Responsible Sourcing Newsletter: May 2024
Fri May 31 2024
OECD Responsible Mineral Supply Chains Forum: Key Highlights, Takeaways and Observations
Minus the blank in our collective social diaries foisted on us by the Covid pandemic, this year marked my tenth in-person visit to what has been described as the “Olympics of Conflict Minerals”.
As an event, the annual Forum brings together most of the key players working across supply chains and the agenda strives to cover the most pressing issues and debates. The combined talent and experience of attendees is humbling, and I always leave with a sense of gratitude and indebtedness to those who enrich my understanding of such a rich, complex and ever-changing field of work.
For me the Forum is also a bit like a family reunion, affording an unparalleled networking opportunity to catch up with colleagues - past and present - that you’ve met along your professional travels. And as with such events, there’s often a “relative” or two that lament the direction the world is going in, point out our collective warts and demand better of us. I have learned to listen to those ones particularly closely, engage in constructive dialogue, and together agree the path to further progress (see issues of transparency and recycled material below).
Here are four takeaways and observations from this year’s Forum:
ASM on the move
LBMA has always been clear that our main objective with our ASM initiative is to move the dial from avoidance to engagement and see the volume of ASM throughput gradually increase overtime. With the launch earlier this year of the ASM Toolkit, we are already seeing what optimistically might be called “competition” among GDL Refiners to begin the outreach in our four target countries.
This week, our ASM consultant Gregory Mthembu-Salter is in Ghana with two GDL Refiners to undertake on-the-ground due diligence of the country’s mining regime and industry actors looking to supply material to the legal market. We are aware of two other refiners who have already engaged with the ASM sector or are in the process of doing so. During the Forum, LBMA also met with Tanzania’s Geita Gold Refinery who is in the latter stages of demonstrating their due diligence systems to potential GDL Refiners. LBMA will be following the development closely and determining ways on how to further support sourcing of responsible ASM.
The Swiss Better Gold Association, which already supports several Swiss refiners source ASM material from Latin America, has also benchmarked the ASM Toolkit against its sourcing requirements and is in the process of implementing it during its onboarding of suppliers.
These all represent concrete steps toward a critical embrace of legal ASM supply chains. For someone who spent the better part of a decade investigating the illicit movement of precious stones and metals, this is a significant step in the right direction. More - much more - obviously remains to be done, but for a much-maligned sector bereft of victories, one cannot ignore the incremental and positive direction in which the Initiative is moving.
Hands up if you've heard of Footnote 59?
Ok, you can be forgiven if you haven’t. Save for diehard OECD geeks, it’s sat mostly unnoticed in the OECD Due Diligence Guidance. The Footnote speaks of disclosing information such as the identity and location of high-risk suppliers to an “institutionalised mechanism” that is either regional or global in scope.
The issue was one of the key discussion points during a second meeting between LBMA and civil society organisations at the OECD - the first being during the Sustainability & Responsible Sourcing Summit in March.
In a step toward meeting elements of Footnote 59, Responsible Gold Guidance Version 9 (RGG V9) introduced requirements that all GDL refiners disclose the identities of high-risk suppliers to LBMA. Refiners are now disclosing this information in their 2023 annual assurance reports that the Responsible Sourcing team is currently reviewing.
While LBMA is committed to meeting calls for greater transparency and disclosure of information, in discussions with various stakeholders (including the OECD), it became apparent that greater clarity was needed as to what constitutes a universally accepted “institutionalised mechanism” (currently there is no consensus or examples of existing mechanisms).
There is also ambiguity around the scope of the sensitive information to be disclosed, who gets access to it, and the expectations of what happens with the information. For example, does a recognised institutionalised mechanism simply retain the information or is there an expectation that it carry out due diligence on the high-risk suppliers? If so, what does the mechanism do with any adverse information it finds?
Recycled gold under a spotlight
There was a lot of discussion on recycled gold - a partner session by the Roundtable on the Responsible Recycling of Metals (RRRM) - as well as several hallway discussions around the ongoing work of an ISO Working Group looking to review and redefine what constitutes recycled material.
During the RRRM session, speakers generally agreed on the following points:
We believe the best way to address the “greenwashing” concerns of civil society groups is through enhanced sourcing requirements of recycled material. LBMA is set to begin drafting RGG V10 in 2025. During this stage, we will revisit our recycled gold definition in light of the ISO process. Any changes to this definition will consider the difference between secondary material for due diligence purposes and “recycled” material for product claims.
Civil society: the importance of representation
The Agenda - both of the Forum and the Partner Sessions - reflects the globalisation of the discussions had, but it’s hard to forget that the alpha and omega of the Forum was and is a response to deadly and destabilising conflicts in Africa, fuelled in part by the trade of high value minerals prized by the global economy.
While the tragic two-decade long war in Congo is what started the entire OECD Due Diligence project, case studies like contemporary Sudan and the Sahel serve to underscore not only the centrality the continent continues to play bearing the brunt of mineral fuelled wars, but also in crafting responses and interventions that build responsible supply chains and address the root causes and grievances that feed poor governance and political instability.
Often those with the most lived experience and potential solutions are Africans - particularly those working in the NGO sector, who live and work closer to the issues and the affected communities.
While several African NGOs were in attendance, notably the highly respected Zimbabwean Environmental Lawyers Association, the overall visibility and numbers of African representation appeared lower than in past years.
While the OECD already has a mechanism to support the travel costs of some civil society representatives, more clearly needs to be done by member states to fund the participation of these critical voices and maintain the credibility and robustness of the multi-stakeholder nature of the OECD Forum.
Alan Martin
Head of Responsible Sourcing, LBMA
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Source: https://www.lbma.org.uk/