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Gold Refiners
Peer Learning Webinar
29 July, 2013
For distribution: 15 August 2013
Agenda
• Welcome
• Introduction to the OECD Due Diligence Guidance
• Perspectives from industry
– Internal management systems (PAMP)
– Due Diligence and Mined Gold (Rand Refinery)
– Due Diligence and Recycled Gold (ArgoHeraeus)
• Questions/ Feedback
• Next steps
Welcome
• Objectives of Peer Learning:
– Foster open and constructive exchange of information
– Learn from companies that are further along in due diligence implementation
– Introduce tools and resources to you
– Answer your questions
• Deliverables from Peer Learning
– OECD Due Diligence Guidance introduction
– Tools and Guides
– Case studies
Peer learning process
Multi-
stakeholder
Steering
Group
• 7 peer groups in Gold
– Large Scale Miners
– ASM
– Refiners
– Banks
– Downstream Users
– Auditors
– Industry initiatives
• Leads identified
Calls with
Peer Group
leads
• Agenda for webinar
• Presenters
• Dates for webinars
Multi-
Stakeholder
Forum
• Dates circulated
• Outreach beyond Forum
1st Peer
Learning
Webinar
• Introduction to DDG
• Examples from industry
• Feedback
2nd Peer
Learning
Webinar
June 5, 2013
late June/ July 2013
• Case studies and tools?
• Decision to continue
with peer learning
July/August
2013
End 2013/
early 2014
Future Peer
Learning
Webinars? Quarterly?
THE OECD DUE DILIGENCE GUIDANCE
Tyler Gillard Head of Project, Legal Adviser
OECD Investment Division
Key features of the OECD Guidance
• One set of expectations
A common framework for due diligence expectations throughout the entire mineral supply chain from mines until end users
• Progressive approach
The promotion of constructive engagement with suppliers in order to gradually affect changes in their sourcing practices without embargoes!
• Different treatment
Depending on mineral (e.g. Supplements on Gold, and 3Ts) and location of company in the supply chain (e.g. upstream and downstream companies), resulting in complementary due diligence processes
Principles of the OECD Guidance
• Due diligence is a dynamic, on-going process with the information collected and built, with quality progressively improved
• Companies are encouraged to integrate the due diligence standards and principles into existing due diligence practices and management systems
• The due diligence recommendations may be carried out jointly through industry or other multi-stakeholder initiatives to save costs and reduce audit fatigue
Local industry and stakeholder initiatives can help companies implement the OECD Guidance within your sector and market – e.g. WGC, LBMA, Conflict-Free Sourcing Initiative, RJC, DMCC and other industry programmes operationalise OECD Guidance.
Overview of the OECD Guidance
• 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:
5-step risk-based due diligence process
• Scope:
Applies to all companies throughout the entire mineral supply chain that potentially use 3T and gold from conflict or high-risk areas
Structure of the OECD Guidance
Due Diligence Guidance includes:
1. A 5-step risk-based due diligence framework for all minerals from conflict-affected and high-risk areas (Annex I)
2. A model supply chain policy (Annex II): – NO! Sourcing from parties linked to serious abuses
– NO! Direct of 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
3. Principles for risk mitigation (Annex III)
4. Supplement on Tin, Tantalum and Tungsten
5. Supplement on Gold, including a special Appendix on artisanal and small-scale mining
Supplement on Gold: Application
• Applies to all companies in the supply chain:
– “Upstream companies” refers to all the companies between the mine and the refiner, e.g. mining companies, local exporters, traders of unrefined gold, recyclers, refiners
– “Downstream” companies refers to all companies after the refiner until the consumer, e.g. jewellers, bullion banks, industrial users of gold
Supplement on Gold: Application
•
Mined Gold
• Gold from artisanal source (ASM Gold)
• Gold from large-scale mines (LSM Gold)
Recycled Gold
Grand-fathered stocks
• Before 1 January 2012
Applies to
Five Step Risk-Based Due Diligence
Step 1 • Establish strong company management systems
Step 2 • Identify and assess risks in the supply chain
Step 3
• Design and implement a strategy to respond to identified risks – If red flag identified
Step 4
• Carry out or ensure an independent third-party audit smelter/refiner’s due diligence – If red flag identified
Step 5
• Report annually on supply chain due diligence – If red flag identified
Red Flags
Red flags of gold origin or transit:
• The gold originates from or has been transported through a conflict-affected or high-risk area
• The gold is claimed to originate from a country that has limited known reserves or stocks, likely resources or expected production levels of gold (i.e. the declared volumes of gold from that country are out of keeping with its known reserves or expected production levels)
• The gold is claimed to originate from a country through which gold from conflict-affected and high-risk areas is known or reasonably suspected to transit
• The gold is claimed to originate from recyclable/scrap or mixed sources and has been refined in a country where gold from conflict-affected and high-risk areas is known or reasonably suspected to transit
Red Flags
Supplier red flags:
• Suppliers or other known upstream companies operate in one of the above-mentioned red flag locations of gold origin and transit, or have shareholder or other interests in suppliers of gold from one of the above-mentioned red flag locations of gold origin and transit
• Suppliers or other known upstream companies are known to have sourced gold from a red flag location of gold origin and transit in the last 12 months
Red flag circumstances:
• Anomalies or unusual circumstances are identified through the information collected in Step 1 which give rise to a reasonable suspicion that the gold may contribute to conflict or serious abuses associated with the extraction, transport or trade of gold
Appendix 1 - Creating opportunities for
artisanal and small-scale miners
• The Guidance assumes that legitimate ASM has a key role to play to drive sector-wide change and focuses on means to create market based opportunities for value-creation
• The Appendix to the Gold Supplement to the OECD Due Diligence Guidance offers an agreed roadmap to enable market access through collaborative efforts of all actors involved and to create economically viable development opportunities for artisanal and small-scale miners
Due diligence on gold produced by
artisanal and small-scale miners
• Risk assessment for ASM gold is more flexible: retrospectively (i.e. “top-down”) tracing ASM gold is impractical and sometimes impossible
• Companies that source ASM gold however are expected to “assist and enable Legitimate Artisanal and Small-Scale Mining producers to build secure, transparent and verifiable gold supply chains”: Creates a “bottom-up” flow of information
• Detailed Appendix on how to create economic and development opportunities for artisanal miners
• All stakeholders encouraged to use the suggested measures in the Appendix
Regulation
► July 2010 – Section 1502 of the US Dodd-Frank Act includes specific reporting requirements for companies using 3Ts and gold (DRC focus)
► August 2012 – Final US rules recognise OECD Due Diligence Guidance (OECD = global focus)
► 2014 – EU Regulations expected to be finalised (focus OECD)
17
US Dodd-Frank and EU Regulations
Global industry initiatives for gold
Initiative Organisations involved
Purpose Participation type
Independent audit
required Conflict-Free Sourcing initiative (CFSI) – includes the Conflict-Free Smelter (CFS) program
Global e-Sustainability Initiative (GESI); Electronic Industry Citizenship Coalition (EICC)®
Verifies that the sources of conflict minerals processed by smelters are conflict-free. Enables downstream companies to identify and source from conflict-free smelters. (Operationalises OECD Guidance for smelter/refiners.)
Voluntary Yes
WGC Conflict-Free Gold Standard and Tools
World Gold Council (WGC)
Establishes a common approach for mining companies to responsibly mine gold and demonstrates that their mining operations do not fuel conflict or the abuse of human rights. (Operationalises OECD Guidance for mining companies.)
Voluntary Yes
LBMA Responsible Gold Guidance
London Bullion Market Association (LBMA)
Ensures that all gold feed stock and all gold produced by refiners are conflict-free. Enables downstream companies to identify and source from conflict-free refiners. (Operationalises OECD Guidance for refiners.)
Mandatory for LBMA accredited
refiners
Yes
RJC Chain-of-Custody Certification Program
Responsible Jewellery Council (RJC)
Supports the identification and tracking of conflict-free gold throughout gold supply chains with the transfer of chain-of-custody documentation.
Voluntary Yes
DMCC Practical Guidance for market participants in Gold and Precious Metals
Dubai Multi-Commodities Centre
Assists DMCC-licensed members and other industry participants in the UAE to enforce OECD due diligence.
Mandatory for all DMCC-licensed
members
Yes
Gold industry Initiatives –
complementarities
Miners Refiners Jewellers
Source: LBMA Responsible Gold
19
Support & Recognition throughout gold supply chain
RJC Chain of Custody Covers All Actors
Source: LBMA Responsible Gold
20
Mutual recognition across the industry
LBMA RJC CFSI
Common Features: 3rd Party Audit, OECD & SEC Compliance
Tailored Focus London Bullion Market Jewellery Supply Chain - Mine
to Retail Manufacturers
Audit outcome Continued Good Delivery Accreditation
CoC Certification Validated Smelter/ Refiner list
Harmonisation RJC CoC, CFS audits = Responsible Gold Requirement
LBMA, CFS = RJC RJC, LBMA audits = CFS.
One Audit Report – Three Programmes
*World Gold Council and ARM Fairtrade/Fairmined initiatives support refiner due diligence
Other Great Lakes-based initiatives
Initiative Organisations involved
Purpose Participation type
Independent audit
required ITRI Tin Supply Chain Initiative (iTSCi)
ITRI; Tantalum Niobium International Study Center; Pact; Channel Research
Supports responsible sourcing from Central Africa through the development of (1) a physical chain-of-custody system that tracks and monitors minerals from mine to smelter and (2) a due diligence system that includes independent audits and mine site and transportation route assessments.
Voluntary Yes
Certified Trading Chains
German Federal Institute for Geosciences and Natural Resources (BGR)
Supports responsible sourcing from Central Africa through the creation of a certification framework for artisanal mining sites.
Voluntary Yes
ICGLR’s Regional Certification Mechanism
International Conference on the Great Lakes Region (ICGLR)
Establishes a certification mechanism for the mining and trading of conflict minerals from the Great Lakes Region.
Mandatory for member countries
Yes
Source: U.S. Government & Accountability Office
OECD IMPLEMENTATION PROGRAMME
OECD Implementation Programme
• Problem-solving and information-sharing
– Common and coordinated solutions
• Collaboration
– Consistency and harmonisation of expectations:
Collaborated multiple industry programmes to support harmonisation and a level playing field
• Promotion and dissemination
– Tools, workshops and training seminars
• Peer-learning
– 3T Pilot from Aug 2011 – December 2012
– Gold implementation programme launched this year – training and case studies
• ICGLR-OECD-UN GoE Forum
– In-person meeting in May and November each year – next meeting on 13-15 November in Kigali, Rwanda
Selection of OECD Multi-stakeholder
Steering Group members
BEDEWA Observatoire
Gouvernance et Paix
Thank you!
For further information on this project and to
download the OECD Due Diligence Guidance:
www.oecd.org/daf/investment/mining
Contact:
Tyler Gillard, Head of Project
Shivani Kannabhiran
Switerzland – 2013 CONFIDENTIAL
[email protected] / www.mks.ch – [email protected] / www.pamp.com
26
PAMP Jacqueline MayorMelan
Olivier Demierre
July 29, 2013
Switerzland – 2013 CONFIDENTIAL
[email protected] / www.mks.ch – [email protected] / www.pamp.com
27
Adopt and commit to a supply chain policy
• Set up a Group Responsible Precious Metal Guidance:
– Scope:
• All companies within the group
• All activities
• All precious metals
– Define internal responsibility for combating human rights abuses, money
laundering, terrorism financing, avoiding contribution to conflict
• Senior Management
• Compliance Officer
• Relationship Managers
– Traceability system that collects and maintains supply chain information
– 5 years record
Switerzland – 2013 CONFIDENTIAL
[email protected] / www.mks.ch – [email protected] / www.pamp.com
28
Adopt and commit to a supply chain policy
– Whistle-blowers mechanism
– High risk categories of supply chain
– Due diligence measures, with additional requirements for high risk supply chain
– No cash transactions allowed
– Strategy to respond to identified risk
– Audit and reporting
• Set up a Group Responsible Precious Metal Policy:
– High level principle / commitment
– Consistent with the model supply chain policy in Annex II of the OECD Guidance
– Public – available on our website
Switerzland – 2013 CONFIDENTIAL
[email protected] / www.mks.ch – [email protected] / www.pamp.com
29
Internal Management System
• 3 steps approbation process:
• Communication / awareness program of employees:
Relationship Manager
Compliance Officer
Senior Management
All employees
Policy
Supply chain employees
Policy
Internal Guidance
Training
Switerzland – 2013 CONFIDENTIAL
[email protected] / www.mks.ch – [email protected] / www.pamp.com
30
Internal Management System
• Engagement with suppliers:
– Refining agreement modified to include undertaking that they conduct their operations
in accordance with a supply chain policy consistent with Annex II of OECD Guidance
– Next step: Awareness program / training of our suppliers
• Whistle-blowers mechanism: – Specific E-mail address set up allowing any interested party to voice concerns
– Mail box is reviewed by Head of Compliance
• Gold Output identifiable:
– Veriscan
• Public Reporting:
– Group Policy
– LBMA RGG Compliance Report with independent audit report
Switerzland – 2013 CONFIDENTIAL
[email protected] / www.mks.ch – [email protected] / www.pamp.com
31
Traceability system – MKS Group internal
database
Packing list with weight and assay
Pro forma invoice
Airway Bill
Export and Import forms
MKS Group documents
(communication, invoice, final
settlement)
Reference to agreement, documentation
of arrival date, flight, type of precious
metals (mined
/recycled/gold/silver/PGM), country of
origin, departure airport, shipping
weight, net weight and assay
communicated by suppliers
One unique number
assigned to each
shipment
Check that material received
corresponds to material expected.
Documentation of arrival date, weight
and assay by PAMP
Warning if significant discrepancy
Supplier/supply chain due
diligence file
CONSISTENCY
Switerzland – 2013 CONFIDENTIAL
[email protected] / www.mks.ch – [email protected] / www.pamp.com
32
Criteria to determine high risk area –
Factors taken into consideration
Conflict Area
• Conflict Barometer from Heidelberg Institute
• Dodd-Frank Act
Conflict Transit Zone
• UN report
Money Laundering
• High risk and non cooperative jurisdictions defined by FATF
Corruption
• Corruption perception index by Transparency International
Sanction
• UN
• US
• EU
• SECO
Rand Refinery © Confidential 33
33
Responsible Gold
Mr. Neil Harby, Head Evaluation
Rg
29th July 2013
Rand Refinery © Confidential 34
Introduction
• Current Status of Responsible Gold Initiatives
o LBMA Responsible Gold Guidance
o Chain of Custody (“green gold”)
o Responsible Jewellery Council
• Organisational Awareness
o Senior Management – this presentation
o Organisation – awareness campaign
o Depositing Customers – sensitisation
o Board – Board Reports
In
Purpose of Presentation
Rand Refinery © Confidential 35
Policies
• Responsible Gold Policy
o Where does Rand Refinery stand?
• Know Your Customer
o Who are we dealing with?
• Anti-Money Laundering
o Are our dealings legitimate?
• Supply Chain Policy
o Where is the gold coming from and how did it get here?
Po
Development and Consolidation
Rand Refinery © Confidential 36
LBMA Responsible Gold Guidance
The LBMA is an organisation that controls the London Gold Market
and in this capacity developed the “Good Delivery Rules” to ensure
the integrity of this market.
As part of these rules the LBMA introduced the Responsible Gold
Guidance (RGG) to ensure that all Refineries adhere to the principles
of Responsible Sourcing as identified by the OECD.
• Rand Refinery is an LBMA Accredited Refinery
• Rand Refinery is an Ordinary Member of the LBMA
• Rand Refinery is an LBMA Referee
• Rand Refinery played an integral role in developing the LBMA RGG
If we do not conform to the RGG, Rand Refinery will lose
Accreditation.
Lr
The only initiative we MUST adhere to.
Rand Refinery © Confidential 37
Process Mapping
The Organisation for Economic Cooperation and Development (OECD) has suggested
a 5 step process of due diligence:
• STEP 1: Establish strong company management systems
• STEP 2: Identify and assess risks in the supply chain
• STEP 3: Design and implement a strategy to respond to identified risks
• STEP 4: Carry out independent third-party audit of smelter/refiner’s due diligence
practices
• STEP 5: Report annually on supply chain due diligence
In order to implement this process and fully understand the Risks, you need to develop
Process Maps. Process Maps rationalise and distil the logical steps to enable all
requirements to be covered. A Depositing Customer Assessment Tool can then be
developed.
This tool enables the Due Diligence Process to be followed and triggers Enhanced Due
Diligence when required.
Pm
Understand the Process – Identify the Risk
Rand Refinery © Confidential 38
Process Mapping Pm
Large Scale Mining
Determine whether the gold producer mines or
transports any gold in a conflict-affected or
high-risk Country and area (“red flagged
operations”).
To do so: - review the context of each location of gold origin and transport,- relying on evidence from credible sources,- and use good faith efforts to make reasonable determinations.
Determine whether the gold producer purchases any
gold (e.g. gold of artisanal and small-scale origin)
potentially from a conflict-affected or high-risk area.
IDENTIFY AND ASSESS RISKS
IN THE SUPPLY CHAIN FOR
LSM GOLD (MEDIUM AND LARGE-SCALE ) “Gold Producers”
Supplier red
flags
Suppliers or other known upstream companies operate in
one of the above-mentioned red flag locations of gold
origin and transit, or have shareholder or other interests
in suppliers of gold from one of the above-mentioned red
flag locations of gold origin and transit.
Suppliers or other known upstream companies are known
to have sourced gold from a red flag location of gold
origin and transit in the last 12 months.
If the gold producer can reasonably determine
that these red flags do not arise in that supply
chain, no additional due diligence is required for
that supply chain.
No
Yes – Identified or info unknown
Map the factual circumstances of the gold
producer’s red flagged operations and other
sources of gold, under way and planned.
Undertake an in-depth review of the context of all
red-flagged locations and the due diligence practices
of any red flagged suppliers
Review research reports, including from governments, international
organisations, NGOs, and media, maps, UN reports and UN Security
Council sanctions, industry literature relating to gold extraction, and
its impact on conflict, human rights or environmental harm in the
country of potential origin, or other public statements (e.g. from
ethical pension funds).
Consult with a combination of local and central governments, local
civil society organisations, community networks, UN peacekeeping
units, and local suppliers. Respond to specific questions or requests
for clarifications made by cooperating companies.
Determine (including through desk research; in-site visits to gold
suppliers; random sample verification of purchase records
proportional to risk; and a review and assessment of purchase and
anti-money laundering and counter terrorist financing (AML-CFT)
procedures and directives, if applicable) if upstream suppliers have
policies and management systems that are consistent with this
Guidance and that such policies and management systems are
operative.
Establish on-the-ground assessment teams
Gold producers with red flagged operations or other sources of Mined
Gold should establish an on-the-ground assessment team (hereafter
“assessment team”) to generate and maintain information on the
circumstances of gold extraction, trade, handling, refining and export
(see below). Gold producers remain individually responsible for
ensuring that the requisite data is gathered, but may wish to facilitate
this by establishing such a team jointly in cooperation with their
customers or other companies in the upstream supply chain supplying
from, or operating in these areas, or via an Industry Programme or
Institutionalised Mechanism. Where „joint‟ teams are not possible, or
companies would prefer not to work jointly, companies should conduct
on-the-ground assessments independently.
1) Ensure that assessors are independent from the activity being assessed and free
from conflict of interests
2) Company assessors must commit to reporting truthfully and accurately and
upholding the highest professional ethical standards and exercise “due
professional care”.
Consider the following factors when contributing to joint on-the-ground
assessments with other companies:
1) the size of the contributing company and the resources available to conduct
due diligence;
2) each company‟s ability to access on-the-ground information
3) the position of the company in the supply chain;
4) the reliability of the company‟s due diligence, as demonstrated by cross-
checking the data provided by the company on all gold inputs
Ensure the appropriate level of competence, by employing experts with
knowledge and skill in as many of the following areas:
1) the operational contexts assessed (e.g. linguistic abilities, cultural sensitivities),
2)the substance of conflict-related risks (e.g. the standards in Annex II, human
rights, international humanitarian law, corruption, financial crime, conflict and
financing parties to a conflict, transparency),
3) the nature and form of the gold supply chain,
4) the standards and process contained in this Guidance.
Provide assessment teams with access to mines, intermediaries, consolidators and/
or transporters within the company‟s control or influence, including:
1) Physical access to sites, including in other countries where trans-shipment or
relabeling is likely;
2) Access to books, records or other evidence of procurement practices, tax, fee
and royalty payments, and export documentation;
3) Local logistics support and assistance;
4) Security for itself and for any information providers.
Establish or support the creation, where appropriate, of community-monitoring
networks and/or multi-stakeholder information units to feed information into the
assessment team. Review, and add to or create if possible, interactive maps that
indicate the location of mines, armed groups, trade routes, roadblocks and
airfields.
Obtain evidence of the factual circumstances of
gold extraction, processing, trade, handling,
transport and export (if applicable)
Location and identity by name of all gold mines for
every output;
Location of points where gold is processed, e.g.,
consolidated, blended, crushed, milled and smelted
into gold doré or alluvial gold output;
Methods of gold processing and transportation;
How gold is transported and processes in place to
ensure integrity, with due regard taken of security
concerns;
Current production and capacity of mine(s), a
comparative analysis of mine capacity against
recorded mine production, and record of any
discrepancies
Current processing production and processing
capacity of mine smelthouse(s), and a comparative
analysis of processing capacity against recorded
processing production, and record of any
discrepancies;
Identification and “know your counterparty”
information of all third party service providers
handling the gold (e.g. logistics, processors and
transportation companies) or providing security at
mine sites and along transportation routes. The
identification should comprise the following
measures, but the extent to which such measures
are carried out should be determined on a risk
sensitive basis: Checking government watchlist information (e.g.
UN sanctions lists, OFAC Specially Designated
Nationals Lists, World-Check search);
Identification of any affiliation of the company
with the government, political parties, the military,
criminal networks or non-state armed groups,
including any reported instances of affiliation with
non-state armed groups and/or public or private
security forces.
Operating licenses, e.g. mining, export;
Identification of the ownership (including
beneficial ownership) and corporate structure of
the companies, including the names of corporate
officers and directors;
Identification of the related businesses,
subsidiaries, parents, affiliates;
Verification of the identity of the companies using
reliable, independent source documents, data or
information (e.g. business registers, extract,
certificate of incorporation)
All taxes, fees or royalties paid to government
related to the extraction, trade, transport and export
of gold;
All payments or compensation made to
government agencies and officials related to the
extraction, trade, transport and export of gold;
The security services provided at the mine sites,
transportation routes and all points where gold is
handled or processed.
The training of security personnel and its
conformity with the Voluntary Principles on
Security and Human Rights.
Screening and security risks assessments of all
security personnel in accordance with the
Voluntary Principles on Security and Human
Rights.
Militarisation of mine sites, transportation routes
and points where gold is traded and exported;
Evidence of any serious abuses committed by any
party in mines, transportation routes and points
where gold is traded and/or processed
torture, cruel, inhuman and degrading treatment
the worst forms of child labour
forced or compulsory labour
gross human rights violations
war crimes
serious violations of international humanitarian law
crimes against humanity
genocide
Information on any direct or indirect support to
non-state armed groups or public or private
security forces
If relevant, the number and name of sites where
any artisanal and small-scale miners operate on the
gold producer‟s concession, an estimate of the
number of miners and an assessment of whether
they can be considered to be involved in
Legitimate Artisanal and Small-Scale Mining
instances of conflict or tensions in the relationship
between medium and large-scale miners and
artisanal and small-scale miners;
If relevant, any instances, reports or suspicions that
ASM gold, or gold from other sources, is being
unknowingly introduced into the gold producer‟s
processing operations (e.g. the mine smelthouse),
and/or fraudulently represented as being mined by
the gold producer.
Assess risks in the supply chain. Assess the information collected and learned through mapping the factual circumstances of the company‟s red flagged supply chain(s). :
1. The company supply chain policy, consistent with Annex II of this Guidance;
2. The due diligence standards and processes contained in this Guidance, as well as information obtained through Step 1 of this Guidance;
3. National laws of the countries where the company is domiciled or publicly-traded (if applicable); of the countries from which the gold is likely to originate; and of transit or re-export countries;
4. Legal instruments governing company operations and business relations, such as financing agreements, contractor agreements, and supplier agreements;
5. Other relevant international instruments, such as the OECD Guidelines for Multinational Enterprises, international human rights and humanitarian law and international anti-money laundering recommendations and guidance.
The gold originates from or has been transported through
a conflict-affected or high-risk area.
The gold is claimed to originate from a country that has
limited known reserves or stocks, likely resources or
expected production levels of gold (i.e. the declared
volumes of gold from that country are out of keeping with
its known reserves or expected production levels).
The gold is claimed to originate from a country through
which gold from conflict-affected and high-risk areas is
known or reasonably suspected to transit.
The gold is claimed to originate from recyclable/scrap or
mixed sources and has been refined in a country where
gold from conflict-affected and high-risk areas is known
or reasonably suspected to transit.
Red flag
locations of
gold origin
and transit
If the gold producer can reasonably determine
that these red flags do not arise in that supply
chain, no additional due diligence is required for
that supply chain.
No
Yes – Identified or info unknown
Determine if the counterparty is a World Gold
Council member and abiding by the conflict free
standard
Yes
No
No additional due diligence is required for that
supply chain, but Rand Refinery reserves the
right to perform additional due diligence
Rand Refinery © Confidential 39
Process Mapping Pm
Large Scale Mining - detail
Determine whether the gold producer mines or
transports any gold in a conflict-affected or
high-risk Country and area (“red flagged
operations”).
To do so: - review the context of each location of gold origin and transport,- relying on evidence from credible sources,- and use good faith efforts to make reasonable determinations.
Determine whether the gold producer purchases any
gold (e.g. gold of artisanal and small-scale origin)
potentially from a conflict-affected or high-risk area.
The gold originates from or has been transported through
a conflict-affected or high-risk area.
The gold is claimed to originate from a country that has
limited known reserves or stocks, likely resources or
expected production levels of gold (i.e. the declared
volumes of gold from that country are out of keeping with
its known reserves or expected production levels).
The gold is claimed to originate from a country through
which gold from conflict-affected and high-risk areas is
known or reasonably suspected to transit.
The gold is claimed to originate from recyclable/scrap or
mixed sources and has been refined in a country where
gold from conflict-affected and high-risk areas is known
or reasonably suspected to transit.
Red flag
locations of
gold origin
and transit
If the Process Map raises a “red flag”, Enhanced due-diligence will
be triggered.
Rand Refinery © Confidential 40
World Gold Council Wg
Conflict-Free Standard
“The objective of our Standard is to create absolute trust that
the gold produced under our guidelines neither fuels armed
conflict, nor funds armed groups, nor contributes to human
rights abuses associated with these conflicts. The Standard is
designed to apply globally, for World Gold Council members
and other companies involved in the extraction of gold.”
• Rand Refinery is an active member of the Steering Committee that
developed the Standard
• Recognition that the Mine Production Chain of Custody ends in the
Melthouse of the Refiner
• Mutual Recognition of LBMA RGG
Rand Refinery © Confidential 41
World Gold Council
Part E
Wg
Part E – Statement of Conformance Documentation
Overview
In order to maintain the integrity of the supply chain, companies need to provide a statement
that gold and gold-bearing material being dispatched is in conformance with this Standard.
Suggested Language
The following is suggested language for a Statement of Conformance that should be
supported by appropriate assurance and documentary evidence:
{Mine company name} confirms, to the best of our knowledge, that this gold or gold-
bearing
material has been produced by a mine which is in conformance with the World
Gold Council Conflict-Free Gold Standard.
Gold or gold-bearing concentrate which is NOT in conformance with this Standard will need
to be specified as such.
Rand Refinery © Confidential 42
Depositing Customer Assessment Tool
• Application to trade form updated to include the following:
• Method of material processing – required specifically by OECD
• Method of transport – supply chain audit if required
• KYC for Non FATF/FICA area countries – confirmation of compliance
• Beneficial owner declaration
• Responsible gold procedures – has the company established and implemented policies
and procedures
• Acknowledgement and declaration – abiding by local regulatory requirements with regards
to KYC, AML and not involved in any illegal activities
• Resources to verify information received on application form:
• World Check – risk screening
• Intierra – mining database
• Control risks – country and area risk analysis
• Dun and Bradstreet – background screening for international applications
• Corporate Verification – background screening for local applications
Dc
How will Rand Refinery meet the Requirements?
Rand Refinery © Confidential 43
Depositing Customer Assessment Tool
• Assessment tool is used to identify risks
• BROWN FLAGS – NON NEGOTIABLE FINDINGS
• RED FLAGS – management decision will be taken
• GREEN FLAGS – low risk
• Application and assessment summary is presented to the customer committee for
approval
• Contract will be signed that includes Responsible Gold warranty
• Responsible Gold Declaration on waybill/bar-list
• What have we done so far:
• KYC including EDD and supply chain verification on 12 customers identified by
Deloitte, high risk customers and new applications
• Letter to all customers informing them to include waybill/bar-list warranty
• Issuing of new contracts to customers that have passed the KYC/AML
• Verifying and auditing of all suppliers in the supply chain
Dc
How will Rand Refinery meet the Requirements?
Rand Refinery © Confidential 44
Chain of Custody
• Enhanced Product Opportunities
o Provenance
o Streaming
o Certified Products
• Responsible Jewellery Council
o Chain of Custody Standard
o Holistic Guidance
o “Value-add”
o Global
o Voluntary
Co
What else can/should you be doing?
Rand Refinery © Confidential 45
45
ARGOR-HERAEUS Group
The golden link
High-tech precious metals processing
Dr. Wilfried Hoerner,
Director Refining and Bank Products
Employees AH Group Internal rules
Good delivery Refiner LBMA Gold Guidance
Financial intermediaries directly subordinated
to FINMA ORD – FINMA (Swiss Financial Market
Supervisory Authority)
Bank and non-bank financial
intermediaries Law – AMLA (Anti-Money Laundering Act)
Melter Assayer
ORD – PMCO (Precious Metals Control Ordinance) Melter Assayer
Law – LPMC (Law Precious Metal Control)
Everyone Penal code
Applicable to: Regulations
Pyramid of rules & regulations
Precious metals flow
Products
ARGOR-HERAEUS SA
Recycled Gold
Grandfathered
Gold
Mines
Transformation Refining
Products for:
- Investment
- Industry
- Jewellery
Sourcing
Precious Metal Services
FAFT inter-governmental
policy making body
National Law
Professional
Association
EICC/GeS
I RJC LBMA
Swiss Law
FINMA
AMLA/AMLAO
PMCA/PMCAO
Provenance/Origin
Refiner
Industry
Watches /
Jewelry
Banks
Distribution
OECD
Grandfathered
Gold
Recycled
Gold
Objectives
Combating money laundering, terrorist
financing and other related threats to the
integrity of the international financial system
Ensure responsible supply chains of minerals,
avoiding to support directly or indirectly
conflicts
1.
2.
LBMA
Gold Guidance
Internal Policy
Rules & Regulations
f.e.:US Law
Dodd Franck Act
Rules & Guidelines which influence the refiner’s role and policy in the supply chain of recycled gold
FAFT Financial Action Task Force
EICC Electronic Industry Citizenship Coalition
GeSI Global e-Sustainability Initiative
OECD Organisation for Economic Co-operation and Development
LBMA London Bullion Market Association
Grandfathered gold refined before 01.01.2012 mark on the bar, inventory list or other valuable identification
Dodd Frank Act, Section 1502 Conflict Minerals (DRC)
AMLA Anti Money Laundering Act (= GWG)
AMLAO Anti Money Laundering Act Ordinance (= GWV – FINMA = Geldwaschereiverodung)
PMCA Precious Metals Control Act (= EMKG = Edelmetallkontrollgesetz)
PMCO Precious Metals Control Ordinance (= EMKV = Edelmetallkontrollgesetz Verordung)
Legend
Identification of risk in the value chain
ARGOR-
HERAEUS
Trader /
Bank
Trader /
Bank
Manu-
facturer
Consu-
mer /
Retail
Recycled
Gold
Supplier Consumer
material
money
Post
consumer
jewellery
Invest-ment
gold
Industrial
scrap
=
=
=
our commitment
company level
Code of Conduct
Accreditations & Certifications
Policy of Compliance and Ethics
Swiss – and international legislation
supply chain level
industry level
Supply Chain Due Diligence Policy
LBMA – RJC – WGC - OECD
Tools used by Argor-Heraeus
Governance structure and functional responsibility
Policies and procedures
Ongoing training programme
Policy employee and information system
Tools used by Argor-Heraeus
Governance structure and functional responsibility
- Board of Directors
- Shareholders Committee
- General Management
- Compliance officer
- Auditor compliance
- Operational Division Management
- Account Managers
- Back office staff
- Receiving and Shipping
- Due Diligence Referent
- Accounting & Administration
- Risk Audit Committee
- Internal Risk Audit Committee
Tools used by Argor-Heraeus
Policies and procedures
Clear and restrictive counterparty opening process
Double-entry precious metals accounting system
Storage of all documents of each transaction for 10 + 1 year
System escalation
Control system of transactions
Continuous relationship and transaction management during the life cycle of a business relation
Ongoing training program
Training of all key people involved in the CoC
Employee policy and information system
Clear employee policy with information system top down – bottom up (grievance procedure)
Material monitoring
Continuous analysis of material quality and composition
Evaluation of quantity and quality of each delivery
Assessment of the physical aspect of the delivered material
Sequence of KYC – KYB Due
Diligence Procedure
• First contact with probable client
• Evaluation of plausibility of the business proposal by Argor-Heraeus
• Internal description of business model, relation and partner
• Proposal from account manager to compliance for counterpart examination
• Compliance analysis
• Proposal to and acceptance by general management
• Requested documentation: - identification of counterpart
- company / legal entity
- persons who act for the legal entity
- beneficial owner
- supply chain policy / AML used by counterpart
- any other supporting documents
• Customer visit / Report of account manager and/or compliance manager for documentation
• Reception and analysis of counterpart’s documents
• Acceptance Account Manager / Internal Compliance Auditor / Compliance / General Management
• Opening counterparty / Track List
• Continuous evaluation of the relationship
Q&A, FEEDBACK
Next steps
• Forum meeting 13-15 November 2013 in Kigali, Rwanda
• Feedback to this webinar (content, approach) – written comments welcome
• OECD website: http://www.oecd.org/daf/inv/mne/mining.htm