Global
Ethical mineral sourcing:
opportunities and challenges
Ethical sourcing of minerals
used in electronic equipment
has become a hot topic of late,
writes Nicolaas C Steenkamp
and Breton Scott.
About the authors
Breton Scott has over two decades of post-
qualification experience in the mining and
project engineering industry. He has been
involved in a variety of activities, ranging from
mine operations, project management, mining
and rock engineering, mineral asset valuations,
due diligences, EPCM contracts, and related
feasibility studies.
Nicolaas Steenkamp has a decade and a
half of post-qualification experience in the
geological and geotechnical industry. He has
been involved in various activities, including
exploration, geochemistry, geological and
geotechnical, desktop studies, due diligence,
EPCM contracts, and related feasibility studies.
Background
The DRC suffered an extended period of
conflict and unfortunately became infamous
for producing conflict minerals and gemstones,
leading to the coining of terms such as ‘blood
diamonds’ and ‘conflict minerals’. In recent
years, the concern has moved from gemstones
to critical metals, specifically cobalt, and the use
of forced and child labour. Cobalt is considered
a critical mineral for all modern electronics,
particularly in the rechargeable battery sector.
The other minerals produced in the so-called
Great Lakes of Africa, namely tin, tungsten,
tantalum, and gold, became the focus of social
awareness groups. This has motivated several
large multinational companies to demand proof
that the minerals and materials supplied and
used by them in the production of their goods
are considered conflict-free.
Conflict in the Central African Republic
exposed widespread smuggling and links to
conflict, and Zimbabwe’s diamonds documented
hidden links that have funnelled significant
diamond revenues to the partisan army and
intelligence services.
South American countries such as Peru and
Columbia have also been cited as sources of
conflict gold. The Southeast Asia region, in turn,
is known for conflict gemstone smuggling.
Industry requirements
Section 1502 of the Dodd-Frank Act addresses
conflict minerals by setting requirements for
due diligence, reporting, and public disclosure,
www.miningmirror.co.za
I
n recent years, there has been an increase
in the requirements of sourcing ore from
artisanal and informal small-scale miners.
This mostly relates to ensuring that the material
was not obtained through child labour or
forced mining to fund conflicts. The passing of
the Dodd-Frank Act relating to tin, tungsten,
tantalite, and gold (3TG) mined in the Great
Lakes region of Central Africa, states increased
scrutiny by the London Metals Exchange
(LME), focusing on tin, cobalt, and potentially,
copper, sourced from the Democratic Republic
of the Congo (DRC) and hence, broadening of
the definition of ‘conflict’ or ‘blood’ diamonds by
the Kimberly Process (KP).
Goma, the capital of the North Kivu province in eastern DRC — a region known, in the past, to be a hotspot
for trading in conflict minerals.
and is designed to ensure accountability and
discourage companies from doing business in
ways that ultimately support exploitation and
finance conflict. It affects the DRC and all its
neighbours, including Angola, Burundi, Central
African Republic, Republic of Congo, Rwanda,
South Sudan, Tanzania, and Zambia.
All parties that are subject to the Act are
required to file a Specialised Disclosure Report
(Form SD) and depending on the origin of
their conflict minerals or level of determination,
issuers may need to submit a Conflict Minerals
Report (CMR). This reporting can be a
complementary output of a third-party audit
process.
The Independent Private Sector Audit
(IPSA) of CMRs must be conducted in
accordance with the requirements of the
Generally Accepted Government Auditing
Standards (GAGAS) as established by the US
Government Accountability Office (GAO).
The London Bullion Market Association
(LBMA) has issued the LBMA Responsible
Gold Programme based on anti-money
laundering principles as well as the OECD
Due Diligence Guide’s five-step framework for
risk-based due diligence. The London Bullion
Market’s Responsible Gold Guidance Sourcing
Programme is mandatory for all of its accredited
refiners. The companies are audited annually
under the programme and are required to report
publicly. It requires the companies to securely
record data on brand, origin, custody, and
location on a global platform, with blockchain
seen as a possible solution.
The new LBMA guidelines now also call for
regulation of the safety and environmental
factors associated with the sourcing of the
gold from small-scale or artisanal sources. The
seriousness of enforcing these requirements was
demonstrated in May 2018 when Elemetal,
previously one of the biggest US refiners, was
sentenced on charges linked to illegally mined
gold from Peru.
The Responsible Jewellery Council (RJC),
an international, not-for-profit organisation
established to reinforce consumer confidence
in the jewellery industry, initiated its Chain-
of-Custody (CoC) Standard and supporting
documents for the precious metals supply chain.
This called for two main requirements: conflict-
free as a minimum and responsibly produced at
each step of the supply chain.
Conflict-free diamonds
The KP is a binding agreement that prevents
conflict diamonds from entering the mainstream
rough-diamond market. The current format of
the KP applies to only rough diamonds, allowing
stones that are fully or partially cut and polished
to fall outside the scope of the initiative.
The LME is reviewing its requirements to
ensure that no metal traded on the bourse has
links to child labour, conflict, or corruption.
Copper producers that buy from the DRC
will be categorised as higher-risk suppliers,
alongside manufacturers of tin and cobalt (the
changes, however, have not been made public
yet). The designation will mean that copper
producers could be removed from the LME’s
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