Responsible mineral supply chains - PDF Document

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  1. Responsible mineral supply chains Global multi-stakeholder cooperation in producing, processing & consuming countries Tyler Gillard, Head of Sector Projects Responsible Business Conduct Unit OECD

  2. Conflict financing & serious abuses of human rights in mineral supply chains • Exploitation and trade of mineral resources can be associated with serious human rights abuses, conflicts, terrorist financing, money-laundering and bribery These issues impact security of supply, access to raw materials, access to markets, company reputation & their global investment and trade opportunities Global issue (Africa, Asia, Latin America, Europe) • • • • Affects all sorts of mineral resources (3T&G, precious stones, coal, etc.) Affects to different extent artisanal mining and large-scale mining 2

  3. Responsible mineral supply chains Global support for OECD Due Diligence Guidance Industry & Consumer Legal & regulatory Political • G8 (2007, 2008, 2009, 2011, 2013) • UN Security Council Resolutions on DRC (2009, 2010, 2011, 2012) and Ivory Coast (2013) • ICGLR Heads of States Lusaka Decl. (2010) • OECD Council Recommendation (2011) • EU Parliament; EU CSR strategy + Commissioners statement on raw materials • China-OECD Programme of Work • Consumer campaigns and civil society (e.g. Amnesty Int’l, Global Witness, PAC, Enough Project) • Industry: EICC (electronics), AIAG (automotive), AIA (aerospace) LBMA, RJC & WGC (gold & jewellery), CCCMC (China)  OECD-benchmarked industry audits cover ~85-90%of total refined gold production  OECD-benchmarked industry audits cover ~93% Ta, ~75% Sn, ~60% W production • Section 1502 of U.S. Dodd-Frank Act conflict minerals reporting • Draft EU regulation on responsible mineral supply chains • Legal requirement in DRC, Rwanda, Burundi & Uganda • Conflict Minerals Bill in Canada • Relevant legislation on forced labour, child labour (e.g. UK & US)

  4. OECD Due Diligence Guidance for Responsible Mineral Supply Chains Objective  To provide clear, practical guidance for companies to ensure responsible operations and sources of supply:  No support to non-state armed groups, No“serious abuses”  Prevent & mitigate support to public security forces, bribery, tax evasion, money-laundering and fraud in supply chains  Strengthen internal controls, due diligence systems, engagement with suppliers (e.g. supplier upgrading) Method and scope  5-step risk-based due diligence process, applies to all minerals & all companies throughout the entire mineral supply chain that potentially contribute to conflict, serious abuses, bribery, tax evasion and money laundering through mining or mineral sourcing practices The Guidance  5-step due diligence framework for all minerals (Annex I)  Model Supply Chain Policy (Annex II) outlining key risks and appropriate responses  Measures for Risk Mitigation (Annex III)  Supplement on 3Ts; Supplement on Gold  Appendix on Artisanal and Small-Scale Mining

  5. “Whole of supply chain” due diligence e.g. simplified metal supply chain “Upstream” companies:  Establish traceability or chain of custody to mine of origin  For “red flagged” supply chains, undertake on- the-ground assessments of mines, producers & traders for conflict, serious abuses, bribery, tax evasion, fraud, money-laundering  Collaborative engagement with local gov’t, CSOs, local business to prevent & mitigate impacts, monitor “Downstream” companies:  Identify “choke points” in supply chain (e.g. metal smelter or refiners)  Collect information on their upstream due diligence (e.g. both through individual efforts and industry auditing)  Use collective industry leverage to encourage improvement of upstream due diligence

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  7. OECD Implementation Programme on responsible mineral supply chains  Over 700 organisations involved – Started in 2011, involving governments (OECD and non-OECD), business (whole supply chain, from mine to market), civil society and other experts  Information-sharing and promotion of due diligence – Peer learning between business & between governments – Tools, workshops, webinars and training on due diligence and enabling policy-making – Partnering with producing, processing & consuming countries: Africa, China, Colombia, India, Middle East ,Turkey, EU, USA  Collaboration and problem-solving – Coordinated solutions on specific challenges (e.g. lowering costs, sharing risk information) – Harmonisation and mutual recognition of industry programmes – Increasing volumes of exports of responsible minerals sourced from conflict-affected and high-risk areas to support development  Forum on Responsible Mineral Supply Chains & regional workshops – Annual event every year at OECD in May (600+ participants, 3 days + side events) – Regional events each fall (Beijing in 2015, Kinshasa in 2014, Kigali in 2013) 7

  8. Global implementation 8

  9. Country cooperation Example: China  MOFCOM designated the China Chamber of Commerce Metals, Minerals and Chemicals (CCCMC) to work with the OECD on responsible mineral supply chains  OECD and CCCMC signed aMemorandum of Understanding (MOU) on responsible mineral sourcing in October 2014, including due diligence outreach in China and a tool to help Chinese companies operationalise the OECD Guidance, improve access to market access, ensure security of responsible supplies, strengthen reputation  OECD and China sign Programme of Work, including cooperation on responsible mineral supply chains in July 2015  Chinese Due Diligence Guidelines, based on the OECD Guidance, published in December 2015  On-going implementation work in China  Developing a smelter / refiner audit framework & system  Cooperation with AQSIQ to standardize and embed into legal framework 9

  10. Significant uptake by business supports global implementation

  11. THANK YOU For further information on the OECD’s work on Responsible Business Conduct

  12. Impacts and challenges: International business • • Guidance, in particular insufficient company reporting • Specificchallenges for SMEs remain • Integrity and alignment of industry programmes globally • Need for cost optimisation of due diligence efforts across the supply chain Business case for doing due diligence • upfront costs but better understanding of sources of raw materials and suppliers • improved internal controls, record keeping, reporting • better opportunities to access finance and inform better decision making OECD Secretariat Alignment Assessment of Industry Programmes Improved transparency and integrity of mineral supply chains But long way to go for companies to fully implement the

  13. Impacts and challenges: Affected populations Indications that due diligence is working towards breaking the link between mineral extraction, trade and conflict in the Great Lakes region • Militarization of mining sites and trading networks in the Great Lakes region remains a challenge, particularly for gold • In 2012 UN Group of Experts on the DRC: “Security situation at 3T mine sites has improved and trade in 3T has become a much less important source of financing for armed groups.” • Need for additional scalable on-the-ground gold supply chain programmes But it remains difficult to demonstrate the actual results on economic development and overall improvements of livelihoods OECD projects on Measuring Results and on the Worst Forms of Child Labour

  14. Impacts and challenges: Governance and ASM Increased focus on mining sector governance  Improved data on production and trade  Improved capacity to raise taxes and levies  Implementation challenges remain in the Great Lakes region Increased visibility of ASM with international buyers, donors and governments  Guidance first instrument with roadmap for economic and development opportunities for artisanal miners and formalization  Market-oriented perspective: secure buy-in of international trading, processing and consuming companies to buy responsible ASM minerals (e.g. “Just Gold” and “CBRMT” projects) OECD FAQ on sourcing gold from ASM miners