conflict minerals regulations · • conflict minerals regulation • presentation by oecd (louis...
TRANSCRIPT
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Conflict Minerals Regulations
Baselworld 19 March 2015
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• Welcome & Introduction (Charles)
• RJC Update (Ashish)
• Conflict Minerals Regulation• Presentation by OECD (Louis Marechal)• Presentation by EU DG Trade (Rein Nieland via Video
recording)• Presentation by CEO of PAMP (Mehdi Barkhordar)
• Q & A session with speakers (moderated by Charles)
• Thanks & Close (Ashish)
Session Structure
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RJC – Building Responsible Supply Chains
Baselworld 19 March 2015
Ashish DeoChief Executive Officer - RJC
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1. The international standards setting and certification body forfine jewellery & watch industry – ‘Mine to Retail’
2. Scope = Gold, Diamonds and Platinum group metals
3. Founded in 2005
4. Initial launch of Standards – Code Of Practices (COP) - in 2009
5. Chain Of Custody standard (COC) for Gold and Platinum GroupMetals launched in March 2012
6. Revised COP Standard launched - November 2013, includingnew requirements for sourcing from Conflict-Affected Areas,and new, voluntary, Provenance Claims provision
RJC – A Quick Reminder of Who We Are
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Strong growth in membership
2010 2011 2012 2013 2014
205
300
404
470
571
3
120
242
306
387
Total Members by Year-End Certified Members
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RJC membership is diverse and covers the entire chain from mine to retail
1. Large, medium and small businesses
2. Spread over 60 countries
3. Certified facilities cover over 270,000 people
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Providing better support to our members
1. Increased and improved Training – members and auditors
2. Translations into several languages
3. Harmonisation – to reduce duplication of efforts / costs
4. Impact report – tracking tangible benefits
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Benefits of RJC Membership
• Builds confidence in your company as a responsible supplier and customer.
• Ensures you operate to international best practices and achieve:1. Higher employee retention and motivation
2. Better customer & supplier relationships
3. Effective management of supply chain risks
• Enables you to trade internationally and comply with international rules for responsible supply chains :
• RJC certification and audit can be used to show compliance with many different rules / protocols
• Provides a shared and cost-effective way to contribute to long term future of the industry
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Responsible Sourcing is more than ‘conflict free’
Drivers:Reactive• Regulatory pressures
• Need to identify and manage risks
• Better control over supply chains
• Changing consumer expectations
Proactive• Voluntary efforts to enhance business reputation
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RJC CoC Certification and Provenance Claim provision support responsible sourcing
• Voluntary, and in addition to COP
• CoC certification supports implementation of OECD Due Diligence Guidance and has cross-recognition agreements with LBMA Responsible Gold Guidance, DMCC Good Delivery and provisions of US Dodd-Frank Act for Gold & Platinum group metals
• 21 Refiners already CoC certified. Some miners and retailers in progress
• Provenance Claim allows members to align certification and audit with several industry standards and protocols – cost & time efficient
• Provenance Claim provision available for Gold, Diamonds, and Platinum group metals
• RJC Support: training, help desk, webinars and fact sheets
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Vision, Mission, and Values Remain Relevant
• RJC Vision Our vision is a responsible world-wide supply chain that promotes trust in the global fine jewellery and watch industry.
• RJC MissionWe strive to be the recognized standards and certification organization for supply chain integrity and sustainability in the global fine jewellery and watch industry.
• RJC Values We are respectful and fair. We practice honesty, integrity and accountability. We engage in open collaboration.
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Join a community of confidence
• RJC - the recognised standard for jewelleryindustry
• Supported by over 600 Members
www.responsiblejewellery.com
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LOUIS MARECHALPOLICY ADVISOR - EXTRACTIVES
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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
Gold from the Democratic Republic of the Congo• Alluvial, artisanal gold &
informally, illegally mined
• Estimated conflict area annual ASGM output: ~10 tonnes
• Market value: $380 millionSource: WGC & IPIS (2014)
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OECD Due Diligence Guidance for Responsible Mineral Supply Chains
Objective To provide clear, 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 and scope 5-step risk-based due diligence process, applies to all companies throughout the
entire mineral supply chain that potentially use minerals conflict or high-risk areas
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Key features of the OECD Due Diligence Guidance - summary
One set of expectations A common framework for due diligence expectations throughout the entire mineral supply chain from mines until end users
Progressive approachThe promotion of constructive engagement with suppliers in order to gradually affect change
Reasonable and good faith effortsNot 100 % compliance overnight
Government and industry programmes can help accomplish due diligence tasks
Companies should use and build upon existing systems!
Risk-basedIntensity of due diligence proportional to risk
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Applies to all types of gold
•
MinedGold
• Gold from artisanal sources (ASM Gold)
• Gold from large-scale mines (LSM Gold)
RecyclableGold
Grand-fathered
stocks
• Gold held in vaults with verifiable date before 1 January 2012
Applies to
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Involves actors all along 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! 18
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Structure of the Guidance
Supplement on 3Ts
Supplement on gold
Appendix on artisanal and small scale mining for gold
Annex I: description of 5-step approach
Annex II: model supply chain policy
Annex III: principles for risk mitigation
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Structure of the OECD GuidanceFocus on annex II and III
• 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
• Measures for Risk Mitigation and Indicators for Measuring Improvement (Annex III)
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5-step risk-based framework
Step 5:report
on all
steps
Step 1: company management systems
Step 2: risk assessment
Step 3: risk mitigation & monitoring
Info
rmat
ion
Step 4: audits of refiners’ due diligence practices
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Risk identification for downstream companies
Identify the refiners in your supply chain
• Collect information directly from suppliers
• Use risk-based approach to verify supplier information
Assess whether refiners are sourcing minerals responsibly
• Do smelters and refiners undertake OECD Due Diligence?
• Have the refiners been audited (e.g. LBMA, RJC, DMCC) ?
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
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Was does it mean for SMEs?
• The Guidance recognizes that flexibility is needed in its application depending on individual circumstances and factors such as
– the size of the enterprise– the location of the activities– the situation in a particular country, the sector and nature of the products or services involved
• However, it expects all companies to adopt a responsible business conduct that will have them
– ask the right questions to their customers or suppliers– respond to inquiries on responsible mineral supply chains– collect all relevant documentation – and, in general, be aware of the potential negative impacts of their activities
• Expectations on small and mediums enterprises in the downstream segment of the global industry are less demanding than expectations set on companies on the ground, in producing countries; or on large companies with proportionate financial means and human resources
• A study is currently underway to understand the practical challenges of due diligence implementation for SMEs: Take the survey! 23
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Industry initiatives can help companies implement the OECD Guidance but don’t take away individual companies’ own responsibility
Glo
bal
Min
eral
Su
pp
ly C
hai
n
Miners (artisanal and industrial)
Refiners & Smelters
Bullion Banks
Downstream manufacturers (electronics, jewellers & others)
3T Programmes Gold Programmes
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EU Regulation
► March 2014 – Draft EU initiative and legislation released:
Voluntary self-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, global responsible smelter lists and funds for OECD implementation programme
► Main differences (as the draft currently stands):
EU regulation focuses on the importer only
EU system to develop an audit of the importer –OECD only recommends audit at the smelter / refiner stage
EU initiative on responsible mineral supply chains
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Why get involved in responsible mineral sourcing?
Gain more information on your supply chain for better commercial decision-making
EU and US market access – meet customer demands
Ethical responsibility & avoid reputational damage for your company and industry
Avoid risk of UN sanctions if sourcing from the DRC or neighbouring countries
Supply chain security – avoid unnecessary disruptions in your supply chain
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• Forum: from May 4 to 6, at the OECD Conference Center, Paris
• Focus of the Forum:– Presentation of the first draft of the CCCMC Guidance on
responsible supply chains of minerals from conflict-affected and high-risk areas. Discussions on the setting up of an audit mechanism.
– Gold production and trade in Colombia and in Central Africa – Discussions on advancing harmonization of audit protocols– Financing models for responsible artisanal and small-scale
mining– Assessing & enhancing the contribution of SMEs to supply chain
due diligence and responsible supply chain of minerals
9th ICGLR-OECD-UN GoE Forum on Responsible Supply Chains of minerals
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Thank you
For further information on the OECD’s work on Responsible Business Conduct
http://mneguidelines.oecd.org/http://www.oecd.org/corporate/mne/[email protected]; [email protected]; [email protected]
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REIN NIELANDPOLICY OFFICER – DG TRADE
TRADE
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MEHDI BARKHORDARCEO – PAMP
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An MKS PAMP GROUP Company
RJC - Chain of CustodyRJC BaselworldBasel, 19 March 2014
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© PAMP
Table of content
RJC - Chain of Custody – Confidential –33
1. Who we are
2. Corporate Responsibility
3. RJC Chain of Custody
4. Our Value Proposition : BEYOND PRECIOUSTM
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© PAMP
Who we are1.
RJC - Chain of Custody – Confidential –
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© PAMP
MKS PAMP GROUP
RJC - Chain of Custody – Confidential –35
The MKS PAMP Group is an industrial and financial services group specialisingin all aspects of the precious metals business, drawing on more than 60-years of experience.
The Group employs over 600-people and has a local presence in key precious metal markets. MKS PAMP Group provides high quality products and efficient services through 2 refineries and mints, 14 offices, in 11 countries on 5 continents.
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© PAMP
MKS PAMP GROUP worldwide
RJC - Chain of Custody – Confidential –36
New York Castel San Pietro
DubaiIstanbul
Singapore
Shanghai
Sydney
Kuala LumpurBangkok
New DelhiHaryana
Geneva
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© PAMP
Our Clients
37
MKS PAMP Group has a diverse client base, spanning the full spectrum of precious metals markets:
• Central Banks• Retail & Commercial Banks• Government Mints• Government Postal Authorities• Mining Companies• Jewellery & Watch Manufacturers• Jewellery Wholesalers• Asset Managers• Bullion Retailers• Direct Marketers
RJC - Chain of Custody – Confidential –
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© PAMP
Corporate Responsibility2.
RJC - Chain of Custody – Confidential –
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© PAMP
PAMP’s Comprehensive Responsible Compliance Framework
RJC - Chain of Custody – Confidential –39
LBMA/OECDResponsible Supply Chain
Swiss AML-CFT
RJCCoPCoC
PAMPBeyond Precious
ISO/OHSAS Quality,
Environment, Safety
SAISocial
Accountability
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© PAMP
Responsible Practices at PAMP
RJC - Chain of Custody – Confidential –40
Name Nature Conflict free
AML CTF
Human Rights criteria
Health Safety criteria
Social, environ
ment criteria
Full Track and
Trace
Applies to full Metal Input/ Output
LBMA Mandatory
SA8000 Voluntary
RJC CoP Voluntary
RJC CoC Voluntary
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© PAMP
Our observations on the dynamics of Responsible Sourcing
RJC - Chain of Custody – Confidential –41
1. Growing awareness of conflict gold issue
2. Determination of gold origin more accepted
3. Better cooperation of other market participants of the supply chain during due diligence process
4. Slowly rising markets and consumer expectations
5. Increasing number of companies with responsible sourcing certification
6. Extraction : Acute issues remain in certain regions
7. ASM Responsible Sourcing: Acute
implementation issues remain
8. Conflict/High risk area: Inconsistency of application of conflict/high risk area criteria by different supply chain actors remains a competitive issue
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Responsible Sourcing: The way forward
RJC - Chain of Custody – Confidential –42
1. Increased diligence of all market players as to responsible sourcing
2. Incentivize and support resolution of acute issues at extracting level
3. Increase the current scope of materials (gold and 3T) to other precious metals
4. Compulsory due diligence beyond conflict/high risk area determination
5. All supply chain actors should obtain a responsible sourcing certification –not only refiners
6. To clarify and adjust due diligence requirements on ASM supply chain
7. Include Business Ethics, Health & Safety and Environment
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© PAMP
RJC Chain of Custody3.
RJC - Chain of Custody – Confidential –
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© PAMP
RJC – Chain of Custody Implementation
RJC - Chain of Custody – Confidential –44
1. Management Systems and Responsibilities
2. Internal Material Controls 3. Outsourcing Contractors and Service Companies : n/a
4. Systems to Confirm Eligible Material
5. Eligible Materials
6. Issuing Chain-of-Custody Documentation
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© PAMP
RJC – Full Track and Trace
RJC - Chain of Custody – Confidential –45
Full traceability through segregation in :
Handling from
source to
refinery
Pre-refining
melt
Cell for refining
Melting of
sponge resulting
from refining
Lots for minting
or casting
Finished product
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© PAMP
Issues faced
RJC - Chain of Custody – Confidential –46
• Implementation : none
• Upstream : very limited supply of mined CoC material
• Downstream : limited demand so far
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© PAMP
Our value proposition :BEYOND PRECIOUSTM4.
RJC - Chain of Custody – Confidential –
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© PAMP
Conflict free
AML-CFT
Limited Environmental impact
Safety assurance
No Human right abuse and work of
children
Certified mine
Community supported
Full Traceability
BEYOND PRECIOUSTM, GOLD FOR POSITIVE IMPACT
RJC - Chain of Custody – Confidential –48
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An MKS PAMP GROUP Company
Thank youThis presentation is confidential and should not be replicated or distributed without the permission of MKS PAMP GROUP.
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Q & A
PLEASE RAISE YOUR HAND TO ASK YOUR QUESTION.
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Thank you!
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