Certified Trading Chains (CTC): Pilot Project Rwanda

Transcription

1 Mineral Certification and Supply Chain Due Diligence in Rwanda and the Great Lakes Region Kigali, March 17, 2011 Certified Trading Chains (CTC): Pilot Project Rwanda Volker Steinbach BGR Support Team CTC Pilot Project Rwanda: Gudrun Franken, Philip Schütte, Jürgen Vasters, Ulrike Dorner Mineral Certification DRC: Uwe Näher, Bali Barume, Dirk Küster, Antje Hagemann, Einar Rossmann Analytical Fingerprint: Frank Melcher, Torsten Graupner, Thomas Oberthür, Simon Goldmann Support to ICGLR Mineral Certification: Manuel Hublitz and others

2 Proportion of the population depending on ASM Proportion of the population depending on ASM no data 2

3 Share of ASM in global production 3

4 Country s share of global GDP and share of metals of total merchandised export (Global GDP: 60 bn US$; Africa: 2 bn US$) Legend GDP 2008 total [%] (Gross Domestic Product) NA Ores_Metals Export 2007 total [%] : Data source: World Bank,

5 2005: UN Group of Experts on DRC advised international community to take measures against the illegal exploitation of natural resources financing armed conflict (with regional implications). Analytical Fingerprint of Conflict Minerals (BMZ; BGR) Certified Trading Chains: Pilot Project Rwanda (BMWi + BMZ; BGR) Transparency and Control in the Mining Sector of the DRC (BMZ; BGR + GIZ) Support to ICGLR - Regional Mineral Certification in the Great Lakes Region (BMZ; GIZ) (BMZ; BGR, GIZ) German Development Cooperation in the Great Lakes Region 5

6 Artisanal Mining in the Great Lakes Region CONFLICT militarization and illegal taxation of mineral production & trade in parts of eastern DRC contributes to sustaining or catalyzing conflict, aggravates social problems transit of conflict minerals affects whole Great Lakes region end user demand for conflict-free products Dodd/Frank Act (US-SEC): due diligence reporting for DRC and neighboring countries Certification of mineral origin and supply chain due diligence (as alternative to disengagement) 6

7 Artisanal Mining in the Great Lakes Region ARTISANAL MINING important livelihood base in the region: >35,000 ASM in Rwanda; more in DRC indirectly sustains about five times as many people characterized by poor working and security conditions high environmental impact low productivity and state income undesirable social developments (e.g., child labor) Artisanal gold mining in Kilo Moto, Ituri (DRC) Certification of mining conditions anticipates future end user demand on addressing ASM-related issues 7

8 CTC Certification Standards 1.1 Origin and production volume of minerals from the mine site throughout the trading chain are traceable Level descriptors: 4 = Producer and buyer 1 plausibly declare amount, type, and origin of mineral shipments clearly, correctly and verifiably at the mine, at points where material is aggregated, as well as at export and import 2 sites. Producer 20 standards, buyer take appropriate organized measures 3 to in ensure universal the integrity CTC of mineral principles shipments and allow for an independent third party to take any mineral sample at any time for AFP 4 analysis. 3 = The producer plausibly declares amount, type and origin of mineral shipments clearly, correctly and verifiably at the mine and at points where material is aggregated. The producer takes appropriate measures to developed ensure the integrity indicators of mineral shipments & and level allows descriptors for an independent for third party auditing to take any mineral sample at any time for AFP analysis. 2 = The producer s declaration of amount, type and origin of mineral shipments is not clear, but the producer takes appropriate measures to ensure the integrity of mineral based on international integrity instruments: OECD etc shipments and allows for an independent third party verification and to take mineral samples at any time for AFP analysis. 1 = The producer s declaration of amount, type and origin of mineral shipments is not clear and not verifiable; the producer does not take appropriate measures to ensure the integrity of mineral shipments and/or does not allow for an independent third party to take any mineral sample at any time for AFP analysis. 0 = The producer does not document any mineral shipments. Explanations for Standard 1.1: 1 Buyer: entity purchasing minerals from a producer; for auditing purposes, it is the responsibility of the producer to ensure the buyer is adequately documenting the producer s mineral shipments and to facilitate auditor access to buyer documentation relevant for traceability. 2 Declaration of mineral shipments at import sites only refers to situations where the producer and the importer are in a direct business relationship. 3 Appropriate mineral measures refers origin to (1) and secure traceability: mineral storage sites; (2) the presence of adequate human security forces rights, to ensure workers the physical rights integrity of a mineral shipment with optional sealing for company-internal transportation (e.g., from mine site to processing plant); (3) sealing of individual mineral transport bags/containers and adequate security presence once on the multiple ownership of levels the material (documentation, shifts from one party to another (e.g., from producer (e.g., to buyer). child labor, protection, training) 4 AFP refers production to the Analytical Fingerprint plausibility, technique developed AFP) at the Federal Institute of Geosciences and Natural Resources (BGR) as defined in the document BGR (2010), Analytical Fingerprint (AFP), July 2010 update. International Reference: BACKGROUND SUPPLY CHAIN DUE DILIGENCE integrity of shipments (security of transport & storage, tagging) MINING CONDITIONS communities (e.g., dialogue, local business support, gender sensitivity) environment (e.g., impact declaration OECD draft supply chain policy for minerals from conflict-affected and high-risk areas, IV. Corruption and financial crimes, 24: We will take steps to identify and verify the identity of all suppliers, business partners and customers. OECD draft taxation, supply chain policy transparency for minerals from conflict-affected and high-risk areas, V. Transparency as base and disclosure, for a management 26: We will disclose timely, plan) regular, reliable and relevant information, showing name, location, structure of parents and affiliates in the business, disclosing additional information on the activities involved in moving the mineral from the extraction site downstream to the end consumer, and all due diligence practices, including supply chain risks and supply chain risk management practices. U.S. legislation, Dodd/Frank Act, Sec. 1502: Companies must disclose annually [...] whether conflict minerals did originate in the DRC or an adjoining country and, in cases in which such conflict minerals did originate in any such country, submit to the Commission a report that includes: (i) a description of the measures taken by the person to exercise due diligence on the source and chain of custody, which measures shall include an independent private sector audit of such report submitted through the Commission [...] (ii) a description of the products manufactured and the facilities used to process the conflict minerals, the country of origin, and the efforts to determine the mine or location of origin with the greatest possible specificity. 8

9 CTC Rwanda Governance Scheme mineral producer: ASM/company supervision income government of producer country dialogue evaluates mining conditions reports requests support mineral trading chain accredits independent auditor reports national certification unit consults certification workgroup evaluates due diligence reports client: trader/ metallurgical processor requests feedback international partnership 9

10 CTC Rwanda Industry Project Partners mineral producer: ASM/company supervision income government of producer country dialogue evaluates mining conditions reports requests support mineral trading chain accredits independent auditor reports national certification unit consults certification workgroup evaluates due diligence reports client: trader/ metallurgical processor requests feedback international partnership 10

11 CTC Rwanda Industry Project Partners Industry project partners (voluntary) Natural Resources Development (Sn, Ta, W) Rutongo Mines, Eurotrade International (Sn, W) Gatumba Mining Concessions (Ta, Sn) / Metal Processing Association Wolfram Mining & Processing (W) / Wolfram Bergbau & Hüttengesellschaft Pyramides (Ta) Gifurwe Rutsiro Rutongo/Ny. Cyubi Gatumba Nemba Major mines in Rwanda participating in CTC 11

12 CTC Rwanda Industry Project Partners Industry project partners (voluntary) Natural Resources Development (Sn, Ta, W) Rutongo Mines, Eurotrade International (Sn, W) Gatumba Mining Concessions (Ta, Sn) / Metal Processing Association Wolfram Mining & Processing (W) / Wolfram Bergbau & Hüttengesellschaft Pyramides (Ta) Progressive certification approach Certification includes production sites and associated mineral trading chains in Rwanda Gifurwe Rutsiro Rutongo/Ny. Cyubi Gatumba Nemba Major mines in Rwanda participating in CTC 12

13 CTC Rwanda Industry Project Partners Industry project partners (voluntary) Natural Resources Development (Sn, Ta, W) Rutongo Mines, Eurotrade International (Sn, W) Gatumba Mining Concessions (Ta, Sn) / Metal Processing Association Wolfram Mining & Processing (W) / Wolfram Bergbau & Hüttengesellschaft Pyramides (Ta) Progressive certification approach Certification includes production sites and associated mineral trading chains in Rwanda Start with large-scale producers: companies in cooperation with artisanal miners Gifurwe Rutsiro Rutongo/Ny. Cyubi Gatumba Nemba Major mines in Rwanda participating in CTC 13

14 CTC Rwanda Industry Project Partners Industry project partners (voluntary) Natural Resources Development (Sn, Ta, W) Rutongo Mines, Eurotrade International (Sn, W) Gatumba Mining Concessions (Ta, Sn) / Metal Processing Association Wolfram Mining & Processing (W) / Wolfram Bergbau & Hüttengesellschaft Pyramides (Ta) Gifurwe Rutsiro Rutongo/Ny. Cyubi Gatumba Nemba Progressive certification approach Certification includes production sites and associated mineral trading chains in Rwanda Start with large-scale producers: companies in cooperation with artisanal miners Advantage: partly formalized governance structures already in place = region-wide ASM model character? Major mines in Rwanda participating in CTC 14

15 CTC Rwanda Industry Project Partners Industry project partners (voluntary) Natural Resources Development (Sn, Ta, W) Rutongo Mines, Eurotrade International (Sn, W) Gatumba Mining Concessions (Ta, Sn) / Metal Processing Association Wolfram Mining & Processing (W) / Wolfram Bergbau & Hüttengesellschaft Pyramides (Ta) Gifurwe Rutsiro Rutongo/Ny. Cyubi Gatumba Nemba Progressive certification approach Certification includes production sites and associated mineral trading chains in Rwanda Start with large-scale producers: companies in cooperation with artisanal miners Advantage: partly formalized governance structures already in place = region-wide ASM model character? Company management highly effective in responding to certification challenges Major mines in Rwanda participating in CTC 15

16 CTC Rwanda Oversight mineral producer: ASM/company supervision income government of producer country dialogue evaluates mining conditions reports requests support mineral trading chain accredits independent auditor reports national certification unit consults certification workgroup evaluates due diligence reports client: trader/ metallurgical processor requests feedback international partnership 16

17 CTC Rwanda Oversight CTC working group OGMR (mine inspections) BGR (technical assistance CTC) RBS (standards & certification) MINIFOM (mining sector governance) MINICOM (commercial sector governance) Extension planned (industry, civil society) 17

18 CTC Rwanda Oversight CTC working group OGMR (mine inspections) BGR (technical assistance CTC) RBS (standards & certification) MINIFOM (mining sector governance) MINICOM (commercial sector governance) Extension planned (industry, civil society) CTC project motivation Good governance in Rwanda s mining sector Realistic & accepted certification standards Allowing responsible management of the ASM sector Improving ASM product market access / Supply security for overseas partners 18

19 CTC Rwanda Oversight CTC working group OGMR (mine inspections) BGR (technical assistance CTC) RBS (standards & certification) MINIFOM (mining sector governance) MINICOM (commercial sector governance) Extension planned (industry, civil society) CTC project motivation Good governance in Rwanda s mining sector Realistic & accepted certification standards Allowing responsible management of the ASM sector Improving ASM product market access / Supply security for overseas partners Demonstration of supply chain due diligence Mineral origin, traceability, transparency, taxation, security Dodd-Frank Act: Certification to demonstrate responsible mineral production (vs. risk of disengagement) 19

20 CTC Rwanda Third Party Audits mineral producer: ASM/company supervision income government of producer country dialogue evaluates mining conditions reports requests support mineral trading chain accredits independent auditor reports national certification unit consults certification workgroup evaluates due diligence reports client: trader/ metallurgical processor requests feedback international partnership 20

21 CTC Rwanda Third Party Audits CREDIBILITY independent third-party audit, aligned with ISO 19011:2002 site inspections, interviews, documentation on-the-ground at all levels of production/trade of upstream mineral supply chain (1-3) verification & cross-referencing of evidence 21

22 CTC Rwanda AER Availability Analytical Fingerprint Additional Credibility: Optional forensic tool to constrain the origin of minerals (Ta, Sn, W) Generates completely independent line of evidence Broad reference database available for Rwanda Succeeds in resolving mineral origin down to individual dig site level 22

23 Mineral Certification Regional Perspective RINR (Regional Initiative against the Illegal Exploitation of Natural Resources) ICGLR provides framework (regional) coordination & integration of different schemes (OECD, itsci, CTC) member states responsible for implementation at the national level CTC = contribution to ICGLR scheme in Rwanda New ICGLR support project integrate AFP into RINR continue successful work of CTC 23

24 Thank you! Web CTC Rwanda Dr Gudrun Franken Dr Michael Biryabarema Dr Philip Schütte