13th CFSI Workshop presentations - Day 1

The Conflict-Free Sourcing Initiative www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect

Welcome!

8:00 - 9:00 a.m. Registration and Check-In

9:00 - 9:15 a.m. Welcome

9:15 - 10:00 a.m. Keynote Address Ms. Signe Ratso, Director, Trade Strategy and Analysis, Market Access, European Commission Directorate-General for Trade

10:00 - 10:30 a.m. Coffee Break 10:30 a.m. - 12:30 p.m.

Panel Discussion: Good Regulatory Practice: Government Policy Frameworks Tyler Gillard, OECD; Patricia Jurewicz, Responsible Sourcing Network; others TBA What’s right, what’s wrong, and what’s needed in building effective regulations on conflict minerals around the world.

12:30 - 2:00 p.m. Lunch

2:00 - 4:00 p.m.

In-Region Due Diligence and Traceability Deep Dive iTSCi, Better Sourcing Program, International Conference of the Great Lakes Region; Rwanda; Burundi

What programs mean for downstream companies, what they provide, how companies use them, what risk mitigation responsibilities companies have if they use them, and how they relate to the OECD.

4:00 - 4:30 p.m. Coffee Break

4:30 - 6:00 p.m. Engaging in the Great Lakes Region Jennifer Peyser, Public-Private Alliance for Responsible Minerals Trade; Jean-Paul Meutcheho, Global Advanced Metals; Boukje Theuuwes, Philips; Bas van Abel, Fairphone

Why are consumer brands and other downstream and companies engaged in conflict-free minerals projects in the Great Lakes Region? What are the opportunities for upstream and downstream companies to engage with each other, civil society, and government? How is this engagement making a difference?

6:00 pm – 7:30 pm Reception 2

8:00 - 9:00 a.m. Registration and Check-In

9:00 - 10:30 a.m. Practical Reporting Guidance: What is expected from companies on reporting? What are companies’ options? How does participating in the CFSI help downstream companies meet their obligations?

10:30 - 10:45 a.m. Coffee Break 10:45 a.m. - 12:00 p.m.

Conflict-Free Smelter Program Overview and Conflict-Free Sourcing Initiative Governance Overview of how interested companies can join the CFSI, how we engage with stakeholders and how the CFSI is managed. We’ll also provide an update about the CFSP and related smelter outreach, protocol updates and training developments.

12:00 – 12:30 p.m. Lunch

1:30 – 2:30 p.m. Compliance Best Practices Building on CFSI guidance, various paths to Reasonable Country of Origin Inquiry (RCOI) data, and Independent Private Sector Audit (IPSA) and US Securities and Exchange Commission (SEC) frequently asked questions.

2:30 - 3:00 p.m. Closing Remarks

3:00-3:30 Coffee Break

3:30-4:30 p.m.

EU Regulation Review (Industry attendees only) The EC’s Directorate General for Trade has announced that it will put forth regulation governing conflict minerals in early March. After a prompt review of the regulation, experts will discuss their interpretation of the requirements and explain what this all means for your company.

4:30 - 5:30 p.m.

Benchmarking Companies’ Reporting Progress (Industry attendees only) What is your company doing for this initial reporting period compared against what other companies are doing? What are you including in your report? What are others including? This industry-only session allows companies to compare their reporting plans to their peers and learn further best practices.

3

• Chatham House Rule: Participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed.

• Respectful participation – Focus on issues, not individuals or organizations –Take a problem-solving orientation – Listen actively (limit side conversations)

• Introduce yourself before speaking • Mobile phones off or silent

4

• No still photography or audio/video recording. • Want to live Tweet? Great! #CFSI #cfsiconf14 . However:

ground rules still apply! • Members of the press are allowed in sessions, but must

adhere to all ground rules and wear a name tag to identify themselves.

• Please refer press inquiries to EICC Director of Communications Julie Schindall (available at registration).

• Be mindful that space outside of sessions is considered public to the press.

5

• Meetings and programs should be conducted so as to eliminate questions regarding antitrust compliance.

• Under no circumstances shall the meetings of this group be used as a means for competing companies to reach any understanding, expressed or implied, which tends to restrict competition, or in any way to impair the ability of members to exercise independent business judgment regarding matters effecting competition.

• These guidelines apply not only to discussions during a formal meeting, but to all informal discussions as well.

6

••••

7

• CFSI will not allow solicitation from non-sponsoring companies.

• All CFSI members and other attendees are asked to report solicitation; any companies found not to honor this policy will not be permitted to attend CFSI workshops for one year.

8

Go to www.PollEv.com/cfsipanel in your browser (computer or mobile device)

or TEXT your response to +32 460 200 056

The Conflict-Free Sourcing Initiative www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 9

http://www.pollev.com/cfsipanel

European Union regulations, in-region traceability initiatives — a lot is going on in the conflict minerals space. Make sure you have the most up-to-date information about best practices on conflict minerals due diligence by attending our 13th Conflict-Free Sourcing Initiative Workshop.

Event Sponsors Event Exhibitors

http://3ecompany.com/

http://www.conflict-minerals.com/

http://fr.ptc.com/topics/conflict-minerals/

EU responsible trading strategy for minerals from conflict zones

13th Conflict-Free Sourcing Initiative Workshop Brussels, 17 March 2014 Signe Ratso European Commission Director, DG Trade

1. Context

2. Objectives of the integrated EU approach

3. Draft Regulation

4. Accompanying measures

5. Impact on operators

6. Complementarity to US Dodd-Frank

7. Next steps

Outline

16

� Natural resources as a driver for development � Extraction and trade often linked to conflict

and instability � UN/OECD/G8 statements to increase

transparency in extractive industries � Existing initiatives on responsible sourcing:

o US Dodd-Frank Act Section 1502

o OECD Due Diligence Guidance

o International Conference on the Great Lakes Region

o Numerous public and private initiatives

Context

17

� European Parliament Resolution (2010) on conflict minerals

� EU communications on Commodity markets and raw materials (2011) and Trade, Growth and Development (2012)

� Public Consultation (March – June 2013) � Internal impact assessment � Integrated EU approach on responsible

mineral sourcing proposed (5 March 2014)

18

Context

Context

� Operating environment for EU companies o 150,000-200,000 EU companies indirectly affected by

US Dodd-Frank Act

o 420 EU importers (traders, smelters/refiners, component manufacturers)

o EU trade share of ores is about 35% (tin, tantalum, tungsten, gold) and 15-25% for the metals

19

� Complementary objectives established on the basis of the public consultation o Break the link between mineral extraction, trade and the

financing of armed conflict

o Preserve and further develop a market in the EU for responsibly traded minerals from conflict regions

o Improve the ability of EU operators to comply with existing due diligence frameworks (OECD DDG, US Dodd-Frank)

Objectives

20

� Main elements of the draft Regulation:

o Voluntary self-certification by EU importers of tin, tantalum, tungsten and gold (ores, concentrates and metals)

o Global scope

o Obligations based on the OECD DDG (5-step framework)

o Ex-post checks by EU Member States competent authorities

o Publication of an annual EU list of responsible smelters/refiners

� Aim: to act at the most effective level of the EU supply chain and to facilitate the flow of due diligence information down to end users

Draft Regulation

21

� Additional measures to promote the take-up of the certificate and supply chain due diligence: o Public procurement incentives for companies selling

products such as mobile phones, printers and computers containing tin, tantalum, tungsten and gold

o Financial support to SMEs to promote the uptake of self-certification and to the OECD to promote due diligence among EU and non-EU smelters/refiners

o Visible recognition for the efforts of EU companies who source responsibly from conflict-affected countries or areas

Accompanying measures

22

� Additional measures to promote supply chain due diligence: o Policy dialogues and diplomatic outreach with governments

in extraction, processing and consuming countries to encourage a broader use of due diligence

o Raw materials diplomacy including in the context of multi-stakeholder due diligence initiatives

o Development cooperation with the countries concerned

o Support by EU Member States through their own policies and instruments

Accompanying measures

23

� Impact on responsible EU importers: o Increased legal certainty and transparency through their

self-certification to ensure that they do not contribute to the financing of armed conflicts

o Easier compliance with Dodd-Frank obligations

� Impact on responsible smelters/refiners: o Increased public accountability and transparency of their

practices through the publication of an annual EU list

o Identification of those sourcing from conflict areas

� Impact on downstream users: o Facilitated flow of due diligence information down to end

users and easier to source metals responsibly

o Public procurement incentives to satisfy contractual due diligence obligations

Impact on operators

24

� Dodd-Frank indirectly responsible for due diligence efforts among EU downstream users

� Weakness in the present system is the flow of information from upstream to downstream

� Focus of the EU proposal on upstream and in particular on smelters/refiners

� Incentive-based EU approach corrects the current deficiency in order to open up the EU market for responsibly sourced minerals from conflict regions

Complementarity to US Dodd-Frank

25

� Draft proposal transmitted to the European Parliament and the Council

� Legislative discussion through ordinary legislative procedure

� Entry into force once legislative procedure is over

Next steps

26

Further contact/information [email protected]

http://europa.eu/rapid/press-release_IP-14-218_en.htm

Submit discussion questions at www.PollEv.com/cfsipanel or text 100020 and your question to +32 460 200 056 27

Contact

mailto:[email protected]










Good Regulatory Practice Tyler Gillard OECD Jean-Paul Meutcheho Global Advanced Metals Patricia Jurewicz Responsible Sourcing Network Submit discussion questions at www.PollEv.com/cfsipanel or text 100020 and your question to +32 460 200 056


Patricia Jurewicz Director, Responsible Sourcing Network

13th CFSI Workshop – Brussels, Belgium March 17, 2014

Good Regulatory Practice: Government Policy Frameworks

What’s Right

� Mandatory regulation for all companies in the same position

� OECD due diligence and public reporting

� Listing which companies are taking specific actions

� Same reporting date � Incentives

What’s Wrong

� Voluntary schemes � Opt-in approach � Application only to entities

importing unprocessed or processed ore

� Regulation that encourages companies to avoid the region

What’s Needed

� Brings all companies up to the same reporting standards

� Focuses on addressing the problem on the ground

� Incentivizes companies to source from conflict-affected and high-risk areas

� Complimentary regulation in different countries/regions

� Phase-in approach of additional minerals and regions

Thank you for being part of the solution

Patricia Jurewicz Director Responsible Sourcing Network [email protected] +1.510.735.8145


Good Regulatory Practice Tyler Gillard OECD Jean-Paul Meutcheho Global Advanced Metals Patricia Jurewicz Responsible Sourcing Network Submit discussion questions at www.PollEv.com/cfsipanel or text 100020 and your question to +32 460 200 056




Afternoon panel preview and poll

Go to www.PollEv.com/cfsipanel in your browser (computer or mobile device)

or TEXT your response to +32 460 200 056



iTSCi: leading minerals traceability and due diligence in Central Africa

Kay Nimmo, ITRI Representative to iTSCi Governance Committee [email protected], http://www.itri.co.uk

Karen Hayes, Director of Mines to Markets, Pact Inc [email protected], http://www.pactworld.org

CFSI, Brussels March 2014

iTSCi Objectives

� Provide a joint industry programme from mine to smelter, meeting international requirements (OECD, UN)

� Provide information for end user smelter audit (CFSP)

� Allow relevant US and multi-national companies to report on due diligence, required by US law (SEC)

� Promote continued access to international markets for 3T mineral sector in the central African region

Monitored large scale global supply chain

� Conflict-free minerals to the international market o DRC [Katanga, Maniema, South & North Kivu] o Rwanda… o And Burundi !

� 12,000,000 kg minerals in the last year

A responsible upstream supply chain

� iTSCi Programme key reference is OECD Annex II: o No! serious HR abuses by any actor o No! Direct or indirect support to non-

state armed groups o Managed formal security forces o Managed bribery and fraud o Encouraging transparency of payments

� iTSCi is not only “bag’n’tag”

� iTSCi is: o Practical application of OECD guidance o On the ground, at local level o And internationally o Through multi-partners, with joint

responsibilities

Wide Partnership of Stakeholders

Industry

Civil Society

Govern-ment

¾ MoU with Govts ¾ Govt agents implement

data collection ¾ Govt can create local

legislation on due diligence & traceability

¾ Govt chairs the local multi-stakeholder committees

¾ Companies share costs & information effectively

¾ Companies responsible for systems and policies ¾ Programme reports

summary information on companies & incidents ¾ Programme provides

authority & drives improved standards

¾ Participate in multi-stakeholder committees ¾ Incident monitoring and reporting ¾ Programme as basis for other actions & benefits

Training

Investment

Capacity building

Knowledge

Balanced Structure of Programme

Governance Committee

International Advisory Panel

Independent Evaluators

Field teams

Secretariat

In region Governments

Local partners

Government agents

Local committees

iTSCi Member Companies

All activity in reference to

due diligence guidance

Ombudsman

Presentation Outline

� Describing the process; o Using membership to apply OECD guidance o Finding and approving conflict-free mines o Monitoring, incidents and mitigation for improvement o Support for other projects o Data gathering and analysis o Independent evaluation and assessment

� Describing related issues; o Input for CFSP audits o Impacts and benefits; trade or embargo o Other challenges, including funding

� Scope and success o From 2009; pre Dodd Frank o Future opportunities

SELECTING RESPONSIBLE COMPANIES

COMPANY SUMMARY & MEMBERSHIP STATUS: licences, conflict mineral policies, due diligence plans, supplier evaluations etc.

COMPILATION OF COMPANY DOSSIER: evaluation of role in the supply chain and extent of OECD understanding at joining

Full iTSCi Membership - upstream

� Open to all companies in the supply chain, inc. co-operatives

� Moves OECD from voluntary guidance into common industry standard

� Possibilities of suspension or other actions

� Challenge of formality of OECD guidance versus practical application

� Flexibility of expectations relating to company size and location o More focus on exporters and international traders

Provisional full member application

Independent evaluation & report

Accepted full member

Documentation and information

� Information about the company; o Formation and background, shareholders and management structure

� Copies of authorisation documents; o Registrations, licences, permits etc

� Declarations and policies; o Conflict mineral policy and due diligence plan o Declarations on legality & political activity etc

� Information about suppliers and trade; o Past 3 years mineral production/trading history o Capacity and planned investment etc

¾ Checks against information e.g. in previous UN reports, and/or trade information – to determine risk and recommendations

Members committed to Due Diligence

� 89 accepted full members + 76 provisional members = 165 � 28 countries (language issues)

� All monitored for progress to standards of OECD � Free market competition within common system and standards

SELECTING CONFLICT-FREE MINES

+ OTHER INFORMATION: Government validation reports, UN, civil society etc. Approved to receive tags

BASELINE REPORTS: mine location, owners, operators, production, civil society, trade routes, taxes and security

Practicalities: geographic spread

Practicalities: roads and infrastructure

Practicalities: limited local resources

The complexity of local trade

� Mines are complex economic and social ecosystems � Relationship is not as simple as it looks

Creuseur

Primary digger

Négociant Official trader at the mine

Entite de Traitment Official processor and exporter

Creuseur Primary digger

Kaleremba Removes waste from pit

Laveur Primary washer (multiple sites)

Kinambuiste Secondary washer

(multiple sites)

Jigger Tertiary washer (multiple sites)

Shashaleur ‘Petty cash’ dealer, no official status

Commissionaire Intermediate between mine and

négociant – recognized but not legal

Négociant Official trader at point of export from mine – in Nyabibwe town

Transporteur Transporter

(independent)

Concasseur Rock crusher

(independent)

How to do a mine baseline

� Work with local authorities to identify all mines in the area � Baseline studies carried out by Pact staff and local partners over

course of several visits � Cannot depend on a ‘snapshot’ on a single day when everyone

knows that outside inspectors are arriving � Regular updates as mines constantly change and evolve

What’s in a baseline

� Site details, concession, owner, operator, number of miners

� Number of pits/tunnels, minerals produced, grades, quantities (with history if possible)

� Details of all state actors present � Details of security presence and

provision � Social issues, child labor � Full profile of all official and

informal taxes and payments

The master mine list

� Information from the baselines and monthly reports is put onto a master mine list – one for each DRC province and one for Rwanda

� Mines remain on the list and status is updated as they are ‘active’ or ‘inactive’

� GPS coordinates ensure that mines are known even if ownership, name or other details change ; codes are assigned to each site

� Used as a cross-reference for incidents where there are apparent contradictions in details of minerals, production levels, etc.

� Comprehensive overview of the project status at any time

Today for instance…..

Extent of iTSCi Implementation (to Mar 2014) Co

untr

y

Prov

ince

Num

ber

of s

ites

Num

ber o

f m

iner

s

Aver

age

prod

ucti

on

kg/m

th

DRC Katanga 170 sub-sectors covering 224 sites, 125 active

28,330 322,000

Maniema 35 sub-sectors covering 126 sites, 106 active

2,520 160,000

South Kivu 4 sub-sectors covering 11 sites, 8 active

700 40,000

North Kivu 7 sites, all active 4,060 20,000 (estimate)

Rw All 233 companies covering 665 sites, 423 active

34,980 820,000

Total 1,033 primary production sites, 669 are active

70,590 1,362,000

A number of recent expansions underway

MONITORING AND SOLVING RISKS

PROJECT COMMITTES: local stakeholders, or project Governance committee, to determine, agree and implement actions

INCIDENT REPORTS: Reports from field staff, or any other source. Record of plan and actions until closed/resolved.

How to manage incidents

Example alerts in supply chain

Mitigation of incidents

� Most prevalent incident types are to do with errors in tagging. These are easily detected due to simple safeguards in the system

� Almost three quarters of incidents are resolved at local level

Local Committees play a key role

Cross-checks on production

� Tags have unique numbers which cannot be used twice � Tags are of no value without the log book, and log books are assigned to

known sites/individuals who can be traced in case of error or suspicion � Production is compared to the baseline and tracked on the mine list � In Rwanda, a ‘due diligence list’ details any sites where there are

questions about credibility of reported production. Companies are advised to carry out their own cross checks as well as those of iTSCi

� Mineral sampling programs are underway for all iTSCi sites � Key is to have all mines in one area all in the system – reduce the

need/incentive for smuggling � Also, need to use common sense, look at the economics and viability of

mineral trading in this situation

Practicalities: transport cost & time

Recording the supply chain at 5 points

SUPPLY CHAIN DOCUMENTS (2): once exported, shipping and trade documents provided by supplier to smelters

FIELD DATA RECORDS (3): in country data on minerals at the mine, processor and exporter, collated by the Programme

• Date • Time • Mine name • Mine location • Tag number • Miner / cooperative • Weight • Price • Grade • Transport route • Transport method • Security • Staff present

Management of tags and logbooks

� Controls on issue; o Specified number based on mine baseline, production and use o Record of recipient to compare to user

� Controls on manual return; o Monitored for time to return & number in field o Monitored for missing tags or logbooks o Checked for incomplete information

� Returned to ITRI UK for manual entry into database

o ~50,000 sheets per year o ~25,000 transactions per week o Further quality and duplicate checks o Analysis

Unique data-sets for artisanal mining

� Example; production per sector and variation

Mine production over time

� Example; technical and tax issues reducing tonnage at the Nyabibwe site in south kivu

Production per location

� Possible reference to assay sampling in the future

Data collection improvements

� Technology solution equivalent o For faster data collection

� Data transfer by phone network o Can be used on pda’s or phones

� Trialled in Rwanda with iTSCi staff 5

� Now trialled in Rwanda with GMD staff o Reshuffle of agents delayed use

� Small number of units provide by Promines for trial in Maniema o Electricity? o Phone signal?

INDEPENDENT EVALUATION

GOVERNANCE FIELD ASSESSMENTS: field visits to evaluate progress and challenges, risks and recommendations

COMPANY AUDITS: site visits to audit for progress on OECD implementation and minerals traceability. Local & international

Area Governance Assessments

� General report on situation to provide “verifiable, reliable, up-to-date information on the qualitative circumstances of mineral extraction, trade, handling and export from conflict-affected and high-risk areas” o Update on security and Annex II issues o Specific focus issues (e.g. tax payments) o Activities of Government and other partners o Progress and challenges

� At the start of the Programme and at regular intervals

� Support company assessments and decisions

� Relate individual incidents to overall picture of an area

Company site audit procedures

� Reference audit standards of OECD Step 4 o Evidence based approach etc o ISO 19011:2002(E), ISO 17021: 2006(E)

� Audit process defined o Opening/closing meetings and normal methods

� Audit checklist o Questions for iTSCi members - 106 due diligence vs 41 tagging procedures o E.G. questions for an iTSCi exporter – 72 vs 37

� Audit report includes; o Comments on OECD Annex II & each step of OECD guidance o Production plausibility o Improvement actions

“All auditing should be to a standard of reasonable care with an expectation that company actions should be reasonable and in good faith in relation to company size, location and circumstance”

5 Steps of OECD Company Due Diligence

STEP 1: Establish strong company management systems

STEP 2: Identify & assess risks in the supply chain

STEP 3: Design & 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

Company responsibility for due diligence, can be assisted by joint industry actions to simplify and reduce costs

� Practical challenges vs formality and the need for due diligence training

Independent Evaluators

� “Synergy is one of the leading social development consultants in the extractive sector, with the most highly experienced staff members in this field, and over a decade of experience working with businesses operating in challenging environments”

� Regional experience o Numerous extractive industry projects in DRC and Great Lakes in the region

� ASM experience o Specialist experience in extractive industries, with large scale and ASM operations

� Audit experience o Independent audit and assessment, including due diligence o Development of standards and assessments for e.g. Rio Tinto and EITI o Trained ISO14001 lead auditors

� Training experience o Sustainability and social assessments in region

� Team stability & continuity

INFORMATION IN THE SUPPLY CHAIN

� SEC audit requirements; o Opinion on conformance of company due diligence with internationally

recognized standards (OECD) o Opinion on implementation of due diligence as per company policies o No opinion on the effectiveness of due diligence o No opinion on whether the minerals are conflict-free

iTSCi upstream company audits

CFS smelter audits

Downstream company Conflict Mineral Report audit

SEC compliance

cfsp

Upstream & Downstream

� Common standards & understanding of system in the supply chain

� Allows cross checking of all information

� Overview of complete upstream supply chain in one Programme

� Effective sanctions

Complex management of information

� Management via a third party reduces competition issues � Protection of commercial information versus publication � Established through practical experience � High risk ! Legal threats and concerns in addition to commercial factors

Mine Source information at Smelter

� Tags arriving at smelters declared and cross check versus information held from field records o Mine source, weights, tags as issued, transporter names and type etc o Any procedural or other issues managed through incident reports

� Tag report sent with a copy of mine baselines for validated source

More info checked by members & at smelter

� As relevant to CFSP audit protocol; o iTSCi accepted members list (or other due diligence report on companies) o iTSCi monthly field report (for e.g. comments on production changes) o iTSCi monthly incident list (for e.g. involvement of suppliers) o Independent governance assessment context reports (for trends and progress) o Independent audit reports on sample of suppliers (for recommended actions) o Government docs (e.g. certificate of origin or ICGLR) o Shipping docs (e.g. bill of lading etc) from trader

� Other iTSCi risk management tools;

o Alerts on security occurrences o Information on suspended companies o Information on mines with varying production

¾ Leads to customer/supplier checks on risks

Legal and commercial

risks

Embargo or Engagement ?

� The case of the Kivu’s and smaller countries o April 2011: downstream requirement for traceable & conflict free material o No time to prepare & Kivu’s considered too high risk for purchases o No due diligence system = limited market o No market = no cash = no progress

¾ Burundi, Uganda, Tanzania, Zambia etc

� The case of dis-engagement in tungsten sector o January 2014: Smelters stop purchasing traceable and conflict-free mineral o Result of ‘africa-free’ downstream market disengagement o High risk, competitive issues & SEC reporting deadline o Due diligence system = but still limited market o Unresolved

Purchase decisions have huge impact

Challenges for 3Ts markets

� ASM production is unpredictable, programme income is variable � Low government capacity and resources, lack of donor support

o (Pact has received support from US Department of State for related projects and from the Governments of South Africa and the Netherlands for direct iTSCi activities)

� External actors fail to understand ASM dynamics � Cannot roll out in certain areas due to insecurity � Unintended negative consequences for other areas and commodities � Managing expectations:

o System cannot go ‘beyond compliance’ without resources for social programming

o Media and NGO focus o Original premise of conflict minerals lobby

More challenges for 3Ts markets

� Consumer fatigue, audit fatigue, cheaper and easier to walk away � If standards are set too high and are too broad reaching, then

‘Conflict-free’ may become ‘ASM-free’ or ‘Africa-free’ � No solution to stocks and commercial risk issues are causing

disengagement � Loss of wolfram (tungsten) markets � Initiatives established without any planning for financial sustainability

will become redundant o Industry will only finance what is necessary for compliance. Beyond that

is that is a CSR or philanthropic ‘extra’ � Individual quests for different options could fragment the landscape

and undermine collective progress

Engagement not Embargo!

� Accurate statistics available for first time � 635 incident reports, 80% closed with agreed local resolution � Miners have a regular and openly competitive market for material � Reduced fraud, reduced theft of minerals, direct benefits to miners,

traders and mine owners � Indirect benefits to community prosperity � Reduced illegal taxation, increased legal tax revenue to government � Livelihoods of well over a quarter of a million miners and their family

members protected � iTSCi 3Ts mines are now hubs where security and stability are becoming

the ‘norm’

Engagement not Embargo !

Child labor and conflict minerals

� Child labor exists in mining areas but not because of conflict

� iTSCi has shone a light on the issue in 3Ts mines

� With support from GE, Pact carried out an in-depth study to understand the dynamics and propose practical positive interventions

� A good example of a concerned company going beyond compliance to address a related social issue

� OECD Working Group formed

The role of Government

� The tagging is carried out by Government, data is recorded by Government, system is monitored with full involvement of Government

� iTSCi is integral to building governance systems for long term management of the mineral sector by its national authorities

� iTSCi reinforces the authority of the state agents in the mines, depots

� Brings transparency in tax revenue – new partner project with the World Bank will use iTSCi as a trial for implementation of the EITI for the ASM sector in Burundi

Opportunities in 3Ts markets

� Peace accord could enable expansion into new areas if funding available

� Building on projects that deliver legal compliance gives a great platform for other initiatives and donor funding o Investment in stabilization of the operating environment o Building government capacity o Transparency in tax revenues (e.g. EITI)

� High level of consumer awareness, willingness to engage o Capitalize on this with tangible projects, not more standards and policy

initiatives o Use success stories and positive publicity that connects both ends of

the supply chain � Social programs by participating members

Social programs by members

Complementary links to other projects

� iTSCi is the due diligence and traceability system for the Conflict Free Tin initiative (funded by the Dutch Government)

� iTSCi is the traceability system for Solutions for Hope

� iTSCi is used as the basis for issuance of ICGLR certificates

� iTSCi baselines complement DRC mine validation activity

� iTSCi supported by PROMINES (World Bank, DFID & GDRC) for additional Government agents training and provision of equipment

� iTSCi membership process and audits apply OECD implementation and train companies while doing

iTSCi – the phased concept

2009 - 2010: Phase 1 � Moving from verbal to written due diligence

o Collection of existing documents, but limited information

2010+: Phase 2 � Moving from documents to tagging & adding OECD due diligence

o Adding huge new areas in very successful market intervention

2013+: Phase 3 � Moving to social and environmental improvements

o Child labour o Basic health and safety standards o Maximising economic benefits through saving and business advice o Capacity building for NGO’s, mining ass’s and Government services o Supporting and extending the mutli-stakeholder actions o EITI transparency of tax payments

Programme funding: majority upstream

� Full (upstream) members; o Small joining fee o Small annual fee o Supply chain levy on tonnage of mineral o Locally provided start-up funds

� Associate (upstream) members; o Small annual fee to support Programme

� Occasional other funding; o EICC for 2010 pilot o ITRI o DBSA (South Africa) o MFA (Netherlands)

Apple

In conclusion….

� Complex regulation and principles to be followed

� Joint industry Programme supports OECD standards

� Information provided enables responsible sourcing

� Bringing significant benefits to local communities, and

� Opportunities for business investment & further development

� Funding challenges are roadblock to expansion of base Programme � Further funding is need for Phase 3 actions � And finally….

Stay Engaged!

70,000 miners in 662 mines in the

GLR are today working securely. They do not face threat, force, or

abuse and the tin, tantalum and tungsten they

produce does not fund conflict.

This is possible due

to international companies sourcing

conflict free minerals through

iTSCi and CFSI.

www.PollEv.com/cfsipanel or

TEXT 100020 and your question to +32 460 200 056



Republic of Rwanda

Due Diligence on Conflict Minerals Certification & Traceability

Venant Nsanzimfura Coordinator of Certification Unit

CFSI Workshop, Brussels, 17-18 March 2014

The Rwandan Mining Sector

` Rwanda – along with its neighbors - forms part of the central-African Kibaran belt richly mineralized in tin, tungsten, and tantalum ores (3Ts) ` Mining in Rwanda has continuously taking place since the 1930s ` Rwanda has also intermittently operated a tin smelter ` There are more than 200 mining companies and cooperatives

currently active in Rwanda

` Mineral exports are important for national development ` Rwanda falls under the Dodd-Frank Act countries with due diligence

requirements for 3T sourcing

The Rwandan Mining Sector

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

annu

al e

xpor

ts [t

]

wolframitecoltancassiterite

The Regional Certification Mechanism

` The RCM forms part of the ICGLR Regional Initiative on Natural Resources, approved by all heads of state in the Lusaka Declaration in 12/2010 ` The RCM aims for OECD Due Diligence compliance ` The RCM includes shared implementation

responsibilities by national authorities and independent regional bodies

` National authorities: Mine Inspections, Mineral Traceability, Export Certification

` MINIRENA regulation no 02/2012 of 28/03/2012 ` Regional bodies: ICGLR Audit Committee, Independent

Mineral Chain Auditor, ICGLR Secretariat, ICGLR Steering Committee

Mine Inspections

Export controls

Issue ICGLR certificate

No certificate – no export

Implementation by national authorities – control through independent audits

Regional Certification Mechanism - Principle

107

Traceability

RCM Mine Inspections

` Preparation ` An ICGLR-compliant inspection template was developed in 2012 ` Pilot inspections and training took place in 2012 ` A dedicated GMD inspection unit was created

` Implementation ` Objective: Progressively roll out annual inspections of all mines in

Rwanda ` Inspections have been implemented since 2013 by 6 inspectors ` 50 mine sites have been inspected and were found compliant with

ICGLR standards (green or yellow-flagged)

Mineral Traceability

` Mineral traceability through iTSCi started in 2011 and has been progressively rolled out to all Rwandan mine sites since then ` 100% of Rwandan mineral exports are tagged

` The scheme currently is in transition from manual recording of traceability information in logbooks to automatic recording of traceability information through PDAs

` The iTSCi scheme has been independently assessed against ICGLR Chain of Custody standard compliance ` GMD plans to bring scheme into compliance very soon

Mineral Traceability

Currently, more than 500 tagging sites are differentiated and overseen by 95 government agents (hiring 40 more)

Exports and ICGLR Certificates

` Certification Unit created in 2013 through MOU between RNRA and RBS; now fully operational

` Procedures developed in line with ICGLR standards ` Certificates were designed and printed, including full set of

adequate security features ` ICGLR certificates are issued for single export containers

certifying that due diligence has been performed for this container ` More than a certificate of origin ` 9 certificates issued since

November 5, 2013

Exports and ICGLR Certificates

Certification Procedure `Performed by dedicated full-time staff upon application by exporter – due diligence assurance for mineral buyers! `Verification of…

` full traceability documentation for the shipment ` tax conformance ` mine site status (not for red mines!)

`Subject to independent audit through ICGLR (to be established) `Smelters should document reception of certificate

Challenges

` Companies which process wolframite (tungsten ore) have begun refusing to buy the minerals from Central Africa (including the DRC, Rwanda, Uganda, Burundi).

` Despite the fact that, since 2011, Rwanda and DRC are implementing the OECD due diligence recommendations in regards with conflict minerals and has implemented a minerals traceability mechanism ‘iTSCi’ in collaboration with ITRI, and the implementation of RCM, the major European and US companies which usually sourced tungsten from Rwanda have stopped buying from the country since three years.

Consequence:

` Reduction of motivation of upstream companies, despite the certification and traceability successes, local communities and business across the region, are being disrupted by the disengagement of tungsten smelters.

` it may undermine the work being done to promote due diligence.

` Fall in price because of fewer demand in the region. ` Weakening investment initiatives in wolfram mining.

Questions

` What do smelters need to know about the ICGLR certificate? ` Does the certificate give them what they need?

` What are their priorities? ` What are the challenges / gaps? ` Are there any differences for tin, tungsten, and tantalum smelters?

` How do we best communicate with smelters? (CFSP) ` How do we improve practical on-the-ground integration

among due diligence schemes?

MURAKOZE -

THANK YOU!

Venant Nsanzimfura Coordinator of ICGLR Certification Unit Rwanda

[email protected]

Mineral Traceability in Burundi -

Brussels March 2014

By Paul NDARIHONYOYE Ministry of Energy and Mines

CFSI_Brussels. Burundi Presentation, March 2014

¾ GENERAL SITUATION

¾ MINERALS IN THE BURUNDIAN ECONOMY

¾ ARTISANAL MINING ¾ MINERAL TRACEABILITY / DUE DILIGENCE IN BURUNDI

I. GENERAL SITUATION


Entity: Republic of Burundi Area: 27,834 Km2 Population: 8.5 millions Capital City: Bujumbura

• Agriculture is mainly the base of Burundian economy. • The country also produces gold, wolframite, coltan & cassiterite • Exploration for nickel, phosphates, REE, vanadium


• Burundi is an eastern neighbor to DRC

• Burundi produces

“conflict minerals”

• Burundi falls under the Dodd-Frank Act due diligence reporting

BGR 2011


0

50

100

150

200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Burundi Major Export Values [Mio USD]

Tea (Comtrade)

Coffee (Comtrade)

Total 3T

Gold

II. MINERAL EXPORTS BURUNDI

• Burundi is a developing country with negative trade balance

• National exports are very important for development

• Major exports: Coffee & Gold

• 3T minerals also

contributed increasingly


0

100

200

300

400

500

600

700

800

900

1,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Burundi Mineral Export Tonnages [t]

Cassiterite

Wolframite

Coltan

II. MINERAL EXPORTS BURUNDI (Cont.)

• Wolframite most important for tonnage

• Coltan most important for export value

• Mineral exports plunged in 2013: quasi-embargo

• Creates risk for smuggling of Burundian minerals into neighboring countries

Civil war Production recovers

y Artisanal mining is important for jobs and sustaining livelihoods

y Government of Burundi undertakes efforts to develop artisanal mineral sector & support due diligence: y Formalization - formation of cooperatives

(already registered: 21 for gold, 16 for 3Ts)

y Implementation process of EITI

y Cadastre system in development

y Commitment to ICGLR Regional Certification Mechanism: performed 5 mine inspections in 2013

y Challenge: (lack of) mineral traceability


III. ARTISANAL MINING

y Government engaged in discussions with 3T traceability providers since 2011 (on-going)

y MOU for Traceability signed and could begin in April 2014 y Private sector committed to contribute

y OECD: it is a private sector responsibility to establish traceability as part of due diligence efforts

y Challenges: y For some traceability providers, unclear if they will be accepted by

CFSP y For other traceability providers, costs are too high to be borne by

private sector alone y External 3rd party funding is not a sustainable solution y Even with traceability in place, no guarantee for offtake from

smelters/downstream (disengagement is cheaper)!


IV. MINERAL TRACEABILITY IN BURUNDI

y Example: Rwanda – similar, but bigger 3T sector than Burundi y Private sector finances traceability in Rwanda

y Same traceability system approach

y Comparison of quoted price for 3T traceability in Burundi and known costs from Rwanda: y For wolframite, traceability costs per unit (ton) would

be 10 times higher in Burundi y Not sustainable for private sector


IV. MINERAL TRACEABILITY IN BURUNDI (Cont.)


10,000

10,500

11,000

11,500

12,000

12,500

13,000

13,500

Burundi Rwanda

US$

per

ton

of w

olfr

amit

e

State Agency

Due DiligenceService Provider


Traceability fees


102.6

9.6

4.4 1.2

Burundi Mineral Export Value 2012 [Mio USD]

Gold

Coltan

Wolframite

Cassiterite


• Gold generates more value than 3Ts in Burundi

• Why are due diligence schemes not developed to include gold?

• Create demand through responsible engagement

Conclusions y Mineral traceability in its current design marginalizes

small 3T producing countries y Despite Government & private sector commitment y This creates regional smuggling incentives (mineral price

differences) & regional credibility risks y Ideas for way forward:

y Regional consultations for private-sector funded traceability/ due diligence with harmonized costs per unit (ton)

y Improved coordination among upstream schemes to further reduce costs (or/and support from downstream)

y Engage responsibly in sourcing gold from central Africa and aim for combined 3TG due diligence /funding solutions



NDARIHONYOYE Paul Geologist Advisor in charge of Mining Sector Cabinet of the Ministry of Energy and Mines. Contact: Phone: (+257) 79 344 491 (+257) 77 741 751 E-mail: [email protected]

Integrated Due Diligence Solution for Conflict Free Mineral Supply Chains

The Better Sourcing Program – March 2014

Introducing the Better Sourcing Program

In-region assurance scheme that is focused on delivering conflict free and human rights

assured minerals to market

Currently undergoing pilot in Republic of Congo

Better Sourcing Program designed with an understanding of the needs across the entire

mineral supply chain and to involve the entire supply chain

• Good practice and transparency along the entire supply chain can help stimulate investment in the upstream, improve conditions for workers and communities, and can assist risk management for mining and processing companies

• Ensure the compliance of upstream partners such as smelters and traders to international standards

• Downstream, create a bridge from mine site to brands to demonstrate compliance with DF1502

• Provide an opportunity for brands to engage and invest directly in the progressive improvement of the lives of artisanal miners and communities

• For investors: provide clarity in activities in the upstream and their investments, and provide consistent, relevant data about the social performance elements of their investments


How does the Better Sourcing Program work?

Objective

Deliver conflict free and human rights assured

minerals to market in a manner that is robust,

independent and business sustainable

An enterprise approach that supports the professionalisation of local activities, and the progressive improvement of both the lives and working conditions of miners, and transparency of activities from upstream to downstream

Ensure we remain invested in the region and guide end users towards an improvement of the circumstances of their mineral supply chain without discrimination on origin


Conflict Free Status and Progress Criteria

At the core of the program is effective implementation of the OECD Due Diligence Guidance (5 steps) and

meeting the requirements of the Conflict Free Smelter Program

¾ Achieved through enterprise adherence to the Better Sourcing status criteria and progressive improvement

The Better Sourcing Standard

Status criteria = minimum standard for export

• Conflict Free

• Free of human rights violations

Status criteria are demonstrated through a) traceability; b) strong business management and risk assessments; c) transparency d) third party audit and on-going monitoring and advisory

Progress criteria = everything else and gradual improvement

• Working conditions

• Health and safety

• Environment

• Social issues

Progress criteria are demonstrated and reviewed through annual audits


Fundamentals

Robust and Credible

• OECD DDG based standard out for public consultation in the coming weeks

• Audit protocol will be released soon thereafter

• Incorporating IT for efficiency: traceability data all the way up to the mine site is available prior to export


Independent and transparent

• UK registered company not affiliated with any particular industry

• Partnerships with qualified service providers in traceability technology, advisory and monitoring

• Strict transparency upstream aiming to support communication down the chain

Market driven and business sustainable

• Affordable entry point for small operations

• Affordable ongoing fees (% of export)

• Adjustment to the specific circumstances of

• each individual supply chain

Proactive improvement

• On-going monitoring and advisory

• Annual review of the program

• Public and ongoing consultation at both local and international level

How is Compliance Demonstrated?

A focus on exporters and monitoring of identified mine

sites • Collaboration needs to be established all the way up to the mining

cooperative or company

• Exporters must demonstrate that, along their supply chain, they have:

• Informed and supported the baseline assessment by BSP, in

full transparency

• Implemented due diligence / supply chain validation systems

as recommended through the baseline assessment (BSP) • Organisation-level management systems (policies,

procedures, reporting, accountability)

• Traceability and transparency systems across the supply chain – in particular set up a recognised traceability system from mine site to export

• Local monitoring, consultation and oversight (including incident reporting) by the BSP Local Monitor (local credible NGO)

• Conducted a risk assessment and risk mitigation planning

• Have passed an independent 3rd Party Audit


Better Sourcing Supply Chain & Partners Upstream business partnerships – an enterprise approach • Working in collaboration with upstream operators to help them adjust to international requirements

• Supporting the implementation of a reliable traceability system

• Building capacity and providing support to local implementation partners and stakeholders

• Transforming behaviours – be proactive, rather than reactive to supply chain issues

• Engagement at local level – inclusive consultation with local stakeholders

Mid to downstream business partnerships • We expect transparency and full disclosure at export level to raise confidence downstream • On-going engagement with international buyers, smelters and manufacturers to promote Better Sourcing-validated

supply chains


2014 Focus: Building Confidence with our Partners

Demonstrating credibility and ability to implement

Raising confidence downstream – bridging the communication gap

Disclosure of facts and events / incident reporting in full transparency ahead of export

Build Credibility

• Robust standards undergo public consultation

• 3rd party auditor is crucial - will NOT be any service provider to the BSP

• Audit standard based on international best practice – will provide clarity to the audit process


March 2014 Program Update Pilot in Congo Brazzaville (tantalum for Tantalex Ressources – Canadian listed company)

• Baseline assessment conducted • Due diligence systems set up and risk evaluation prior to export • Results will be communicated to the receiving smelter and exports will be initiated subject to consultation with all

relevant stakeholders including CFSI • Support to the implementation of the ICGLR RCM • Third party audit targeted for Summer 2014

Supporting the CFSI

• Approval in principal from CFSI • BSP will liaise with the CFSI to ensure its approach remains faithful to CFSP audit objectives

Looking forward

• Second and third trading chains this year • Standard and Audit Protocol public consultation • Developed upstream enterprise management systems - closed consultation/independent review

Looking for partners who share our vision from upstream to downstream

• Establishing long term partnerships in region, with operators and local communities • Smelters can enquire about our approach and upstream supply chains we have identified, to ensure they fit with

their compliance and commercial objectives • End-Users can support implementation directly through funding of support projects (improvement of working

conditions, provision of technical equipment), or indirectly by promoting a Better approach to their suppliers


Email: [email protected] Website: www.bsp-assurance.com Twitter: @BetterSourcing

The Better Sourcing Program – February 2014


Jean-Paul Meutcheho GAM

Bas van Abel Fairphone

Boukje Theeuwes Philips


What’s your biggest question, concern, or hesitation about sourcing from a conflict-affected or high-risk area?

• Why are consumer brands and other downstream and companies engaged in conflict-free minerals projects in the Great Lakes Region?

• What are the challenges and opportunities for upstream and downstream companies to engage with each other, with civil society, and government?

• How is this engagement making a difference on the ground?


Direct Sourcing or “Closed Pipe” Projects: • Conflict Free Tin Initiative • Solutions for Hope • Conflict Free and Socially Sustainable Public-Private Alliance for Responsible Minerals Trade


NEGOTIANT

NEGOTIANT

COMPTOIR

NEGOTIANT

COMPTOIR

INTL. TRA

DERS

SMELTERS

MA

UN

FACTU

RERS

OEM

Creuseur

Creuseur

Creuseur

Creuseur

Creuseur

preneurs

preneurs

preneurs

MMR** AVX/SMELTER AVX Motorola Solutions MINE*

Mining conducted under concession from MMR

Customer has traceable, transparent supply chain

AVX take ownership of material directly from MMR

The “closed pipe” Solutions For Hope pilot provides a secure chain of custody that meets OECD Guidance and

encourages responsible sourcing from the GLR

* The diggers sell through their cooperative CDMC ** Mining Mineral Resources

Solutions for Hope: ‘Closed Pipe’ Supply Chain

Solutions for Hope: Tantalum Project Results

• Over 147 metric tonnes mined (since 2011)

• Pilot demonstrated credible, sustainable program

• Expanding to other mines • Inspired CFTI, Kemet • Expanding to other areas,

minerals

• CFTI is a public-private initiative to source conflict free tin • Participants: Dutch Ministry, Industry, NGOs • Goal: initiating a tightly controlled, verifiable conflict-free tin

supply chain from mine to end-users • Timeline:

Oct 2012: first mineral bags left the mine site Dec 2012: minerals exported to

Malaysia Smelting Corporation Mid 2013: first refined tin sent to solder

manufacturers

A multi-sector and multi-stakeholder initiative to support supply chain solutions to conflict minerals challenges in the Great Lakes Region of Central Africa.

153

Provides funding and coordination support to organizations working in the region to • develop verifiable conflict-free supply chains; • align chain-of-custody programs and practices; • encourage responsible sourcing from the region; • promote transparency; • bolster capacity of in-region civil society and

governmental representatives

154

NGOs (“Other Orgs”) (14) • Africa Faith and Justice Network • B.E.S.T. • CENADEP • DDI • Enough Project • Global Witness • IOM • IPIS • Jewish World Watch • Pact • Partnership Africa Canada • RESOLVE • Responsible Sourcing Ntwk • World Vision (unofficial) Governments (3) • US Dept. of State • USAID • ICGLR

Supply Chain Actors (26) • Acer • Advanced Micro Devices • Apple • AT&T • Blackberry • Boeing • Dell, Inc. • Ford Motor Company • General Electric • Global Advanced Metals • H.C. Starck • HP • Intel

• Microsoft • Motorola Solutions • Nokia • NVIDIA • PAMP • Panasonic • Qualcomm • Sony Corporation • Sprint • Telefonica • Toshiba • Toyota • Verizon

155

Industry Associations (4 representing >100 members) � Electronics Industry Citizenship Coalition � Global e-Sustainability Initiative � International Tin Supply Chain Initiative � World Gold Council

13th CFSI Workshop presentations - Day 1

Technology

Transcript of 13th CFSI Workshop presentations - Day 1