OECD Due Diligence Guidance for Responsible Mineral Supply Chains Louis Maréchal – policy advisor on extractives Responsible Business Conduct Unit OECD Investment Division

Addressing conflict and serious human rights abuses in mineral supply chains Exploitation and trade of mineral resources is a source of growth, but can be associated with significant adverse impacts, including Serious human rights impacts (e.g. child labour, forced labour) Financing conflict Money-laundering, terrorist financing & sanctions violations Bribery Global issue (Africa, Asia, Latin America, Europe) Affects all mineral resources (tin, tantalum, tungsten, gold, cobalt, precious stones, coal, oil & gas, etc.) For mining, affects to different extent ASM and LSM Since 2011, the OECD has helped lead a global movement to prevent the production and trade of minerals used in everyday products from benefiting armed groups and perpetrators of serious human rights abuses.   This instrument was developed as an element of response to the ongoing crisis raging in Central Africa, where dozens of non-state armed groups, and sometimes elements of the national armed forces, have been perpetrating serious abuses of human rights and causing massive unrest for over 15 years. Connexions between the illegal exploitation of mineral resources in these countries and the survival of these armed groups have been long established, and so international leaders called upon the OECD to develop practical recommendations to allow responsible elements of the private sector ensure they are not supporting the perpetuation of this situation. The OECD guidance focuses on conflict financing through the mineral trade is a major impediment to peace, development and growth.. (read slide) The DRC is but one example of a global issue – conflict financing is applicable to many regions in the world experiencing conflict and high-risk issues. And the Due Diligence Guidance is applicable to any minerals beings sourced in any high-risk, conflict affected areas in the world. Securing the integrity of global supply chains will result in many positives beyond simply cutting the source of funding to armed groups who illegally tax and extort. Ending the link between mineral production and violence will result in transparency in supply chains, higher consumer confidence, which will in turn maximise the value of global mineral value chains.

Artisanal and small-scale mining (ASM) in the world Artisanal and Small-Scale Miners Around the World ASM is a major source of mineral resources production in the world 20+ million artisanal miners globally 100+ million people depending for their livelihood - 30%+ are women ASM is largely informal, and is associated with low levels of safety measures, health care or environmental protections ASM can however be a huge driver of inclusive growth in developing countries Artisanal and small scale mining proportion of world production of various metals in 2011 Source: Reproduced from CASM website, http://www.artisanalmining.org Artisanal gold represents over 25% of yearly production – roughly around 700 tonnes in 2014 Source: Polinares, Raw Materials Data

OECD Due Diligence Guidance for Responsible Mineral Supply Chains Objective To provide clear, practical guidance for companies to ensure responsible operations and sources of supply: No support to non-state armed groups, No “serious abuses” Prevent & mitigate support to public security forces, bribery, tax evasion, money-laundering and fraud in supply chains Strengthen internal controls, due diligence systems, engagement with suppliers (e.g. supplier upgrading) Method and scope 5-step risk-based due diligence process, applies to all mineral resources & all companies throughout the entire mineral supply chain that potentially contribute to conflict, serious abuses, bribery, tax evasion and money laundering through mining or mineral sourcing practices Principles On-going, proactive and reactive due diligence approach Due diligence is risk-based, i.e. intensity of due diligence proportional to risk Progressive improvements over time and good faith and reasonable efforts promoting constructive engagement with suppliers Global scope - intended to enable investment and trade in conflict-affected and high-risk areas, i.e. no blacklists, no embargoes, no protectionism While collaboration is encouraged, companies retain individual responsibility for due diligence Background The Due Diligence Guidance was developed in 2009 through a multi-stakeholder, consultative process in partnership with non-OECD economies, notably Africa’s Great Lakes region. Business has been actively involved, characterizing the practical nature of the Guidance and leading to its strong buy-in by business. It is, the de-facto international standard on responsible sourcing of minerals from conflict areas and is Supported by the UN Security Council and the G8 Endorsed by the ICGLR in Lusaka Declaration and integrated into ICGLR Certification Mechanism Integrated into, referenced and/or relied on by multiple industry programs (e.g. DMCC, EICC-GeSI CFS Programme, iTSCi, LBMA, RJC, World Gold Council) Referenced by U.S. SEC in final rules for section 1502 (Dodd-Frank) Legal requirement to operate in the DRC, Rwanda and Burundi Extensively referenced in the draft EU legislation So what is the DDG? (read slide)

Responsible mineral supply chains Highlights - last 12 months Policy & laws Input to EU institutions on EU regulation for responsible mineral supply chains Advice to Chinese authorities to support alignment of national standards with OECD Guidance Reports & Tools Colombia gold baselines: Overview, Antioquia, Chocó Alignment assessment pilot tool & methodology Practical actions to address worst forms of child labour Frequently Asked Questions on ASM Outreach events Latin American Workshop on Responsible Mineral Supply Chains, 1-2 December 2016, Bogotá, Colombia Workshop on sustainable development of artisanal & small-scale mining in West Africa, 1-3 March 2017,  Abidjan, Côte d'Ivoire Cooperation & partnerships Explored partnerships with World Bank (ASM) and Interpol (Law Enforcement) Supported launch of Responsible Cobalt Initiative Initial participation in Kimberley Process Certification Scheme for diamonds

Responsible mineral supply chains 2017 & beyond Countries Technical support & research for country implementation Capacity Assess alignment & boost capacity on due diligence Impacts Assess & enhance impact of responsible mineral sourcing efforts Beyond 3TG Support implementation of OECD Guidance beyond 3TG Activities India (launch) EU countries (launch) Monitoring Adherents (launch) China (cont’d) Colombia (cont’d) West Africa (cont’d) Central Africa (cont’d) Activities Alignment assessment reports for CFSI, LBMA, RJC, DMCC & iTSCi Training programmes in producing countries Cost/benefit analysis of due diligence Measuring global use by industry Activities Scoping framework & indicators for measuring results OECD-World Bank platform for artisanal & small-scale mining Interpol-OECD law enforcement coordination Activities Online tool on country and commodity risk (BETA version) Demand-driven support to programmes & initiatives to implement OECD Guidance

Global implementation of OECD Due Diligence Guidance Implementai

For further information on the OECD’s work on Responsible Business Conduct http://mneguidelines.oecd.org/ http://www.oecd.org/corporate/mne/mining.htm OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas FAQ on sourcing gold from artisanal and small scale miners  OECD Alignment Assessment of industry initiatives: Tool and methodology Mineral supply chain and conflict links in Eastern Democratic Republic of Congo Report on due diligence in Colombia's gold supply chain OECD Council report on the implementation of the due diligence guidance

Thank you For further information on the OECD’s work on Responsible Business Conduct: http://mneguidelines.oecd.org/ http://www.oecd.org/corporate/mne/mining.htm Relevant contact details: tyler.gillard@oecd.org ; louis.marechal@oecd.org ; hannah.KOEP-ANDRIEU@oecd.org ; rashad.abelson@oecd.org