Presenters - OECD

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

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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

[email protected]

Shivani Kannabhiran

[email protected]

http://www.oecd.org/daf/investment/mining

mailto:[email protected]

mailto:[email protected]

Switerzland – 2013 CONFIDENTIAL

[email protected] / www.mks.ch – [email protected] / www.pamp.com

26

PAMP Jacqueline MayorMelan

Olivier Demierre

July 29, 2013



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



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



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



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



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



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


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


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


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.


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


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


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.


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

https://www.gold.org/about_us/who_we_are/our_symbol/


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.


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?


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?


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?


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

http://www.google.ch/url?sa=i&rct=j&q=piramide+7+livelli&source=images&cd=&cad=rja&docid=4KEbaPgq6-zpDM&tbnid=DY5ozD7zNsZsdM:&ved=&url=http://it.123rf.com/archivio-fotografico/piramide.html&ei=CMBnUfuAN4TFPayQgfgF&bvm=bv.45175338,d.ZWU&psig=AFQjCNEVeeN2mFLY6ItvFpFlAkVqdWNU9Q&ust=1365840265122214

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

=

=

=

http://www.google.ch/url?sa=i&rct=j&q=!&source=images&cd=&cad=rja&docid=txGokOEmZXKa1M&tbnid=WKkBBw_Znm_JGM:&ved=&url=http://elasticwords.wordpress.com/tag/exclamation-mark/&ei=s89rUYKJLfLG7AbF4oHoAw&bvm=bv.45175338,d.ZGU&psig=AFQjCNGqzNJpd4_9uRL0ypIPjkQWDjMnTw&ust=1366106420189990









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


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


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

http://www.oecd.org/daf/inv/mne/mining.htm

Presenters - OECD

Documents

Transcript of Presenters - OECD