Responsible mineral supply chains

Global multi-stakeholder cooperation in producing, processing &

consuming countries

Tyler Gillard, Head of Sector Projects

Responsible Business Conduct Unit
OECD
 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
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 Responsible mineral supply chains
Global support for OECD Due Diligence Guidance

Political Industry & Legal &

• G8 (2007, 2008, 2009, Consumer regulatory
2011, 2013)
• Consumer campaigns • Section 1502 of U.S.
• UN Security Council and civil society (e.g. Dodd-Frank Act conflict
Resolutions on DRC Amnesty Int’l, Global minerals reporting
(2009, 2010, 2011, 2012) Witness, PAC, Enough
and Ivory Coast (2013) Project) • Draft EU regulation on
responsible mineral supply
• ICGLR Heads of States • Industry: EICC chains
Lusaka Decl. (2010) (electronics), AIAG
• Legal requirement in
(automotive), AIA
• OECD Council (aerospace) LBMA, RJC &
DRC, Rwanda, Burundi &
Recommendation (2011) Uganda
WGC (gold & jewellery),
• EU Parliament; EU CSR CCCMC (China) • Conflict Minerals Bill in
strategy + Canada
 OECD-benchmarked industry
Commissioners statement audits cover ~85-90% of total
on raw materials refined gold production • Relevant legislation on
forced labour, child labour
 OECD-benchmarked industry
• China-OECD Programme audits cover ~93% Ta, ~75%
(e.g. UK & US)
of Work Sn, ~60% W production
 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
 “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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 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)
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– Regional events each fall (Beijing in 2015, Kinshasa in 2014, Kigali in 2013)
Global implementation

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 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 a Memorandum 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

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Significant uptake by business supports global
implementation
 THANK YOU
For further information on the OECD’s work on
Responsible Business Conduct

http://mneguidelines.oecd.org/
http://www.oecd.org/corporate/mne/mining.htm
 Impacts and challenges:
International business
• Improved transparency and integrity of mineral supply chains
• But long way to go for companies to fully implement the
Guidance, in particular insufficient company reporting
• Specific challenges 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

 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
 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