The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals and its implementation programme American Chamber of Commerce to the European Union Brussels, December 9 Louis Maréchal Policy adviser on extractives OECD Investment Division

Conflict financing and serious abuses of human rights Non-state armed groups or public security forces, associated with serious abuses: Illegally control mine sites, transportation routes, or dealers in minerals Illegally “tax” or extort money or minerals from artisanal miners, mineral traders and exporters Illegally “tax” or extort money or minerals at mine sites, transportation routes, or points where minerals are traded Gold from the Democratic Republic of the Congo Alluvial, artisanal gold & informally, illegally mined Estimated conflict area annual ASGM output: ~10 tonnes Market value: $380 million Source: WGC & IPIS (2014) 3

Demand for responsibly produced minerals Political G8 (2007, 2008, 2009, 2011, 2013) UN Security Council Resolutions on DRC (2009, 2010) and Ivory Coast (2013) ICGLR Heads of States endorsement (2010) OECD Council Recommendation (2011) Consumer Consumer campaigns in US and Europe From brand-name users via industry groups (EICC, GeSI) Legal Section 1502 of US Dodd-Frank Act conflict minerals reporting Draft EU legislation on responsible mineral supply chains Legal requirement in DRC, Rwanda and Burundi Draft conflict minerals act in Canada 4

Objectives, method, scope & key features Objective Developed through a multi-stakeholder process to provide clear, practical guidance for companies to ensure they do not contribute to conflict or human rights abuses through their mineral and metal production and procurement practices Method and scope 5-step risk-based due diligence process, applies to all companies throughout the mineral supply chain that produce or potentially use minerals from conflict-affected or high-risk areas Applicable to all minerals, on a global scope Key features One set of expectations : a common framework for due diligence expectations throughout the entire mineral supply chain from mines until end users Risk-based approach:Intensity of due diligence proportional to risk Progressive approach: promotion of constructive engagement with suppliers in order to gradually affect change Reasonable and good faith efforts: Not 100 % compliance overnight 5

Structure of the Guidance Supplement on 3Ts Supplement on gold Appendix on artisanal and small scale mining for gold Annex I: description of 5- step approach Annex II: model supply chain 6 policy Annex III: principles for risk mitigation

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Annex II - Key risks and responses Step 2: risk assessment Suspend or discontinue engagement with supplier when:  Sourcing from parties linked to serious abuses  Direct or indirect support to non-state armed groups Devise and implement a risk management plan when  Direct or indirect support to public or private security forces  Bribery in the supply chain, fraud or misrepresentation of chain of custody or traceability information  Money-laundering through the mineral supply chain  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 NO! MITIGATE!

Industry initiatives can help companies implement the OECD Guidance but don’t take away individual companies’ own responsibility Glo bal Minera l Su p p l y C h ain Miners (artisanal and industrial) Refiners & Smelters Bullion Banks Downstream manufacturers (electronics, jewellers & others) 3T Programmes 9 Gold Programmes

Key points for companies engaging in mineral supply chain due diligence 10 Step 1, 2 and 5 should become usual business practices to identify potential links between minerals and conflict finance / serious abuses of HR The duty of a company to act responsibly is tied to the potential impacts of its operations Guidance for companies– sources a company can use are numerous: – United Nations Security Council resolutions / Group of Experts reports – Multiple thinks tanks and research institute (IPIS, International Crisis Group, etc.) – Academic research (Heidelberg Institute, SIPRI, etc.) – Press articles, Int’l / local NGO reports, etc.

OECD Implementation Programme 11 Over 500 organisations involved –Started in 2012 –Governments (OECD and non-OECD), international organisations, business, civil society and other experts Information-sharing and promotion of due diligence – Tools, workshops, webinars and training – Outreach: Africa, China, Colombia, India, Middle East and Turkey – Peer learning Collaboration and problem-solving – Coordinated solutions – Harmonisation and mutual recognition of industry programmes – Promotion of responsible mineral sourcing from conflict-affected and high- risk areas Forum and workshops on Responsible Mineral Supply Chains

Mandarin edition of the Due Diligence Guidance available since May 2014 MOFCOM designated the China Chamber of Commerce Metals, Minerals and Chemicals (CCCMC) as key partner to work with the OECD on responsible business conduct in minerals OECD and CCCMC signed a Memorandum of Understanding (MOU) on responsible mineral sourcing, to cover due diligence outreach in China and a tool to help Chinese companies operationalise the Guidance The objective is to develop Guidelines for Chinese companies, based on the OECD Guidance, as well as an audit system for smelters and refiners in China The Guidelines have been approved and published during a dedicated workshop in China in December 2 & 3, 2015 Mineral (3TG) specific guidance / audit protocols will be developed in 2016 through a multi-stakeholder process 12 Implementation and outreach in 2014/15 - Focus on China

OECD Implementation Programme – main outcomes 13 Impressive uptake of countries – producing, processing, consuming – Endorsement by ICGLR and ICGLR Member States – US Dodd-Frank Act – Proposal for a EU regulation – Cooperation with the Popular Republic of China / Turkey / Colombia, etc. Impressive and increasing private sector buy-in – increased coverage by industry programmes of due diligence implementation by their members, in particular at the smelter and refining stage Improved understanding and awareness of due diligence, through extensive capacity-building programmes Increased global awareness of artisanal mining – Within producing countries – By the international donor community

Implementai 13 Global implementation of OECD Guidance

► July 2010 – Section 1502 of the US Dodd-Frank Act:  Specific reporting requirements for public companies using 3Ts and gold  DRC and adjoining countries focus (reasonable country of origin inquiry)  If from “DRC countries”, companies need an audited “Conflict Minerals Report” ► August 2012 – Final US SEC Rules recommend companies use the OECD Due Diligence Guidance 14 Regulation Section 1502 of the U.S. Dodd-Frank Act Under Dodd-Frank, audited “Conflict Minerals” report should include: Country of mineral origin Due diligence procedures Smelters of minerals Mine of origin (to greatest possible specificity)

► March 2014 – Draft EU initiative and legislation released:  Based on OECD Due Diligence Guidance  Initially a voluntary self-certification scheme for importers of 3T and gold into EU common market  Significant amendments by MEPs on 20 May  Accompanying measures ► Amended text currently examined by EC, Council and EP through the trilogue process Cooperation with the EU EU initiative on responsible mineral supply chains  OECD Secretariat is actively supporting the EU Institutions to help ensure maximum alignment with the OECD Guidance, and develop accompanying measures

Work programme Objectives and activities 3 main objectives and 4 streams of work 1.Enhanced positive impact of due diligence in conflict-affected and high-risk areas 2.Increased transparency and accountability globally in mineral supply chains 3.Improved understanding & awareness of natural resource-related conflicts, the informal economy and the role of the private sector, beyond tin, tantalum, tungsten and gold supply chains

What do we hope to see in mineral supply chain due diligence in 5 years? 18 Supply chain due diligence reporting is embedded in common business practices New supplements and / or activities as part of the implementation programme are developed? Other natural resources covered ? Private sector engagement in CAHRA has increased significantly (i.e. support to responsible ASM) Expanding geographic scope of due diligence implementation (South East Asia?)

Thank you For further information on the OECD’s work on Responsible Business Conduct