden of evaluations and audits across the supply chain

  • The five steps include:

    Establish strong company management systems

    2. Identify and assess risk in the supply chain.
    Type of Gold - 3 types
    Identify origin – 3 types, Mined Gold (Mine origin); Recyclable gold (point where turned back for value), Grandfathered Stocks
    With that information, identify the exitence of red flags in the supply chain – listed in the Supplement on gold

    If red flags identifed, further and in-depth risk assessment on those sources. Mined Gold Supplement has an array of informaiton to be collected on the gold, specific to ASM or LSM gold, mine of orighin, points where gold is traded, entities in the supply chain and KYC info, and qualitiative cricumstances of minein and trade – look for risks as per the model policy

    Recyclable gold – use a risk based approach to look for posisbloe laundering through recyclable channels.
    3. Design and implement a strategy to respond to identified risk. In the Gold supplement, this step has also been further segmented to

    4. Carry out independent third-party audits of refiner/smelter’s due diligence.

    SO it’s important to distinguish between the type of audit recommended in the Guidance and the ICGLR audit

    5. Report annually on supply chain due diligence
  • I’d like to now turn to the ICGLR to provide a brief over view and this will be followed by our partners from ITRI who are focused on a 3T programme on the ground (which includes traceability and other components of DD).
    Thank you for listening!
  • Transcript

    • 1. The OECD Due Diligence Guidance for Responsible Supply Chains and Programme Initiatives (DDG 101) Shivani Kannabhiran Policy Analyst OECD Investment Division
    • 2. Why get involved in responsible mineral sourcing?  Ethical responsibility  Avoid risk of UN sanctions if sourcing from the DRC or neighbouring countries  Legal requirement if operating in DRC, Rwanda and Burundi  Supply chain security – avoid unnecessary disruptions in tantalum supply  Avoid reputational damage for your company and the tantalum industry  EU and US market access – meet customer demands!  Gain more information on your supply chain for better commercial decision-making
    • 3. Conflict financing Non-state armed groups or public security forces, associated with serious abuses: – Illegally control mine sites, transportation routes, or dealers in minerals – Illegally “tax” or extort money or minerals from artisanal miners, mineral traders and exporters – Illegally “tax” or extort money or minerals at mine sites, transportation routes, or points where minerals are traded CASE STUDY: Gold from the Democratic Republic of the Congo • Alluvial, artisanal gold & informally, illegally mined • Estimated conflict area annual output: ~20-30 tonnes • Market value: $840m~$ 1.26 bn Source: WGC & UN GoE DRC (2012)
    • 4. Demand for responsibly produced minerals Political Consumer Legal • G8 (2007, 2008, 2009, 2011, 2013) • UN Security Council Resolutions on DRC (2009, 2010) and Ivory Coast (2013) • ICGLR Heads of States endorsement (2010) • OECD Council Recommendation • Consumer campaigns in US and Europe • From brand- name users via industry groups (EICC, GeSI) • Section 1502 of US Dodd-Frank Act – conflict minerals reporting • Draft EU legislation on responsible mineral supply chains • Legal requirement in DRC, Rwanda and Burundi
    • 5. Conflict Minerals Regulation ► July 2010 – Section 1502 of the US Dodd-Frank Act:  Specific reporting requirements for public companies using 3Ts and gold  DRC and adjoining countries focus (reasonable country of origin inquiry)  If from “DRC countries”, companies need an audited “Conflict Minerals” report ► August 2012 – Final US SEC rules recommend companies use the OECD Due Diligence Guidance ► Early – June 2014 – Deadline for first filings for applicable companies5 Section 1502 of the U.S. Dodd-Frank Act Under Dodd-Frank, audited “Conflict Minerals” report should include:  Country of mineral origin  Due diligence procedures  Smelters of minerals  Mine of origin (to greatest possible specificity)  Description of products not “DRC Conflict-Free”
    • 6. Conflict-Free Minerals Regulation ► March 2013 – European Commission announces intention to develop a comprehensive initiative on responsible supply chains of minerals from conflict-affected and high-risk areas ► May 2013 – EU holds public consultation at the OECD ► March 2014 – Draft EU initiative and legislation released:  Voluntary certification scheme for importers of 3T and gold into EU common market  Based on OECD Due Diligence Guidance  Accompanying measures include public procurement benefits, SME financing for due diligence, funds for OECD implementation) EU initiative on responsible mineral supply chains
    • 7. OECD Due Diligence Guidance for Responsible Mineral Supply Chains Objective: To provide practical guidance for companies to ensure they do not contribute to conflict or abuses of human rights through their mineral and metal procurement practices Method: 5-step risk-based due diligence process Scope: Applies to all companies throughout the entire supply chain that produce or source minerals from any conflict-affected or high-risk area –global, applicable to other minerals
    • 8. Key features of the OECD Due Diligence Guidance • One set of expectations A common framework for due diligence expectations throughout the entire mineral supply chain from mines until end users • Progressive approach The promotion of constructive engagement with suppliers in order to gradually affect changes in their sourcing practices without embargoes! • Different treatment Depending on mineral (e.g. Supplements on Gold, and 3Ts) and location of company in the supply chain (e.g. upstream and downstream companies), resulting in complementary due diligence processes
    • 9. Supplement on Gold Applies to all companies in the supply chain Mining companies, ASM Local gold traders & exporters Refiners Bullion Banks Jewellers, manufacturers Upstream Companies Downstream companies RecyclersRefiners are the “choke point” in the supply chain!
    • 10. Structure of the OECD Due Diligence Guidance • 5-step risk-based framework for all minerals from conflict- affected and high-risk areas (Annex I) • A model supply chain policy (Annex II): – NO! Sourcing from parties linked to serious abuses – NO! Direct or indirect support to non-state armed groups – MITIGATE! Direct or indirect support to public or private security forces – MITIGATE! Bribery in the supply chain, fraud or misrepresentation of chain of custody or traceability information – MITIGATE! Money-laundering through the mineral supply chain – MITIGATE! Non-payment by suppliers of taxes, fees and royalties related to mineral extraction, transport and export, or non-disclosure of payments by suppliers in accordance with EITI • Principles for Risk Mitigation (Annex III) • Supplements on Tin, Tantalum and Tungsten (2011) and Gold (2012), including special Appendix on artisanal and small-scale mining for gold
    • 11. Five Step Risk-Based Due Diligence Step 1 • Establish strong company management systems Step 2 • Identify and assess risks in the supply chain Step 3 • Design and implement a strategy to respond to identified risks Step 4 • Support independent third-party audit of the refiner’s due diligence Step 5 • Report annually on supply chain due diligence
    • 12.  Adopt a company policy on 3TG from conflict-affected and high-risk areas, consistent with the model policy in the Guidance (Annex II)  Structure internal management to support due diligence, e.g. resources, build capacity  Strengthen engagement with suppliers, communicate expectations  Collect and maintain transaction information and documentation with unique internal reference numbers for all inputs and outputs  Request suppliers to provide names of smelters and refiners of all 3TG products by direct sourcing, marks imprinted on gold, or from supplier documentation  Pass on smelter or refiner information to customers Step 1: Establish strong company management systems Transaction information for Gold: a) Information regarding the form, type and physical description of gold and gold-bearing materials, e.g. gold ore, gold concentrate, gold doré, alluvial gold, recyclable gold, gold bullion, type of jewellery, etc. b) Information provided by the supplier regarding the weight and assay of gold and gold-bearing materials of input, and determinations of the weight and assay of gold inputs and outputs. c) Supplier details, including “know your counterparty” (“KYC”) due diligence information d) Unique reference numbers for each input and output. e) Dates of input and output, purchases and sales.
    • 13. Chain of custody or traceability options Greater risk of fraud = more monitoring!! - Chain of custody documentation Greater monitoring required! “Bag and tag” - traceability Radio frequency tag (RFID) traceability - UPSTREAM
    • 14. Traceability TRACEABILITY/CHAIN-OF-CUSTODY INFORMATION a) the mine of origin, with the greatest possible specificity b) locations where gold or gold-bearing material is consolidated, blended, crushed, milled, smelted and refined c) the method of extraction (artisanal and small-scale or medium and large-scale mining), and dates of concentrating, smelting and refining d) the weight and assayed quality characteristics e) the identity of all suppliers and relevant service providers handling the gold in the upstream supply chain from the mine of origin until the refiner; the ownership (including beneficial ownership); the corporate structure including the names of corporate officers and directors; the business, government, political or military affiliations of those companies and officers within conflict-affected and high-risk areas f) all taxes, fees or royalties paid to government related to the extraction, trade, transport and export of gold g) all payments or compensation made to government agencies and officials related to the extraction, trade, transport and export of gold h) all payments made to public or private security forces or other armed groups at all points in the supply chain from extraction onwards, unless prohibited under applicable law i) how gold is transported and processes in place to ensure integrity, with due regard taken of security concerns UPSTREAM
    • 15.  Identify the smelters and refiners in your supply chain!  Collect information directly from suppliers  Use risk-based approach to verify supplier information  Assess whether smelters and refiners are sourcing minerals responsibly!  Do smelters and refiners undertake OECD Due Diligence?  Have the smelters and refiners been audited under an industry programme? Step 2: Identify and assess risk DOWNSTREAM Preliminary indicators of due diligence may include:  A public policy on minerals from conflict-affected and high-risk areas, consistent with Annex II of the Guidance  A public report on refiner‘s due diligence  Participation in international or industry collaboration on responsible sourcing, e.g. OECD Forum and implementation programme, industry or other multi-stakeholder initiatives
    • 16.  Verify a sample of chain of custody or traceability information Increase sample size if inconcistencies found!  Map the circumstances of the supply chain(s), under way and planned Step 2: Identify and assess risk UPSTREAM Risk Factors for Mined Gold Use a risk-based approach, with more due diligence for persons, places and transactions that present higher risk!  Any affiliation of suppliers with military, criminal networks or non-state armed groups.  Militarisation of mine sites, transportation routes and points where gold is traded and exported.  Evidence of any serious abuses committed by any party in mines, transportation routes and points where gold is traded and/or processed.  Information on any direct or indirect support to non-state armed groups or public or private security forces through the extraction, transport, trade, handling or export of gold.  Instances of conflict or tensions in the relationship between ASM and LSM.  Any instances, reports or suspicions of fraud or contamination in the supply chain
    • 17.  Report findings to designated senior management  Enhance engagement with suppliers and the internal systems of transparency, information collection and control over the gold supply chain  Devise, adopt and implement a risk management plan with stakeholders, that includes:  continuing trade throughout the course of measurable risk mitigation efforts  temporarily suspending trade while pursuing ongoing measurable risk mitigation  disengaging with a supplier in cases where mitigation appears not feasible or unacceptable  Monitor supply chain with support from stakeholder networks Step 3: Design and implement a strategy to respond to identified risks Risk Mitigation  Focus on building capabilities of suppliers and smelters to conduct due diligence, with clear performance indicators and concrete and specified timeframes for improvement (e.g. 6 months recommended)  Companies should only suspend or terminate a business relationship with relevant suppliers when :  The smelter is not using reasonable and good faith efforts to implement the Guidance or participate in related programmes  Evidence that the smelters sources from suppliers that provides direct or indirect support to illegal armed groups, or contribute to “serious abuses” associated with the extraction and trade of minerals in conflict areas
    • 18. The scope of the audit  All activities, processes and systems used by the refiner to implement supply chain due diligence of gold from conflict- affected and high-risk areas Audit criteria  The audit should determine the conformity of the implementation of refiner’s due diligence practices against an audit standard that is based on this Guidance Audit activities  Documentation review  On-site investigations of smelter facilities, a sample of the suppliers, meeting with smelters on-the-ground risk assessment, and consultation with other experts **Can be carried out through industry programmes** Step 4: Carry out or support independent third-party audits of refiners’ due diligence
    • 19.  Report on management practices (i.e. policy, internal systems of control)  Report on the company risk assessment and risk management with due regard taken of business confidentiality and other competitive and security concerns ( i.e. supplier relationships, prices, security)  Publish the summary audit reports of refiners with due regard taken of business confidentiality and other competitive or security concerns Step 5: Report annually on supply chain due diligence
    • 20. Summary on Due Diligence Step 1 • Establish strong company management systems Step 2 • Identify and assess risks in the supply chain Step 3 • Design and implement a strategy to respond to identified risks Step 4 • Support independent third-party audit of the smelter or refiner’s due diligence Step 5 • Report annually on supply chain due diligence • Risk-based, intensity of due diligence proportional to risk! • Reasonable and good faith efforts, not 100 % compliance overnight! • Government and industry programmes can help accomplish due diligence tasks! • Use and build upon existing systems!
    • 21. OECD Gold and 3T Implementation Programme  Information-sharing and promotion of due diligence – Tools, workshops, webinars and training seminars – Outreach and training: Africa’’s Great Lakes region, China, Colombia, Middle East, Turkey, India  Collaboration and problem-solving – Consistency, harmonisation and mutual recognition of industry programmes – Develop common and coordinated solutions  Peer-learning – Share tools, best practice, promote discussion  ICGLR-OECD-UN GoE Forum on Responsible Mineral Supply Chains – Twice a year in May and November – 7th Forum this May
    • 22. Governed by the Multi-stakeholder Steering Group – selection of members BEDEWA OGP
    • 23. Industry and Sector Initiatives Guide
    • 24. Introduction • A number of industry and sector initiatives in the gold sector seek to operationalize the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas • The booklet/guide provides an overview of these industry and sector initiatives and how they complement each other 24
    • 25. Gold sector initiatives - mutual recognition 25 GlobalMineralSupplyChain Mining Companies Artisanal & Small- scale Miner (ASM) Organisations Refiners & Smelters Bullion Banks Downstream manufactures – jewellers & others
    • 26. Sample of global industry initiatives for 3T supply chains Initiative Organisations involved Purpose Participation type Independent audit required ICGLR’s Regional Certification Mechanism International Conference on the Great Lakes Region (ICGLR) Establishes a certification mechanism for the mining and trading of conflict minerals from the Great Lakes Region. Based on OECD standards. Industry programmes may be used for traceability/chain of custody. Mandatory for member countries Yes ITRI Tin Supply Chain Initiative (iTSCi) ITRI; Tantalum Niobium International Study Center; Pact; Channel Research Supports responsible sourcing from Central Africa through the development of a physical chain-of-custody system that tracks and monitors minerals from mine to smelter and a due diligence system that includes independent audits and mine site and transportation route assessments. Voluntary Yes Conflict-Free Sourcing Initiative (CFSI) - includes the Conflict-Free Smelter (CFS) program Global e-Sustainability Initiative (GESI); Electronic Industry Citizenship Coalition (EICC)® Verifies that the sources of conflict minerals processed by smelters are conflict-free. Enables downstream companies to identify and source from conflict-free smelters. Operationalizes OECD Guidance for smelter/refiners. Voluntary Yes Solutions for Hope; Make Africa Work; Conflict-Free Tin Initiative Private companies: AVX, Kemet, F&X, Motorola, Intel, Philips, and many more! Close pipe initiatives to enable downstream companies to source conflict-free 3Ts from the DRC with positive development impacts Voluntary Yes, Through implementing initiatives (e.g. iTSCi, CFS) 26
    • 27. 3T Industry Initiatives – complementarities Great Lakes region mining & export Smelting Manufactur- ing 27 Support & Mutual recognition of initiatives on-going iTSCi assesses risk and brings traceability from mine to smelter Conflict-Free Smelter Initiative CFSI Tools: e.g. Reporting Templates 1502 Dodd Frank issuers - downstream due diligence and demand for conflict-free minerals!!
    • 28. Remember: OECD Due Diligence Guidance Step 1 • Establish strong company management systems Step 2 • Identify and assess risks in the supply chain Step 3 • Design and implement a strategy to respond to identified risks Step 4 • Support independent third-party audit of the smelter or refiner’s due diligence Step 5 • Report annually on supply chain due diligence • The Guidance provides an internationally recognised framework for companies to responsibly source minerals from conflict-affected and high-risk areas • The Guidance enables companies to meet due diligence requirements (Dodd-Frank Section 1502) • Risk-based, intensity of due diligence proportional to risk! • Reasonable and good faith efforts, not 100 % compliance overnight!
    • 29. Remember: Industry programmes and the OECD Due Diligence Guidance • Many industry and sector initiatives have been developed to help companies operationalise the OECD Guidance • Work continues to further harmonise industry and company initiatives to support outreach and implementation and reduce unnecessary duplication of supply chain audits • For further information on this project and to keep informed of latest developments: www.oecd.org/daf/investment/mining • OECD contact emails: • Tyler.gillard@oecd.org; shivani.kannabhiran@oecd.org, hannah.koep-andrieu@oecd.org 29

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