Responsible Sourcing Newsletter: January 2023

Five things to watch in 2023 from LBMA Responsible Sourcing

The beginning of a new year is always a good time—as individuals and organisations—to take stock of the past year and consider how best to achieve the goals ahead.

As this newsletter goes to print, celebrations for the Chinese Lunar New Year are in full swing, heralding the Year of the Rabbit.

In the Chinese culture, the rabbit is known to be the luckiest of all the twelve zodiac animals, and is a symbol of longevity, peace and prosperity. The Year is often considered one of calm and contemplation — a good time to form partnerships that, hopefully, later bear fruit.

For our part we have spent most of January thinking about the ambitious projects that loom large on our horizon, and taking the Rabbit’s best traits to heart. This year is about partnerships and laying the groundwork for things we hope will lead to some positive shifts in how gold is sourced and traded.

Here are the top five things to watch in Responsible Sourcing in 2023.

ASM Recognition System:
Building on the ASM Feasibility Study commissioned last year, LBMA will move to implement the Study’s six recommendations. Gregory Mthembu-Salter will continue his work, beginning with undertaking “Model ASM Country Assessments”, that will examine the suitability of 4-6 producing countries where supply chain actors (from governments and miners (big and small) to aggregators and refiners) could cooperate to create the right legal and due diligence regimes necessary to support direct ASM sourcing. In tandem to this LBMA will review and amend the current ASM Toolkit to remove unintended obstacles to such sourcing. Both will feed into the ultimate goal of a draft framework of an “ASM GDL system” that recognizes legitimate ASM suppliers and aggregators from which GDL refiners can source material with confidence.

IBC Initiative:
2023 is the year LBMA will engage directly with the IBCs on the Responsible Sourcing developments and the implementation of the OECD Requirements. Levelling the playing field and improving sourcing practices across all IBCs is critical to consumer and market trust and certainty.

Updating the Responsible Silver Guidance:
The second iteration of the RSG will introduce new measures to better align it to its gold companion, and to address emerging trends or changes in the silver sourcing space. Expect to see a first draft of the amended RSG to be circulated for consultative feedback in April or May.

EU recognition:
LBMA continues to work with the European Commission to have our assurance programme recognised by the EU Conflict Minerals Regulation—a law introduced in 2021 to stem the import of conflict affected gold into the European Market. Part of this work will involve a strengthening of the assurance process through the continual training of assurance providers, including their awareness of current sourcing challenges and the ISAE 3000 standard.

Defining ESG:
Readers may recall the release of the Responsibility and Sustainability Declaration at the last LBMA/LPPM Precious Metals Conference. As a first step toward fulfilling our commitments, LBMA intends to improve industry disclosure on ESG matters. This process will require extensive stakeholder consultations with our refiners and across the value chain. By year end the plan and reporting templates will be finalized and agreed, with reporting beginning in 2024.

LME conditionally approves LBMA's RGG Programme

The London Metals Exchange (LME) has announced that it has conditionally approved Version 9 of LBMA’s Responsible Gold Guidance (RGG).

Version 9 of the RGG was launched on 29 November 2021, and became applicable from 1 January, 2022. The document underpins LBMA’s Responsible Sourcing Programme, and was updated following extensive consultations.

The agreement between the LME and LBMA, effective as of 1 January 2023, serves to reduce audit duplication for GDL refiners that process both precious and base metals.

Producers of LME brands or Refiners looking to take advantage of this cross-recognition agreement must meet the requirements specified in the “multi-site assurance and standards equivalence” section of the Responsible Sourcing Guidance. The following criteria must be met:

• There is one multi-metal refinery processing all metals in scope
• The Refiner’s supply chain policies and management systems are consistent for all metals in scope
• The RGG is used as the basis for the multi-metal assurance engagement, i.e., all metals in scope should be assessed for threat finance risk and ESG factors
• Detailed sample testing adequately covers all metals in scope (further guidance is provided in the Third-Party Assurance Guidance)
• Refiners provide sufficient disclosures on each metal in scope in the Compliance Report
• Assurance Providers include sufficient information on each metal in scope in the Assurance Report or provide separate Assurance Reports for each metal in scope.

Growing the Responsible Sourcing Team

LBMA is pleased to welcome Jonathan Rickwood as our new Responsible Sourcing Officer. Close observers of these pages will notice that growing the size and skill set of the team has been a priority over the last year.

A chemist by education, Jonathan brings with him significant metal supply chain experience gleaned from over a decade with the International Tin Association, including contributed to the creation of codes and standards in the Tin Code.  He joins us from WSP, the environmental consulting firm, where he was a Principal Consultant in the Environmental Policy and Economics team.

Jonathan, ably supported by Charlotte Gibbons, will lead in the day-to-day management of LBMA’s assurance programme, liaising closely with refiners and assurance providers in implementing the requirements of the Responsible Gold Guidance.

Jonathan can be reached at Jonathan.Rickwood@lbma.org.uk