Agenda A d Introduction Some thoughts on the conflict in the eastern provinces Some thoughts on the conflict in the eastern provinces of DRC Introducing Fairmining and Kalminco Introducing Fairmining and Kalminco Fairmining overview Kalminco Challenges and update The future of ASM Fairmining
Artisanal Small scale Mining Artisanal Small‐scale Mining as an alternative investmentOver 13 million people work directly in small mines throughout the world, mainly in developing countries. The sector is known for its high environmental costs, inefficiency and poor health and safety record. It is also viewed as unprofitable and fundamentally unsustainable. l i d fit bl df d t ll t i bl Oak Ridge Mining Solutions has a different viewWe believe ASM can play a crucial role not only in poverty alleviation and rural economic development but also in regenerating local, regional and in some cases national economies, while providing exciting new and , p g galternative investment opportunities. Today in the Congo 80% of all mining are still generated by artisans
Who are we… Wh Oakridge Mining Solutions Ltd (ORMS) was established as a social and philanthropic enterprise to transform communities in the developing world through enabling artisanal/small scale mining cooperatives to world through enabling artisanal/small scale mining cooperatives tomine more effectively, profitably, safely and responsibly.These cooperatives are supported through joint ventures to in turn p pp g jgenerate sustainable economic transformation. ORMS provide management expertise, assets, finance, business process, communications/ IT infrastructure and international trade capability to these commercial small scale mining companies. Our main area of operation is the east of the Democratic Republic of Congo.
Conflict in Eastern Congo… C fli t i E t C Mineral trade in the DRC has been a central feature of conflict in the Congo for decades, Resulting in the lowest per capita income in the world, A d And one of the world longest running humanitarian disasters. f th ld l t i h it i di t It’s a complex and multi faceted conflict, where superficial and over simplified attempts at solutions tends to perpetuate d i lifi d tt t t l ti t d t t t rather than help the cause.
Our views on some of the issues... O i f th i Blood in the Mobile movie – very subjective and one sided. DRC Government mineral ban – proof that the law of unintentional consequences can sometimes have a very positive outcome! ti h iti t ! US Dodd Frank Bill – de facto embargo that could lead to economic genocide. Not properly thought through with no alternatives or solutions put in place. Impossible to comply with on the scale solutions put in place Impossible to comply with on the scale needed to ensure a positive outcome. Colonization vs Investment – what Africa needs is investment capital ‐ cash used to start businesses factories mines etc to create wealth cash used to start businesses, factories, mines, etc to create wealth The real problem facing artisanal miners – debt, not militia
Congo conflict overview C fli t i Extract from article by Jason Stearns, previous head of the UN team of Special Investigators into the East Congo Conflict“…My article in Foreign Policy received several helpful comments from friends who My article in Foreign Policy received several helpful comments from friends whoobjected to the emphasis on conflict minerals by some advocacy groups in the United States and elsewhere. There is a growing number of people ….who are skeptical of this approach.…. minerals were not the source of the conflict in the Congo, not will severing the links between the mineral trade and armed groups bring an end to the violence. The excessive focus on conflict minerals has the perverse side effect of believing The excessive focus on conflict minerals has the perverse side‐effect of believingthat the war is driven by greedy warlords, can prompt irresponsible policy and lead people to believe that the violence is somehow impossible to stop and due to deep rooted antagonisms.”
Congo conflict overview C fli t iThe conflict in the Congo is complex, and is being perpetuated by a mixture of permissive, structural factors and active spoilers. The country lacks functional institutions to police the country, secure equitable property rights and courts to p y, q p p y gpeacefully adjudicate disputes. It has suffered from outside interference ……with a mixture of motives. At the very local level, disputes over land and citizenship ‐complicated by crises in civil and customary authority ‐ have fueled feuds and conflicts, often expressed in ethnic terms.conflicts often expressed in ethnic termsGiven all of this, the war in the Congo requires a much more comprehensive strategy that looks toward the long‐term transformation of Congolese society to become a less violent, more equitable place. In the end, this will be the responsibility and concern of Congolese citizens, not foreigners.
The new face of mining Developed in Africa for AfricaOakridge Mining Solutions, in conjunction with local stakeholders in the DRC have developed Fairmining, a sustainable new approach to poverty alleviation and long‐term rural development by developing the artisanal alleviation and long term rural development by developing the artisanalmining sector into community owned small scale mining companies with a dedicated social development and wealth creation objective. An African developed, Congo led initiative Fairmining ‐ The future of mining re‐defined
What is Fairmining…. Wh i F i i iFairmining promotes a sustainable approach to poverty alleviation, long‐term rural development and ultimate wealth creation by providing a framework for ‐ ethical trading, ‐ en ironmental a areness environmental awareness, ‐ social development and ‐ regulatory compliance. This standards based frameworks forms the basis for the development of ppractical and self sustaining artisanal gand small scale mining activities in developing countries.
Community based mining C it b d i i Fairmining assist communities and artisanal miners to form sustainable community based cooperatives. Social development and ethically focused investors are introduced to ld l d h ll f d d d these cooperatives under Fairmining guidelines Local joint venture mining companies are formed where these cooperatives retain a majority stake. These mining companies operate under the Fairmining model.This will create a new generation of smaller, effective and environmentally sensitive mining companies that will ensure wealth creation for the benefit of local communities and regions while delivering high social and financial return on investment for investors.
The future of community based miningTh f f i b d i i Profitable commercial small scale Mechanisation mining of artisanal companies mining activities owned by Formation of under control of community community mining cooperatives based mining cooperatives b d i i Ad Hoc cooperatives artisanal mining activities
Fairmining Deliverables F i i i D li bl Transparent business model that allows open negotiation, builds trust across the stakeholders and delivers returns at local, regional and national level national level Joint Venture structure that shares best practice management Investment vehicle that attracts international capital through high levels of return and significant risk mitigation Supply chain rationalisation through an inclusive approach approach Best in class IT and Communication systems that allow for end to end process management, enhancing security and output authentication. Partnering with world standards organisations such as Fair Trade and ITRI to assure end users in their CSR requirements.
Fairmining Mineral Traceability F i i i Mi l T bilitWe consider the ability to track mineral production d h bl k l dfrom source to export across the entire supply chain as part of any business’s normal operational processes and not as an add‐on or independentprocesses and not as an “add on” or independent activity. All companies that adopts the Fairmining model All companies that adopts the Fairmining modelwill be required to adhere to this and implement Fairmining traceability in conjunction with the relevant regulatory or industry representative g y y pbodies.The Fairmining traceability will help to establish a transparent chain of custody.
Re‐defining miningThe Fairmining model introduce a number of important new elements into the current approach to mining in predominantly third world developing countries.thi d ld d l i ti1. A new approach to social development by incorporating wealth creation as integral part of social development. wealth creation as integral part of social development2. A new approach to the acquisition of mining concessions with the incorporation of community co ownership. with the incorporation of community co‐ownership.3. A new way to access development capital and investment for small scale mining and artisanal mining cooperatives. g g p
The first Fairmining Th fi t F i i i company…The first Congolese minerals company owned by the The first Congolese minerals company owned by thelocal community.
Generic Fairmining Business Model Oakridge COMIMPA COMIMPA Mining Cooperative Solutions 50% 20% 80% Kalminco Social Development Projects 40%* 35%* 70%* Partner Partner Partner P Company Company Company Eg. Eg. Eg. Trader Smelter Exploration* = Percentages depending on business agreement
Kalminco’s h ll K l i ’ challenges… The DRC Government mining ban was announced only days before the launch of the first Kalminco pilot mining site, putting a hold on all operations for 6 months. all operations for 6 months Three weeks after the lifting of the DRC mining ban the US Dodd Frank induce electronics industry embargo came into effect on 1 y g April creating further delays. Raising the required investment capital. Building trust amongst members of communities. Debt – almost all artisanal miners are in debt to traders.
Kalminco update… K l i d t Kalminco management played a leading role in the negotiations that led to the lifting of the DRC mining ban and the adoption of a new artisanal mining code of conduct. g Kalminco VP elected as representative of all artisanal miners in North Kivu, leading to the establishment of an umbrella cooperative representing all artisanal miners in the province. representing all artisanal miners in the province Kalminco have committed to implement the Fair Trade Gold standard for small scale and artisanal mining, which together with Fairmining traceability, will give a clear chain of custody that would comply with traceability will give a clear chain of custody that would comply with Dodd Frank and SEC requirements. Kalminco’s first Fairmining gold site have become operational this month.
The future of artisanal Fairmining… Th f t f ti l F i i i Since the end of the DRC Government ban a total of 36 cooperatives in South and North Kivu have been formed based on the Fairmining model. They are now in the process of registration before setting up joint venture structures. This conservatively represent around 800 000 miners. Mechanised small scale mining in DRC have the potential for exceptional high yields, providing very attractive ROI to investors. yields providing very attractive ROI to investors A high number of women mine owners are currently involved in these mining cooperatives. Its not a silver bullet, it’s a slow and sometimes painful road, but it does provide the local communities with a sustainable platform for economic and social transformation.
The benefits of artisanal Fairmining Th b fit f ti l F i i i We believe that the adoption of the Fairmining Model by local artisanal mining will bring a number of important benefits :‐ It will address the local community s economic and social aspirations, It will address the local community’s economic and social aspirations which in turn will create a more favorable climate for co‐existence with large scale commercial mining. It will provide an alternative investment opportunity for the investor demanding a higher social dividend than what is possible in traditional demanding a higher social dividend than what is possible in traditional commercial mining, while still delivering very attractive financial returns. Community owned small scale mining companies like Kalminco offers a new, sustainable and robust platform for international mining exploration and other commercial partnerships with local communities, mitigating one of the biggest risk in mining investment in Africa today – local community conflict and political dependency.
Thank you… Th k We believe in the future of Africa as a prime of Africa as a primeinvestment destination and encourage you to join the people of Africa as they build a new future of peace, stability f t f t bilitand prosperity.