Virtual Responsible Sourcing & Technology Summit 2020

Speakers:

• Sakhila Mirza, General Counsel, LBMA/Speaker 1
• Dr Mark Pieth, Professor of Criminal Law & Criminology, University of Basel/Speaker 2

Summary:

Dr Mark Pieth, a professor of criminal law and a specialist in international regulation is going to give an outsider’s view on some key issues that gold refineries are currently facing. He will namely address the current tendency of de-risking amongst refineries, a problematic move towards informal boycotting of ASM or certain world regions. He will go on to ask what due diligence efforts can reasonably be expected of refineries and what would be the role of industry organizations. Finally, he will address the challenges facing auditing and reporting, and remind that self-regulation depends essentially on credible auditing.

Speaker 1:

Hello, this is Sakhila Mirza, General Counsel of the LBMA. In today's webinar, I have the pleasure of introducing Dr Mark Pieth. Dr Pieth is a prominent anti-corruption expert, who has held notable roles internationally. This includes the head of section in economics and organized crime at the Swiss Federal Office of Justice, as well as 24 years chairing the OECD working group on bribery. Dr Pieth has been doing a lot of research into the global supply chain and today he will be sharing his recommendations based on his findings as to what it is that the gold market needs to be thinking about and also doing. So, with that, I’d like to turn over to Dr Pieth. It'd be great to get some insight from you as to what you think the gold market should be focusing on and how they should be addressing the risks that they face within the supply chain. Thank you, Dr Pieth.

Speaker 2:

Thank you very much. Ladies and gentlemen, dear colleagues, I would have liked to talk to you face to face, but I'm very sorry we have to do it in the electronic fashion. I want to address three topics. I want to start off with the question, ‘Is de-risking an option?’ We're all acutely aware of the challenges posed by the gold supply chain, especially on ASM, we went over that. I merely want to indicate here that, of course, LSM also has some formidable challenges, but I won't belabour that. What I do want to say, though, is I don't consider de-risking, or if you want to another word for it, informal boycotts of certain world regions, or of ASM in general, a valid option. I think that, it’s a route we should not go down. I rather think we should follow what the OECD is suggesting. If you look at step three of the gold supplement, it states: mitigation – risk mitigation – please, before disengagement. And I think that's a very valid point. After all, we have to think in ASM, we have 15 to 20 million miners, and possibly 100 million people worldwide depending economically on this area. And, frankly, from a purely economic point of view, I don't think refineries can simply dispense of 20-30% of the world's LBMA Webinars VIRTUAL SUMMIT freshly mined gold. My second point that I would like to transmit would be, what we definitely need is a credible due diligence in the supply chain. I think that's obvious. Much depends on whether the refineries are really able to track the gold, where it comes from. And now you all know, many NGOs have been criticizing even the best of refineries that they're not really up to speed here. And traditionally refineries have been reacting rather harshly to that critique. My point is a bit different. I would say, ‘Well, let’s accept that most refineries are in reality from what I've seen- I've visited a lot of them-kind of SMEs’. Certainly, they have limited resources if you look at the legal and compliance area, and I don't think we should blame them for that. And, so, if a refinery says, ‘Look, we cannot clean up the whole world’, I think they have a valid point. But my question would be, what can an industry organization like the LBMA do in such a situation? Why not encharge specialized third parties to do the due diligence of mines on behalf of everybody, of the entire community. It is something that the OECD would accept, and it comes kind of natural to me.

I have been creating, the last 20 years, a collective action in the banking area – the so called Wolfsburg Banking Group, and all these banks – the twelve biggest of the world – they had one big problem: geographic risk of money laundering. And what they did, they teamed together, and created something called The Bankers Almanac, telling them what regional risks they were facing. So, my idea would be why shouldn't LBMA take the lead here? Maybe you are doing that. I'm an outsider as you realize. That would be my second point. The third point I'd like to make is a bit tougher. I must say. It's about auditing and reporting. The OECD and the 2018 alignment assessment, which many of you will know has harshly criticized the state of auditing. If you read that report, they basically say, well, auditors lack crucial know-how. They also say, well many cases looking – based on their shadow auditing – they found that many auditors were overly lenient in their assessment. That's quite a harsh critique. And thirdly, they are saying, well the reporting frankly doesn't cut much ice. So, the question, what to do about this? Or, maybe before that I must say, I believe that they have a point here. I've been trying to speak to the Big Four. One of them was ready to speak – one of them who had a real problem, the other three simply were not ready to speak and it turned out that they had one person each for a country like Switzerland, the world's champion in refining. And my point is here, everything depends on self-regulation being credible. And, I think, that's what LBMA is about. It's self-regulation, but in a credible manner. And sound independent third party audience are absolutely crucial if you want to come across as being credible, and basically LBMA has a role here in telling auditor's what we're expecting of them and these audits really need to come across as sound third-party audits. I will stop here. Thank you very much.

Speaker 1:

Thank you so much, Dr Pieth, for sharing some of your thoughts and even some recommendations. That's been very helpful. I guess, if it's okay with you, just maybe a few questions for those listening to this webinar, to really understand how some of those recommendations can perhaps be helpful. But before I ask you those questions, I want to also highlight that the LBMA is very much working currently on a three-year strategy in trying to identify key areas where we want to make sure we're pushing for better standards, more information and really getting that message across that it’s about responsible engagement, rather than disengagement. And so we are doing a lot of work around this where we are going to be speaking to relevant stakeholders, market participants and understanding how can we achieve some of the objectives that we're going to highlight under that strategy. So, that's a piece of work that the LBMA will, most certainly be sharing and I'm actually doing a separate webinar to explain a lot of that in detail. But just a couple of questions and comments and I think I'll start backwards. So, taking your point on the auditing first. I absolutely agree with the point that the actual audit is as good as the auditor. Does the auditor have the right and relevant expertise in making sure that he or she is understanding what is being audited, what the risks are, how does the market function, and identifying and making sure that the right challenges are being put out there to the refiner? And it's a piece of work that we have been pushing to do more on and are going to be focusing a lot more on. So, what sort of tips, or advice, would you give to both the LBMA and a refiner when we are engaging with the auditors, and let’s just take the large four, in – what are the expectations that we should have of these auditors, given that the risks along the supply chain are – there's a huge variety of them. You've mentioned anti-money laundering, human rights abuses, child labour, you've also got the ESG Agenda. So, there's a number of risks. How do we meaningfully get an audit that helps us give the confidence that those risks have been identified appropriately, and are being challenged, and the auditor is making sure that they're asking the right questions, and obviously pushing the refiner for more information? What is it that you would suggest that we should be thinking about, and doing, with some of these auditors to help address all those risks? And many more? Because the OECD Annex 2 highlight a few more than what I've mentioned. It's a challenge, but a challenge that we need to address, and it'd be good to get your thoughts on that.

Speaker 2:

Yes, well I think really, it's a very valid question because auditing is, I think the key point of the, at least of the menu that I put before you, and it's, it's actually quite funny, you know. If the big four don't want to speak to this nutty professor, uh, well, too bad. So, that's not necessarily a sign. The OECD on the other hand, if in their alignment assessment is saying, auditing could be better, that cuts much more ice. Interestingly, I was in a conference recently with all the Swiss refiners present and they said ‘Yes, auditors are also our problem’. Obviously, they might have a different kind of problem with their auditors than what I am seeing here. But I think what you could do is, instil some courage to the big auditing firms and say, ‘Look, we're expecting something, some real work here’. Do what you do in the other areas of work where you are. Take, for instance, money laundering, they are frequently helping bank supervisors to look at banking practice. And, frankly, if somebody says you are too lenient, just because somebody is paying you, that is detrimental. That is not what we're expecting of an auditor because it undercuts their credibility and independence. So, I think you are in the best position with 70 refineries to say, ‘Look, it's no use if you are being nice and chummy with the people who are paying you. We need serious work here’. And, frankly, for me it is not serious if a very big – I will not give names – but the major auditing firm worldwide has one person for a country that is importing 70% of freshly mined gold every year. That is just the way of making little money. LBMA is top notch of the industry groups and you already have standards in this area. The question would be, now, how do we translate the standards into practice, and actually get these auditors to the table and tell them we mean business. But the point is not just refineries, we have similar issues with jewellers. We have similar issues in the very big mining area. So, the World Gold Council would have a very similar problem with their standards. They also rely there on voluntary independent auditing. And if that doesn't work, the whole standard is not worth what it should be, then it’s mere paper.

Speaker 1:

Thank you, Mark. Um, uh, for your comments. Now moving to your second point, of the three that you made, about credible due diligence, and your suggestion about engaging third parties to carry out due diligence. First of all, I would like to highlight on the LBMA perspective, our program has evolved. It was launched in 2012 and you know, what the program looks like today is quite a development from what it looked like in 2012, and that's to demonstrate that it's constantly evolving. We're asking for more, we’re pushing for higher standards, and to continue on that journey, it has to be about market engagement, getting feedback from the stakeholders, working together and making sure that to what extent can we reflect some of that in the actual guidance itself, but making sure that what we're putting in the guidance that also gets reflected in practice. So, again, interesting in terms of your proposal on getting third parties to carry out our due diligence. I think having third parties on the ground certainly is helpful, but then there's a whole process around this that needs to be effectively monitored; surveillance needs to be in place. In terms of the effectiveness of the due diligence: How current is it? How frequently should we be going back in? Who can rely on it? How much reliance should be put on? Because, again, the issues are quite diverse, and no two mines are necessarily the same. So, there's a lot of considerations that you need to reflect on before engaging third parties and then, obviously, the ongoing commitment. So just given some of the challenges that I’ve raised with this potential recommendation, how is – I think you gave us an example within the banking community – how are they addressing some of this in terms of their reliance on third parties? And then, the frequency of those due diligence, and the standards because, again, no two banks may have the same standards; they may disagree with each other’s standards. How do you get a consensus across different organizations? So maybe a couple of questions in that. I'll let you take it however you want.

Speaker 2:

I’ll start at the end. The banking community has this very good problem that when they are assessing money laundering risk, one risk factor everybody has to deal with is geographic risk. So, the question is, can I do business in Sudan nowadays? That is an issue that banks have to deal with, and how do I do that? And here they are mostly interested in having information. The question then ‘How to deal with the information?’, that is up to them. But, instead of, for instance, going through the motions with every region of the world, they have specialists doing that for them, supplying the information and then the decision ultimately where to engage, and where to disengage, is left to the banks. There is a similar area with banking. It's called the issue of correspondent banking. Now imagine there are thousands of banks that big bank has to deal with, and they would want to know how good or bad are these individual banks. Now if every bank does that individually, that just costs millions. So, that's another area as an example. Now, turning to your area, obviously there is a macro and a micro perspective. I have my micro perspective. What I did was simply, as an amateur, walked into an area where risks are high. I produced this book here, and what I did to produce it, I went to Peru and to South Africa. When I went to Peru, I went to that very difficult area in Puno, everybody knows it, La Rinconada, but I didn't stay there. I went to see where does the gold from La Rinconada go? It's very easy actually. You can find the trail to different companies. I went to one specifically and they said, ‘Yes, of course we take the gold of La Rinconada’. I was sitting in a row together with the miners from La Rinconada. They were telling me ‘Yes, of course, that's where we come from’. And that's the collector, Minerales Del Sul, was actually sending up to 10 tonnes of gold to a Swiss refinery. And the supply chain was absolutely seamless and proven. That's not the problem. And then I was thinking, well, hang on, if I as an amateur can do this and find out about the supply chain in certain areas, there are much more complicated supply chains. Take Colombia, and the organized crime involvement and so on, it gets really complicated. Now, if I can do that, why cannot a company that has this as its job, following certain formats given by the refineries or, better, an organization representing refineries to do it in a standardized manner and find out has this mine, for instance, got children working there or not?

Obviously, the problem, it's problematic because you can't just turn up and see, and if you announce yourself, there will certainly be no children present on the premises. There are questions, but these are feasible, and companies can deal with them. And I think your role in my appreciation would be to help them with the format because the thing is that, the OECD actually demands from every refinery that they do this, that they know where the gold comes from and what are the problems of that area are. Now, if you do this collectively, there's no antitrust issue with that but just as a bracket. I believe you could do a very big step in advance, jointly for the whole group of refineries and I mean this seriously when I'm saying, individual refineries are frequently SMEs. They have like 150 or 200 employees. They have one legal person and one compliance person and they, with some rights, they're saying, ‘Look, you're asking the impossible of us. Why should we roam the world now and find out what the problems are in every mine, for instance, in Africa?’ So, my suggestion is, this would be something that, and possibly you are already on track, I may be mistaken here, I believe LBMA is the right partner. You don't have to do it yourselves. I think it's better if it’s done by private organizations. It doesn't even have to be one. You could have several such organizations competing – that's useful competition. But I think that would be a very big step, in advance, to ensure thorough due diligence.

Speaker 1:

Great. Well thank you so much. I'm just conscious that we are running out of time. In fact, I think I could probably spend another hour talking to you and ask you more questions on it. I know there was another one I wanted to focus a little bit of time on – your comment about this, ‘De-risking is not an option’. Absolutely, we want to encourage responsible engagement, and it's not something that we either encourage in terms of de-risking, but obviously making sure that you've got the right controls and systems in place to identify those risks and actually address those risks. But, perhaps, I know we’ve got a series of other webinars. What I might do is raise that question in another webinar and, perhaps, ask some of our other speakers, if that's okay with you, given that we have ran out of time. But again, thank you so much. Some really positive steps, good recommendations, you can sort of see some of the challenges. And, again, let's work together. I call to the rest of the market and to the stakeholders and to those who are obviously listening to this: it's about doing this together. I don't think any one individual organization can actually address this singlehandedly. So, thank you, Dr Pieth. Any parting comments before we close?

Speaker 2:

Thank you very much for inviting me to take part in this webinar.

Speakers:

• Sakhila Mirza, General Counsel, LBMA/Speaker 1
• Sasha Lezhnev, Deputy Director of Policy, Sentry/Speaker 2

Summary:

Sasha Lezhnev provides context to the issue of conflict and high-risk gold and agrees with Dr Pieth that de-risking is not an option. He highlights the many ways in which conflict gold can be easily smuggled and stresses that more needs to be done by the industry to focus on the red flags in responsible sourcing when conducting due diligence reports, and provides five recommendations as to how this can be done. Sasha stresses the fact that, in order for responsible sourcing to actually work, there needs to be a market for responsibly sourced gold.

Speaker 1:

Hello, I'm Sakhila Mirza, the General Counsel at the LBMA. Today, I am joined by Sasha Lezhnev, who's the deputy director of policy at Sentry. Sasha has been working in conflict minerals for over 12 years now, having spent some time in the Congo as well. More recently, Sasha was certified by Aiken as an anti-money laundering specialist. Sasha is no stranger to the challenges that the gold supply chain faces. We've already heard from Dr Mark Pieth, who shared some of his recommendations as to what the gold market should be doing. Before Sasha and I spend some time discussing some of the recommendations provided by Dr Pieth, it really would be helpful to get an update from you, Sasha, in terms of the work that you've been doing over the last 12 months and, more so, what is it that the gold market should also be looking at and actually doing? So, thank you again, Sasha for joining. Over to you.

Speaker 2:

Great. Well thanks so much for the introduction Sakhila, and thanks to the LBMA for having me on this webinar. I'd like to give a little bit of context to this issue of Conflict and High-Risk Gold, and then we can talk a little bit more about the solutions/ideas, some of which we have proposed, and we can talk about Dr Pieth's ideas as well. So, let me start off with a little bit of context first. So, conflict gold is an emerging issue for the gold industry, right? So, the UN has done research on this issue in several different countries. In the democratic Republic of Congo, where I have done most of my focus, the UN group of experts there said that gold provides the most significant financial benefit to armed groups. It is the most lucrative and easily smuggled of natural resources there. Similarly, in Sudan, Venezuela, Central African Republic, South Sudan, there is conflict and high-risk gold coming out, and industry is starting to pay attention to this. There were government regulations issued, there's been industry rules, the LBMA has the responsible gold guidance, the OECD has due diligence guidance, there's the financial action taskforce red flags, and there's also an increasing responsible gold trade that's coming out of high risk areas, as companies are trying to not de-risk, from those areas and are actually trying to source responsibly. We call it a conflict-free trade or responsible trade. This sort of conflict gold trade generally has a kind of a six-step supply chain. We've been mapping this at various points over the last decade. So, generally, it's gone from artisanal mines to local smugglers, who will then sell it off to regional smugglers – and there's been some regional refineries in Eastern Central Africa where we focus at the Sentry – then most of the gold, some 95%, or so, has been going to the UAE in Dubai, and that's where a lot of it will enter the formal supply chain. Then, from there it goes to a variety of sources, some, to Switzerland, some to India, China, Western Europe and other gold markets. Of course, jewellery is the largest end point, but smaller amounts go into electronics, dental work, etcetera. And of course, the banking community investments. On the ground, this is a photo that I took, right around the gold mine. In Congo for example, some 300-600 million dollars’ worth of gold is smuggled out annually. This represents roughly 98% of the artisanal gold trade, which was actually not formerly exported from Congo, but is in fact smuggled to neighbouring countries. Armed groups or the army control the majority of mines. Over two thirds of the mines that miners work at are conflict affected mines. And these armed groups either control the mines themselves, they control checkpoints around them, or they raid the mines. So those are the three ways that they're profiting. And over 90% of the gold mines in the DRC are not yet certified. There is as a regional, certification process, which is run by the regional organization called the ICGLR, which is a fairly credible process that’s built on lessons learned from the Kimberley Process for blood diamonds. But there aren't very many gold mines certified because of the large presence of armed groups. So, there are multi-stakeholder teams that go out to mines and certify a mine is as “green” – i.e., conflict free or child labour free; “yellow” as in, this mine can get approved, and “red” – it's a no go area. So, we've been doing some investigations to look at where there have been holes in this system and other industry systems around the world. And we published this in a report we launched about a year and a half ago called the Golden Laundromat, which is about the conflict gold trade from the DRC to United States and Europe. We found that, in fact the gold, was pretty easy to smuggle, that smugglers and some refiners were getting around these systems and companies really to understand some of the risks.

I think another problem that we've identified is that some of the responsibly mined gold, is in fact not accepted by the market yet and, so, it's quite important for companies not to de-risk. And there is in fact some conflict free artisanal, gold out there that is starting to be produced and processed, but you know, a lot of banks haven't accepted that yet. And so there needs to be more sort of education around those areas. And we're going to talk a little bit more about this in a moment, but I just want to highlight the FATF Report, which is specific to trade based money laundering in the gold sector, and highlights a number of different red flags that anyone purchasing gold, really needs to utilize when doing their KYC and due diligence process. Here we're highlighting a few that are relevant for conflict areas. For example, a trader, or gold dealer, or a refiner, is not registered with the financial intelligence units. Some of you could refuse. The development of mining in prohibited areas. So, I mentioned those “red” mines, like there's still mining going on and sourcing going on from there, but that's a red flag for people to utilize. I think I will stop there and highlight a couple of other recommendations for both companies and governments in this area that I think can help us move forward. I think that the first thing I would say is we've developed really the architecture, I think, for dealing with this issue in terms of sanctions regimes, in terms of global guidance for companies, whether it's the LBMA, the OECD, the responsible jewellery council, but a lot of that hasn't been fully enforced yet. In a couple of cases, some refiners have been kicked out and that sort of thing but, in fact, you know, we realize that some of the schemes, for example, in the UAE haven't really been properly implemented. So, we need to properly implement those. And, likewise some of the sanctions regimes, that there are penalties on paper for sourcing conflict gold and, yet, there have been almost no sanctions, in fact, for conflict gold refiners or for people who are using/sourcing conflict gold. So, just, five quick, overarching recommendations and I’d be happy to get more into the discussion and detail with you Sakhila. So, first of all, I think companies, anyone buying gold, whether it's banks, or traders, or refiners, really need to pay close attention and utilize those trade-based money laundering red flags for gold. Just a couple of them to highlight. There are major discrepancies between the trade statistics from gold producing areas in Africa and those countries that are receiving the gold, for example, the UAE. So, that's a red flag that companies need to pay attention to – likewise with large cash transactions. Secondly, to source or not to source. Well, that's a deeper question, but often can be very binary. I think that, the reality is that this is a problem that affects everyone in the gold industry, and our organization is personally not in the gold industry, but it affects us a lot. So, I think it's very important for companies to really make the decision to be part of the solution.

It's not a problem over there. What we tracked in our investigation was in fact conflict gold from the DRC was ending up in US, and European supply chains. So, this is something that we all need to be part of. And, so, number one, working with your suppliers to address some of the issues. Like, for example, the large cash transactions, some of the other red flags, but also, join up with other entities, whether it's your government or a public-private partnership. So, for example, there is a Public-Private Alliance on Responsible Minerals Trade that are working to try to address these areas. So, whether it's working with, or trying to engage the UAE government, or one of the producing governments, or one of the neighbouring country governments to change some of the policies, or trying to source responsibly, et cetera. I think thirdly, working to try to establish partnerships for responsibly mined, in particular artisanal, gold. So, I really salute the LBMA on this, who engaged with us in the journey for gold, which was sort of a mine-to-market partnership to get conflict free artisanal gold out here, but that was a pilot initiative that needs to go further. And so I think that the more that refiners or traders can partner with efforts on the ground, whether they be artisanal mining cooperatives, or whether they be a government who is working to source responsibly and then sell to an LBMA refinery, that those kinds of partnerships can work. There needs to be a market for the responsibly mined gold, otherwise we'll never get out of the criminal trade. Fourthly, banks, I think, need to develop more expertise, frankly, in trade-based money laundering, and gold refining more generally, and due diligence for the artisanal minerals trade. In our experience, banks that focus largely on the large-scale industrial gold mines – and so have taken the KYC and their AML – work, sort of, focused on those. But really a lot of the illicit trade is happening in this artisanal trade, and then the refining of that. So, developing more expertise in that area. And then finally, this is really not a call for industry mainly, but more governments. There need to be consequences for those who trade in the conflict affected gold, and there we're talking about anti-money laundering measures and network sanctions and that sort of thing, because without that, there'll be no signals to others in the industry who were continuing to engage in that. So, maybe we can start more of this conversation. Thanks.

Speaker 1:

Great. Thank you, Sasha, as always – very insightful to hear your thoughts, especially in terms of the work that you've been doing and your recommendations. I know you've had an opportunity to also listen to Dr Pieth's recommendations, from an earlier webinar. So, I think it will just be helpful to perhaps get your views on his take in terms of what it is that the gold market needs to be doing and how that sits with perhaps what you have been doing, and your five recommendations; he gave three, you gave five. So, just trying to understand. I think there is one thing in common and, in fact, he started his webinar by saying, de-risking is not an option and, something you've also alluded to in terms of de-risking, shouldn't necessarily be the first step. So, just some thoughts on that and more generally on what Dr Pieth had to say as well.

Speaker 2:

Sure. Thanks, Sakhila. I fully agree with Dr Pieth that de-risking is not an option. I would go even further to say, take that a step further, that these money-laundering red flags are really where industry needs to focus a bit more. And, so, let me highlight a couple of those. So, if folks are looking at sourcing from an area that neighbours a conflict producing country or, sorry, a conflict gold producing country, or a high risk area, the things that they should be looking out for when sourcing from there, to make their kind of sourcing decisions. So, one of them is that, if there are major tax discrepancies between that country in particular and the neighbouring producing countries. So, this is an area that we have noticed, in several different cases. So, for example, Cameroon exports quite a bit of gold, relatively speaking, to the region and, yet, it has a major tax discrepancy with the Central African Republic – which is in fact a large producer of gold – that people are increasingly turning to. So, I think that's one area of red flag. And another one is corruption and weak controls at major regional airports and land borders. So, if gold is coming from a particular area where it's been publicly reported several times that there's major corruption at this airport, or a certain border point, then some additional due diligence is needed. A third area, I would highlight is, the certification process for gold from that particular area. So, I mentioned, the ICGLR Process for the Democratic Republic of Congo. Only 96 mines have been certified in the DRC at the moment. So, you know, looking at the certificates that are being presented for a gold mining area are those, in fact, from one of those 96 mines. Those are available online, and NGOs, and the UN, and the government can be contacted for further efforts, to look into those. So, those are a few, and there are obviously others, and Environmental Risk Assessment, has that been conducted? Has the entity been registered with the FIU? So, I think that's one thing. I think the other part of this is really to, not just do the due diligence, but really trying to reach out to those who were trying to build up that responsible trade on the ground and establish some of those partnerships because I think, some of the ways that this problem is going to be solved is partly through changing supplier behaviour, but also to set up some either closed-pipe systems, or some direct partnerships to source for responsible gold. So, for example, the U.S. Agency for International Development, and the German equivalent GIZ, are setting up partnerships with artisanal miners to loan them equipment in exchange for them selling the gold to established supply chains that can go to LBMA, or other refineries. There are also a craft standard, which is a standard for progressive improvement for gold mines in a number of different areas, whether it's labour, environmental, mercury standards, etcetera. So, working to establish craft certified gold can also help. I think there are good examples of places like Peru, for example, where you have a sort of fair trade and progressively improving responsibly sourced artisanal gold where partnerships can be made and frankly to engage the LBMA with this as well, who's working to develop that in an effort to develop that sector and not to not derisk.

Speaker 1:

No, no, absolutely. And I think the message, from the LBMA’s perspective, is to encourage responsible sourcing, identify those risks – it's not about disengaging – obviously understanding what is the risk. Do you have leverage by working with other industry/initiatives? I think it always helps to provide a more comfortable platform that you can actually demonstrate that you are trying to work on an industry solution together. And as you said, being part of the solution is absolutely important. Doing this on your own, it's never going to be easy. I'm conscious of time, so we are running out of time. So, in terms of just wrapping this up, any concluding remarks from you Sasha, until next time, of course. Anything that you would like to emphasize before we wrap this webinar up?

Speaker 2:

Yeah, sure. I think that, first of all to say that this is a global problem that we're all grappling with, and we all should grapple with and engage on. I think that's one important point I want to lay out – that everybody has a role in the solution and, if it's just left to one entity like the LBMA, or the Sentry, or some other organization, we're never really going to solve this. So, for example, one of the key recommendations that we want to highlight (and by the way we're working on our next report, which will highlight some of the trends and red flags), is engagement with the UAE, that's the hub for highrisk and conflict gold. The only way we're going to get some of the reforms done in the UAE, is if we collectively engage, and try to work with them, to solve those issues. This is not just a one person, one organization effort. And I think the second, is a call really to governments to enforce and better implement some of the regimes that they do have on paper. So, if it's a sanctions regime, like looking for those conflict traders who are trading and establishing consequences and sending a wider message. And lastly, I think this is a really good opportunity, perhaps this COVID time actually is a really good opportunity for everybody to step back and think about, okay, let's strategically map out a little bit better how we can, in fact, try to source responsibly from a higher risk area. So, if a refiner is saying like, ‘Well, you know, last year we decided we’re going to halt all artisanal buying, or we're going to halt from these four countries’, to really think about, who are the organizations we can reach out to now who are more knowledgeable about efforts on the ground there, so we can partner with them and in a sustainable way so there's not some grand premium attached to it, but work with them. And we've had something. called The Responsible Artisanal Gold Solutions Forum (RAGS Forum). which was just a monthly forum to get, artisanal mining groups/players in the gold industry; refiners and governments together to just talk through what some of the issues are. And we've discovered all these interesting things like inventory finance, which I had no idea what it was before that, and so we developed a solution for inventory financing, which was a challenge for Congolese gold at the time. Each gold area will have its own challenges but engaging in forums like that, can absolutely be productive, and a way forward. So, we ourselves continue to engage in efforts like that, as does the LBMA. So, anyway, thanks a lot for your time and I really appreciate you inviting me.

Speaker 1:

No, no, always a pleasure. So, hopefully, look forward to our next conversation – our next update – so, thank you so much as always, Sasha.

Speakers:

• Sakhila Mirza, General Counsel, LBMA/Speaker 1
• Pamela Fierst-Walsh, Senior Advisor, U.S. State Department/Speaker 2

Summary:

Pamela Fierst-Walsh, Senior Advisor Conflict & Critical Minerals, from the US Department of State. Pamela provides a US perspective on responsible sourcing for gold in a world of COVID-19. The Dodd-Frank regime, international sanctions and the impact of COVID-19 on the ASM sector will also be addressed. Pamela has focused on critical foreign policy and national security issues throughout her career, including counter-terrorism, atrocities prevention, and humanitarian assistance. Pamela appears in the Top 100 Corporate Social Responsibility Influencers in 2019, according to data management company Assent Compliance. She played a key role in shaping the 2019 U.S. Federal Strategy on Critical Minerals to improve U.S. competitiveness for clean energy and technological advancement.

Speaker 1:

Good Afternoon! Welcome to the LBMA’s Webinars today. I would like to introduce Pamela FierstWalsh, who is Senior Advisor, Conflict and Critical Minerals from the US State Department. Pamela today will be providing the US perspective, on responsible sourcing for gold generally but, also, in a world of COVID-19. She will be covering the Frank-Dodd, international sanctions and, generally, the impact of COVID on the ASM sector as well. So with that, I would like to hand over to Pamela. Pamela, thank you so much for joining us today.

Speaker 2:

Thank you Sakhila, it's lovely to be here. I think this is my first presentation with the LBMA audience and so, hopefully, there are some listeners out there who are going to learn some new things today. If you don't mind, I'll just dive in, in the interest of everyone's time and – bear with me as I work the slides. So, we're here today to talk about US perspectives on responsible sourcing for gold in the time of COVID-19. It’s not exactly love in the time of cholera but, first, a quick introduction. So, this is me and this is what I work on. I'm in the office of Threat, Finance, Counter Measures in States, Bureau of Economic and Business Affairs. Essentially, for this audience, we're a small team that focuses on responsible mineral sourcing issues. So we cover the Kimberly Process; we cover DoddFrank; we often discuss what we call other troubling minerals, like cobalt that, perhaps, don't have an applicable legal regime like Dodd-Frank but are, nonetheless, very important to supply chains. I’m also the coordinator for Critical Minerals at the State Department, which is a much broader initiative focused on diversifying supply chains for a much larger list of minerals. So, we work with other US agencies, on programmes covering a number of things that impact private sector companies, as well as civil society, and we also work closely with our international partners on these issues. So, I think this is pretty basic for probably many of you tuning in, but just to make sure I've covered the bases when we say, ‘What is responsible sourcing?’. Well, it's how you get from here, this is gold, to here, refined products, finished goods without funding this – armed groups covering a mine, or this, actors that are perhaps not very helpful, or killing this, or contributing to this. So, it's basically about asking, ‘Can you answer these?’ Do you really know your suppliers? Are you constantly reviewing the risks in your supply chain? Are you checking the box or are you substantively confident about what you would find if you scratch a little deeper?

So, a quick breakdown on what is artisanal and small-scale mining vs large scale mining. I won't go over all of these bullets but suffice to say that ASM is much less mechanized, typically much more informal with much less of a regulatory oversight about it, if any. We rely heavily on the OECD due diligence guidance when we're talking about responsible sourcing. This sets out the five-step process for companies to follow. Basically, asking them to establish a regime and then establish protocols to follow it and constantly check it. It's driven also by conflict affected and high-risk areas which, as you can see here, are identified by the presence of armed conflict, widespread violence and other risks of harm to people. So, it's about due diligence – due diligence is about ensuring that you are processing things in line with a set of practices and protocols that you're confident are not doing that. This is just a quick primmer on the mineral supply chain. I find oftentimes that no matter the commodity, people want to say, ‘Well, I just do this with commodity acts, and so I'm not really part of this big supply chain’. But the concept of mineral supply chain really refers to every single node. And, so, it's important to bear in mind that chains really are that, right – one thing connecting to another – and so, if you're an actor in that space, you are concerned with everything above you and everything below you. Just a graphic depiction here of the OECD five step process, and DoddFrank 1502. So, my first talking point when I bring up Dodd-Frank 1502, is that it is still the law. If you're not familiar with 1502, it was enacted in 2010, and it calls for companies that source tin, tantalum, tungsten and gold, that may come from the DRC, to file with the US securities and exchange commission – if they are listed on the U.S. Stock Exchange – in order to ensure that they are adequately reporting on whether or not their commodity is contributing to armed conflict. The law itself – 1502 – is part of a much bigger regulatory scheme under the Wall Street Reform and Consumer Protection Act.

And so, that bigger piece of legislation, which principally deals with things like banking issues and housing regulation, has been fairly controversial in the last few years. And there were many efforts in the U.S. Congress to roll back all of it, parts of it, sometimes just 1502, sometimes the entire package. None of those legal or legislative fixes came into being. Dodd-Frank 1502 does remain law, whether or not you file with the SEC – if you are required to, it is a decision you make between you and your lawyer. That's my advice on that. The SEC has said some things that sound or feel contradictory to the supply chain. I don't work for the SEC, so I can't speak for them, but I can say that, the SEC has said that only official, pieces of guidance are what carry weight at the SEC and not informal statements by acting representatives. So, always check the origin of any statements you might be relying on to justify whether or not you file. But at the end of the day, the reality is that publicly traded companies that are worried about their reputations will always file.

A quick plug for our Public-Private Alliance for Responsible Minerals Trade. When Dodd Frank was enacted, the State Department joined with our partners at USAID, and put together a public-private alliance of private companies, NGOs and civil society, as well as the U.S. Government to work on establishing conflict free supply chains. It naturally wasn't something that folks were really used to dealing with. And, so, this organization of actors comes together and expresses support for it, works on a few smaller projects to try to underpin ways, and identify ways that might improve the establishment of conflict free supply chains. A major success story from that involves just gold, which established a concrete supply chain of gold, feeding into a jewellery company in Canada. Major members include Apple, Dell, Ford, Google – they're listed below. We're always looking for new members. So, if you're at all interested in throwing your weight behind the Public-Private Alliance for Responsible Minerals Trade, we would love to have you. The World Gold Council is also a member.

What is OFAC? Now, this is another agency I don't work for, but is of great interest to you if you're looking at responsible gold. So, OFAC is the Office of Foreign Assets Control in the U.S. Department of the Treasury. They’re who administer and enforce economic and trade sanctions based on US policy. So, they are the ones that you are always trying to make sure you're on the right side of if you're concerned about violating US sanctions. ‘Why would anybody working on gold be worried about violating US sanctions?’, you might be wondering. Well, before we get to that, let's look at OFAC’s objectives: identify, and expose, and target those who are engaged in illicit activity; deny access to the U.S. financial system for those actors; restrict transactions that involve U.S. companies, and individuals, from transactions that are considered in violation of sanctions (or of strong concern); and as a way to exercise support for U.S. national security objectives. So, this is a broad list of their sanctions programmes. So, you'll see on there that, obviously, trading diamonds sanctions or blood diamonds is listed on there, but so are transnational organized crimes, as well as foreign country regimes, as well as terrorists. Those are things that OFAC has a lot of interest in, and gold is certainly not immune from them. These are a list of foreign country regime programmes, that are on here. Some might seem like they've been there for a long time – some of them have been – but OFAC is constantly in an effort trying to organize and update regimes as necessary.

I also want to talk about Global Magnitsky, which is another tool that we have at our disposal. So, Global Magnitsky actually, in this case, pertains to an executive order that the president signs, enabling a broad authority to designate individuals for human rights abuses and corruption globally. So, you can be brought to bear under U.S. sanctions, like the kind that I just talked about – with OFAC – for behaviour where, in which if you're responsible for, or complicit in, serious human rights abuses. And this includes government officials and former government officials. So, who's this guy? This is, well, you can read from the headline Spotlight on a Secretive Billionaire and his deals in Congo. Well, he's a case study because his name is Dan Gertler. He's an international businessman and billionaire. He amassed his fortune through hundreds of millions of dollars of corrupt mining and oil deals in the DRC and, as a result of these activities, he's been designated under Global Magnitsky for corruption directly pertaining to DRC minerals extraction. So, suddenly Global Magnitsky has some real applicability. These are a list of companies that are related to Dan Gertler, but as an entity with a lot of resources, he's constantly kind of moving and shifting. If I were concerned about having any of these companies in my supply chain, or any companies that might be offshoots of these companies, I would have been extra vigilant about it.

But it's also not just an Africa issue. So, stepping away from the Dodd-Frank or the Global Magnitsky – the Dodd Frank construct – which is just DRC and its neighbours. Let's talk a little bit about NTR metals and its parent company Elemental, which was a major money laundering case, involving gold funds heading back to drug cartels and resulted in layoffs for U.S. workers, because U.S. companies were involved in this activity. You can read all about it in a very impressive set of our articles on Dirty Gold, Clean Cash through the Miami Herald – very impressive reporting. But this is what it looks like, right: these are kids panning for gold, probably using mercury. And it's pretty bad. Also, Venezuela gold. So, gold out of Venezuela is covered because it is one prong through which an entity can be designated. The designation for gold under this executive order is the state mining company, Minerven, and the company president, Adrian Antonio Perdomo Mata. And, so, if any individuals from that company or specifically that individual are in your supply chain, that spells real trouble. The problem with a lot of Venezuelan gold, principally all of it, is that it is artisanal. So, if it's leaking out and it's informally getting into the hands of sanctioned entities, like Minerven, before it leaves, that's a real concern. It's also, it's not the only concern in Latin America gold, right? We could talk all day about Colombia and Peru and the environmental impact, and the health impact of mercury in those supply chains. But just from a legal perspective, Venezuelan gold specifically is under threat of OFAC sanctions.

And then some countries sanctions regime that also influenced minerals. North Korea is one of them. The message here for those on the minerals market, generally, is to look for dumping of really cheap products like tin. But there have been linkages of DPRK to gold trades and so it's incredibly important to stay vigilant in that area as well. OFAC can sanction offshore persons and businesses. If you're concerned about OPEC violations – I give you a phone number a little bit later – but today we learned it's not just a U.S. thing, it's also a European Union thing. They have their own conflict minerals legislation coming into force January 2021; India is working on its own due diligence guidance; even China is working on its own standards for responsible sourcing in these ways. Now let's talk a little bit about the scale of ASM gold mining, so that we know kind of where we are: 40 million miners in 80 countries; 60% mine gold exclusively as of 2009, 70 and 80% of that is informal; another 50% of that is women; 20% of the world's gold supply comes from ASM. So, it's exceptionally important that those working in the gold sector fully understand their supply chain, because – for all of the things that I just outlined – if you're not positive, those elements are not in your gold supply chain, then you're not doing enough due diligence because simply saying ‘It's good
enough’, might not always be good enough.

And now COVID happens. So, that was already a very vulnerable population and now it's about to get even more vulnerable. So, the recent impact of COVID on ASM is that it is a serious, serious problem. So, even though gold prices are going up everywhere else – we know the spot price was what, I think, something like $1,800 an ounce right now – declining gold prices in the ASM sector are the result of opportunistic actors, maybe illicit actors in the threat finance space. Maybe they're just getting a good deal, but maybe they're actually part of larger efforts to use gold as a laundering opportunity. So, the exact implications are really uncertain but we are getting a lot of reporting from sources in the field that say, ‘Buyers will come along, they'll offer a much lower price than the value of the gold and the communities have to take it’. So it's having all of those onward effects. But it's not because the price of gold has suddenly gone down, it's simply because they know people are vulnerable and they're taking advantage of it. So they get to buy low, and then get it to a place where it's going to sell high later on in the market. So, trends and effects observed so far: buy low, sell high. There's a real drop in the price of mercury, which is concerning. It feels almost like a “gateway drug”. If you're an illicit actor and you drop the price of mercury, you make it possible for artisanal miners to mine even more gold, because you're giving them even more of a tool, notwithstanding all of the toxic effects of mercury on human health and the environment. But you're also establishing kind of a client base, if you will. Supply chain stagnation, because of the restrictions on travel, legitimate buyers and refineries and mines are closing. Some governments are imposing strict controls. That's true, and that's impacting costs as well. Then of course, mounting healthcare concerns due to limited capacity of the healthcare system and the risk of transmission while mining, especially given that there's so much about COVID we don't fully understand yet. This makes for a disproportionate impact on women who are often the ones doing the mining.

So, these are potential ways to support communities affected by COVID-19: triple check your due diligence. Do you know where your gold is coming from? Do you have artisanal gold in your supply chain? This is not a message to say, get artisanal gold out of your supply chain. It's a message to make sure you understand what's actually happening and what's actually being produced as a result of that presence in your work. Bring COVID-19 information to miners and raise awareness. Don't let them think that they are immune from it, or that it's not something that will impact their communities. Support legitimate artisanal gold mine schemes where possible. It's a difficult, difficult nut to crack – artisanal gold – and making sure it's done in a transparent way. But the more people are involved, the more interested that we can make sure people are to understand 20% of the supply chain, the better off we're going to be and the closer we get to some sustainable approaches. And then upper advocacy. Advocate for continued support to communities by governments, and other funders and other entities, that might have an influential role wherever their mining operations are occurring. So, today we learned responsible sourcing means: ‘Do I really know my supply chain?’ Not just, ‘Did somebody I paid to fill out paperwork check all the boxes properly?’. Yes. Dodd-Frank 1502 is still the law. Global Magnitsky is a serious and real tool. The U.S. Government has to go after corruption and human rights abuse, and that includes in the mineral supply chain to include gold. Join the Public-Private Alliance for Responsible Minerals Trade. I'm not shy about promoting that. And this isn't just an Africa thing, or a diamond thing, or even a U.S. thing. This is a global concern in a variety of contexts and the United States Government is joined by many others in our concern for how to deal with threat finance issues lurking here. And that responsible sourcing is not going away. And that, unfortunately, COVID is impacting gold, particularly in the ASGM sector, which is full of particularly vulnerable actors.

Thanks for listening. That was pretty quick. That's my contact information. If you need to contact me, that's my email. If you would like a more general email address, there's a very long set of letters strung below that will also reach me.

Speakers:

• Susannah McLaren, Compliance & Responsible Sourcing Manager, LBMA/Speaker 1
• Ian Warman, Head of Commodities Operations, Europe, Standard Chartered Bank/Speaker 2
• Andrew Parsons, Vice President, Group Sustainable Development, Gold Fields/ Speaker 3
• Grant Angwin, President, Angwin Precious Metals Advisory Services/Speaker 4

Summary:

Watch our panel from across the supply chain reflect on accountability, with a focus on who has the influence and leverage to effect change to achieve positive outcomes. Our panellists provide an overview of the value chain, the role each actor should play and their accountabilities, before discussing meaningful achievements seen through LBMA’s Responsible Sourcing Programme plus any challenges encountered along the way.

Speaker 1:

Welcome to LBMA’s webinar on Building Leverage Across the Value Chain. This is part of our Responsible Sourcing Virtual Summit webinar series. My name is Susannah McLaren and I'm the Compliance and Responsible Sourcing Manager at LBMA. Building leverage has been identified as one of the key priorities in our Responsible Sourcing strategy, which Sakhila Mirza presented on a previous webinar. This priority builds on the work we have been doing at LBMA to map the precious metals value chain, to assess existing mitigation measures and points of leverage. What we have identified through our work is that, although the refiner has been identified as the choke point, often there are other bigger actors in the value chain who have more resources, and greater leverage. This point was well articulated by Dr Mark Pieth in our opening webinar of the Virtual Summit. On today's webinar, we will discuss accountability in the precious metals value chain with a focus on who has the influence and leverage to effect change, to achieve positive outcomes. I'm delighted to be joined today by an esteemed panel of key actors in the precious metals value chain. Ian Warman is Head of the Precious Metals Transaction Management Unit at Standard Chartered Bank, with a bullion career spanning thirty years. Ian is also the chair of LBMA’s Physical Committee, where Responsible Sourcing is a standing agenda item. Further upstream, Andrew Parsons joins us from Gold Fields where he is Vice President, Group Sustainable Development. Andrew has a wealth of experience working in the mining sector for over twenty-six years, including former roles with AngloGold Ashanti, ICMM and the Chamber of Mines of South Africa. Grant Angwin is an independent, Precious Metals Advisor. He is a veteran of the industry, and extremely well placed to be the voice of the refiner on this panel. Until recently, Grant was President of Asahi Refining North America, the world’s largest gold and silver refiner. Among other noticeable roles, Grant is also former chairman of LBMA. So, turning now to our panel, let me ask you to please begin by reflecting on two questions very much from the view point of where you sit in the value chain. So, the first is, what effort is your organization taking to achieve positive outcomes in Responsible Sourcing? And, secondly, what do you think has been the most meaningful achievements to date and some of the main challenges that you faced along the way? Ian, I invite you to respond first, followed by Andrew, and Grant.

Speaker 2:
Thank you for that and thank you for the introduction. I guess the answer to the first question, that's a multi strand attack and people need to look at various levels of risk, and a key control is around knowing your counterparty, but also knowing your counterparty’s sorting chain. So, you need to be detailed in digging when you're looking at buying metal, so that you understand exactly where it's coming from, and if you don't understand, you need to ask more questions. So, I guess in a way this is a good advertisement for the LBMA, because the LBMA do do a lot of that due diligence and work and detail. But if you're applying non-LBMA accredited metals then you need to do a lot more investigation yourselves. So, it's about the assigning on a level of risk for specific jurisdictions. The level of risk in some countries is certainly higher and that is something that people need to be aware of. And then maybe some countries where the risk is certainly higher than the level of appetite, and there are business opportunities that we at SCB would decline because they're in regions where we consider those to be too high-risk. So, people need to do their own due diligence and risk assessments. And to the second point, what do we think has been the most meaningful achievements? Understanding that the supply chain is a major achievement and working with your suppliers to mitigate the risks is something that I would strongly recommend. There are a lot of people in the market that do understand the detail in terms of the full supply chain and those contacts are invaluable, and we should work together more, to understand the full end-to-end risk. So, it’s a – there is a lot of experience within the LBMA Market Members, and those people are willing to talk and help so it’s something that – building those relationships is a positive.

Speaker 1:
Thanks Ian. Perhaps we'll come back to that point later when we move on to explore some of the solutions, and maybe you can give us some of your ideas there. Andrew, I turn to you for your comments please.

Speaker 3:
Thank you very much for the opportunity. We’re the mining company at the start of the value chain, so, I think the controls that we have in place, and what we do, is very important. So, we are signatory to the World Gold Council, Conflict-Free gold standard, and we apply that. It's a fairly straight forward set of controls to ensure that the gold that we produce is not contributing to a conflict or to gross human rights abuses. We're a proud member of the ICMM – the International Council on Mining and Metals – and implement their Sustainable Development framework. Well, in fact, it's a requirement of membership and that covers the whole gamut of sustainability criteria. So, by implementing the framework, we ensure that we address all the key sustainability – well, really, E.S.G, environmental, social and governance challenges or issues that we confront as a mining company and, as a member of ICMM, we're going to be complying with their performance expectations, which, really implements the Sustainable Development framework – and apply a set of auditable requirements that we must beat. And so, therefore, further strengthen the standards that we have in place, and the ability that stakeholders have to ensure that we are meeting them. Of course, we apply the International Cyanide Management Code, which governs our use of cyanide at all of the mines where we use cyanide, which is all but one.

And then, each of these requirements is externally assured. So, it's not just our words that we give but it's vouched for by external experts, who are independent of us and provide us with the assurance statements. And our performance has been recognized by ratings agencies and others. So, I think that each of these are very important building blocks that provide assurance to those downstream of us in the chain and to all stakeholders, whether they're consumers or in the investment and banking industry or, indeed, the NGOs and communities that we interact with, and the governments that regulate what we do. In terms of our own supply chains, we carry out due diligence on our largest suppliers. We've recently published our first modern slavery report for our Australian operation. So, that's another building block. In terms of our greatest achievements, I think – it’s why I refer to them as building blocks – is all of these different components that over the years that we've added in, and then it's been an expensive undertaking over many years to add in all of these so I wouldn't single out any one particular achievement for that. I think they all build on each other and give confidence to stakeholders that the product that we provide, and supply, is reliable and has been produced according to the highest standards.

Speaker 1:
Thank you, Andrew. And Grant, do you have anything to add?

Speaker 4:
Yes. Hello everybody, just taking on board what Ian and Andrew have said and, you know, having run some of the world's largest refiners for a number of years, I think, you know, the global commercial refining industry can look at this position and hold its head up very high, and certainly in terms of working with large-scale miners. I'd say it's easier to on-board and work with, your companies are – (illegible) become members of World Gold Council and ICMM and adopt the Responsible Gold Guidance. The harder part becomes when you move down the scale into the medium-sized producers, that are not necessarily public listed companies and then we ended up at the, should we say, the end of the chain with the small-scale mining companies, which has become very difficult to go through the due diligence process. I think what the industry has done with the large-scale and, to a degree, the medium-scale is very commendable and I think it's working generally very well. The issues rely – become more involved – in the small-scale area. I, for one, you know, having worked in the industry for a long time, I think, you know, a lot of what we've done in Johnson Matthey and Asahi and, of course, other refiners is worked with the smaller companies in, say, developing countries to ensure that, whilst they are not members of the ICMM or the World Gold Council – or even the LBMA – they are adopting and following the procedures that come out of these organizations. And that's been very, very good and, you know, policies with companies like Johnson Matthey and Asahi were very much, ‘If you don't do this, or have to do it under the RGG, we would walk away from the business’.

Speaker 3:
Thank you, Grant. And on that, I mean, it sounds like a lot of effort is applied to particularly the smaller producers. Do you feel that the refiners are getting the support they need along the value chain, or are they putting a lot of work in and then finding that somehow they're penalized for trying to move into these areas of activity?

Speaker 4:
That's a very good question. I think the refiners have often felt that they've been sandwiched in the middle – between the miners, the associations, the bankers, and the regulators. And a lot of pressure has been put on the refiners to deliver in certain areas that they really are experts in. And I have to agree with Mark Pieth, you know, they are small, medium enterprises and do not have an enormous amount of resources. I think that's why a lot of refiners, including myself when I was running them, focused on the large-scale because that is the bulk of the business was – that was the easier one to approve, on-board and manage with less costs and less resources. The further you go down the chain, the more you need to become – you need to have a large compliance department, a lot of legal support and, ultimately, a lot of cost. It's been talked about at LBMA conferences in the past, how the refining business is a tough business. So, it's a lot easier to say, ‘We're focused on what we can manage’.

Speaker 1:
Thanks! Ian, from the perspective of a large financial institution. Do you have anything to add here in terms of, I mean, you started by talking about risk appetite, levels of risk. Clearly, you mentioned that some countries are higher risk and perhaps might inform a strategy – a no-go strategy. Was that relating to areas in terms of small-scale mining, or was that for other issues such as higher propensity for money laundering or aspects like that?

Speaker 2:
Actually both. Clearly for us, if we were talking to the small-scale miner, the level of extra work that's involved in doing the due diligence makes it more expensive for us to be involved in doing those trades. So, there is a trade-off – an economic trade off – as to whether it's actually worth us doing it,given the scale of business involved. The other side of it is around money laundering and sanctions, and all of the regulatory controls and compliance that we have to go by. So, there are countries that we would consider to be too much of a risk for regulatory and money laundering requirements that we just wouldn't talk about. There's a conscious decision not to be involved in those countries, just because it's taking too much of a chance. There is genuine business to be done in some of those countries, but it's too much of a risk for us to be involved in something that is not clear, so we won't take the chance. If it's not clear, we would decline that business. So, it's interesting when we were going through the earlier question about the independent cooperation, and the fact that the multiple building blocks of process and building that security. I think both of those are relevant for financial institutions, as well as the refineries and the mines. There are multiple levels of security and assurance, and there is independent validation of what you're being told is actually true. You can't just rely on what somebody is telling you, because you believe them. You have to prove that so that you can assure your buyer when you sell it on, that you've done the correct due diligence to prove where it came from.

Speaker 1:
Thank you. And in terms of solutions, I don’t know if – Andrew – in terms of a large mining companies, such as yourselves, with all the expertise, all the investment, you've put it into the right processes, is there anything then in terms of supporting, you know, the wider mining community? Is that something/initiatives that you're involved in already, or areas you see opportunity to do more of – well let’s say level the playing field. I recognize you are in competition as well, but something to somehow support the smaller players, particularly, you know, the artisanal, if you like, miners so that we're not seeing efforts diverted elsewhere.

Speaker 3:
Yeah. Well, I think mining companies have a long tradition of collaborating on safety and health, for example, and also in ensuring confidence in our product. So, this is why ICMM has been formed, the World Gold Council with its work on gold standards and now the Responsible Gold Mining Principles. So, definitely there’s scope to work together amongst the larger companies, and we have done so. It
does become a challenge working with artisanal mining because there is, depending on where you are and which countries you are, there can be quite a lot of criminality involved. And because of concerns around being involved in that money laundering and all sorts of things, that does make the larger companies quite wary of working with artisanal miners and it's just an enormous challenge. You know, there’s many more people working in artisanal mining than there are employees in large gold mining companies, millions upon millions of people. There’s an awful lot of people who are working honestly to find income and support their families but, as I said, you know, there's challenges around criminality as well. It's a challenge that the companies in ICMM and World Gold Council has grappled with for many years. There’s been more challenges, I think, than successes, but there have been some good initiatives of working with the UK Government. So, the Canadian Government has also done some good work so, as you need, so I think that it tends to be initiatives at the national level where one can work with the government, and various agencies and NGOs, rather than the big international initiatives stuff and, tend to get caught up in all sorts of bureaucracy. I’m not really providing any answers because it –

Speaker 1:
This isn't an area to uncrack completely, but it's useful to just understand. Of course, at LBMA, a lot of the work we do is working with refiners who source from large-scale mines and we’re very supportive of that. We're just trying to understand how we also open the landscape to other players in a way that meets some of the standards that a large mine, like your large mining company, like
Gold Fields, would be implementing and perhaps that’s something – an aspiration – but one that stakeholders are interested in. I'm afraid we don't have a huge amount of time left but, I think I would like to turn to, for some final thoughts of, are we missing a trick here, in terms of the value chain? Is there more that any one player could be doing? Are there any opportunities for collaboration, that Ian referred to, that at LBMA could be considering more and following up on? And they could just be ideas, you know, nothing that's already concrete, but the things to begin to consider.

Speaker 2:
So, maybe I can kick off with a couple of quick thoughts. So, the work that we're doing on the global database is clearly something where that will help us to track bars that are in circulation. I think that that's something that is taking longer than we would have hoped but is valuable in ensuring the integrity once the bars are in circulation. There is an awful lot of knowledge in the market amongst the participants and maybe some of the collaboration I’m talking about is how we share that information more widely and make that more available. Because we are all asking the same questions, but we’re asking the same question multiple times. So there should be something that, maybe, the LBMA could help to coordinate where we become more efficient in asking the question once and maybe the LBMA then are auditing those responses to give some assurance on the further downstream chain. So, I think there is opportunity to improve the process. I think what we've started to do has been really good and positive for the LBMA, but there's a whole wide world of business that's done outside of LBMA accredited refiners that is not in scope at the moment.

Speaker 1:
Thanks. So, Andrew would you like to share any thoughts?

Speaker 3:
Well in our discussion previously, I think with Grant – I’m going to take a point from him – we talked about education of consumers. I think there's a lot of ignorance out there, or people just don't understand the industry. So, I think as players in the industry, we need to be creating awareness about what responsible gold is, how it’s produced, what people can be looking for, to build confidence in the product, and to throw some light on the enormous amount of work that's being done. I think that, certainly as miners, we’re pretty poor at communicating what we do. And I think that we need to work harder at that.

Speaker 1:
Thank you! And the final word goes to Grant.

Speaker 4:
Okay, I will try and keep this brief because it's obviously, it’s a topic that I'm quite passionate about and been involved with for a long time. I could probably talk for 20 minutes or 30 minutes. I mean, just to take what Ian and Andrew said in the points that we discussed last week – I think education and promotion of the gold industry across the whole chain is exceedingly important. And I don't think we, as an industry, are doing it particularly well. I use a term I’ve used for a number of years now – the industry is extremely fragmented where there is, there are very good organizations all trying to do the right thing, but there's no one umbrella overseeing it all. And then we happen to have the issue of funding. We talked about the refiners having not a huge amount of resources to do the auditing and the, shall we say, the Responsible Gold Guidance and all that goes with that. And I can also say that the LBMA is not, you know, an overly wealthy organization. I think the industry needs to come together. The example I would use with something that happened maybe 20 years ago, or 30 years ago, with the diamond industry where they came together over the blood diamond and promoted diamonds and educated people about diamonds. The gold industry needs to do the same. It needs to focus on areas that, where there are definitely weak links – I talk about, you know, countries that will take a lot of these artisanal gold bearing in mind, according to metals focus, artisanal gold is the largest growing by percentage terms, area sector within the gold mining industry. Some 350 tonnes now close to to 15 to 20% of gold supply from the mining side comes from the artisanal world now. And I listened to what Andrew said, you know, it employs, you know, tens or hundreds of times more people and they need that business. And it isn't all bad business, you know, some of it is good. It's good for the communities, it’s good for the society that they operate in. Unfortunately, it does attract the bad actors, but I could go on and on for a long time on this and I just think, you know, the overarching message for me is a fragmented set-up, and we need to come together to work on the issues to basically promote and educate the whole industry across the globe.

Speaker 1:
Thank you, that's really helpful. So, things I'm hearing and takeaways I'm definitely hearing is looking at ways for better collaboration to bring the industry together, more awareness about what we do, what have been our achievements to date. I mean, I'm sometimes astonished by the amount of questions that I get about what I consider to be basic things, but I guess, actually, it’s something in terms of are we communicating well enough about what we're doing. And then, finally, a strong role for education and for supporting some of the smaller peers. I think that's all we have time for today. So, that brings us to the end of our webinar. I'd like to say a big thank you to Ian, Andrew, and Grant for the stimulating discussion and giving up their time to join us today. I think we can all agree that
we've been left with some real food for thought. I’ll certainly – as some of you may have noticed, I’ve been taking notes all along – so, I'll certainly be reflecting on how we can take some of these suggestions forward at LBMA. I'd also like to thank all those who tuned in today to listen. A recording of this webinar will be available on our Virtual Summit site. Meanwhile, please don't hesitate to get in touch with any queries or feedback you have on our Responsible Sourcing Programme. And finally, all that's left for me to say is, please stay safe and we look forward to welcoming you on our next webinar. So, thanks again, everyone. Bye.

Speaker 4:
Thank you.

Speaker 3:
Thank you.

Speaker 2:
Thank you, very much.

Speakers:

• Tayler Birch, Events Coordinator LBMA/Speaker 1
• Neil Harby, Chief Technical Officer, LBMA/Speaker 2
• Jennifer Peyser, Senior Mediator & Director of Ethical Resource Programme, RESOLVE/Speaker 3

Summary:

Neil Harby (CTO, LBMA) and Jennifer Peyser (Senior Mediator and Director of Ethical Resource Program, RESOLVE) discuss the LBMA and OECD’s recent Call to Action, before turning their attention to the importance of ASM to LBMA, why we’re getting involved and what issues are being faced in the current global environment. Neil and Jennifer assess the action already being taken across the industry, such as supporting reliant communities, and the future of ASM. Jennifer presented the findings of the CRAFT Code, published with the Alliance for Responsible Mining, which looks to bridge the gap for ASM workers engaging in formal trade and helps to expand trade between legitimate ASM producers and refiners, banks and other supply chain actors.

Speaker 1:
Good afternoon and welcome to today's webinar for our Virtual Summit series. Today we welcome Jennifer Peyser, Senior Mediator & Director of the Ethical Resource Programme at Resolve, and NeilHarby, Chief Technical Officer at LBMA to discuss the LBMA and OECD’s call to action, the importance of ASM to LBMA, why we're getting involved and what issues are being faced in the current global environment. Neil and Jennifer will assess the action already being taken across the industry, such as supporting reliant communities and looking forward to the future of ASM. Neil is LBMA’s main contact for the Good Delivery System for Goods Delivery refiners and applicants and LBMA committees. His duties range from managing LBMA’s Good Delivery accreditation system including applications, proactive monitoring, proficiency testing and more. Jennifer has over 15 years of experience in designing and leading proactive global multi-stakeholder partnerships and strategies linked to the use of natural resources. She advises industry NGOs and government, and supports collaborative problem solving to address high profile and high stakes sustainability challenges, with an emphasis on responsible supply chains. If you have any questions throughout this webinar, please email them through to ask@lbma.org.uk. So, with that, I hand over to Neil. So, Neil, whenever you're ready.

Speaker 2:
Okay, thanks Tayler and hello Jennifer. Good to see you again. A lot of you watching this webinar will remember that we used to have conferences around the world and we had one – the last one was in Shenzhen – where we really started to raise the profile of ASM with respect to LBMA Responsible Sourcing. And, really, we started that call for action in Shenzhen, and that was obviously long before the coronavirus happened. And, obviously, the landscape has changed quite a lot since then. The LBMA published a report by Ruth Crowell, which is on our website at the moment, really to sort of highlight this call for action in the current environment and just to reiterate – just to extract a couple of key points from that report – is that 83% of the world's mining workforce relies on artisanal and small-scale mines for their livelihood. That comes up to roughly 40 and a half million people. These people were vulnerable before COVID-19 and even more so now. As gold prices rise, so does exploitation and violence for these miners. We're calling on industry, government and civil society to urgently work together to support and protect these vulnerable communities. Now, the LBMA has been involved in a number of initiatives in the ASM space. Everything from the RAGS Forum all the way through to helping to develop the CRAFT Code, to assist with the responsible production of ASM gold. We've been involved in country initiatives, like helping Ghana try and sort out its industry with a company called (inaudible) but really, the LBMA is keen to get involved where it can, in any initiative which sort of helps the ASM sector.

Now the purpose of this webinar, when we first started talking about it, was really to get some of the key players talking openly to our membership, to keep them informed and to help them understand what we're trying to do. What became very clear very quickly is that there's an awful lot of people doing an awful lot of good work in this space, and it wouldn't have done justice to have a large number of people on this webinar really, sort of, trying to get their message across in the short time that we have, so that's why we've asked Jennifer Peyser to really, sort of, share with us her experiences of what she's been up to over the last while because, I think, she's been involved in a lot of these initiatives either personally, or her organization. But, certainly, she knows a lot of people who are doing a lot of good work out there, so what I'd like to do is hand over to Jennifer and maybe you can share with us what is going on out there. But before we do that, this graph puts things in perspective. If you look at the amount of ASM gold that's being produced – which is the big orange thingy – compared to the amount of gold from ASM sources, that actually is going through GDL refiners, it is a small percentage and we see there's a huge opportunity pre-COVID, during-COVID and post-COVID. So, Jennifer, over to you.

Speaker 3:
Thanks, Neil. So, you're right. There have been many discussions, you know, lots of really good work for some time on thinking about responsible sourcing of artisanal gold and supporting responsible production and improving the sector. The COVID pandemic has really heightened some of these conversations and given them even another level of urgency. And so there have been a lot of convenings lately, to think through, ‘What now?’ Before I jump into exactly, you know, all the different initiatives or quick overview of those at least. I do want to say that we do know a lot. We have done a lot of tests, had some good successes, as well as having learned from some failures.
And, so, in a couple of slides here, I want to share what did we learn about the challenges and, therefore, what we are trying to solve for, and thinking about a way forward. So, from an upstream perspective – especially, we typically think of the miners or the cooperative at the mine site level, the artisanal producers but also in thinking about the rest of that upstream chain, whether the traders within the country, sometimes even smelting or refining to a point in the country, and certainly the exporters – things that we know need to be addressed. Really a big piece of that puzzle is that we know that the gold will always have a buyer. So, it's not that there isn't a market for their artisanal gold but we really want to make the preferred market and more pathways to get to the formal and responsible buyers, for example, the Good Delivery supply chains. To do that, we need to create incentives and a business case for a lot of those actors, which are now in informal chains, not necessarily illicit and with bad actors, but certainly some of that, and a lot of informality. We want to provide pathways, and again, incentives, to come into formal markets and some of those pieces of that puzzle include pricing, including legal taxes as informal sellers and buyers don't pay those.

Thinking about how to finance or, you know, pre-buy or pre-finance the gold, try to increase production and do it in an environmentally sensitive and responsible way but just getting more gold out of the ore the miners are working with. Establishing longer term commercial relationships rather than sort of one-offs and then, and really just thinking with this frame of supporting local benefits to inclusive and resilient development. So, what can we do, for example, in this time of crisis that could weather the storm? Or a next wave of COVID or the next pandemic or crisis that comes along within the supply chain relationship? So, really, we're talking about enabling formalization, capacity building, professionalization of the artisanal sector, and also even thinking about the details of logistics and services at the scale of ASM. On the upstream side – next slide, please – and the midstream, there are a number of different challenges. Thinking about, ‘How do we identify sites that are viable, that again might be informal, but that could come into formality, and that don't have illicit actors and that the risk can be mitigated?’ So, finding those viable sites. Being able to just conduct those initial due diligence and the ongoing site visits that are required for high-risk sourcing. Know your counterparty and the ongoing monitoring at the site and at the supply chains. Obviously, refiners, for example, not many have, you know, regional offices or people on the ground, and so, how can we address that in order to support due diligence? You know, really, a primary need is to be able to maintain a programme or certification status again, such as with LBMA, Responsible Jewellery Council, Responsible Minerals Assurance Programme and just the many different other kind of legal requirements, and the risk committee requirements, internally, that companies have whether anti-money laundering, a CPA, et cetera, all of those things which need an ASM, just like in any other business relationship to be sorted.

And then, really, there's a whole element around costs and financing, so because of the scale of ASM and typical production, every, sort of, unit of due diligence, of logistics and of that work, becomes more expensive, and there's a real cost asymmetry compared to the industrial market – let alone the need to interact with finance institutions and explain what it means to source from a higher risk country and to have those business interactions and transactions. And again, thinking about being able to establish these resilient supply chains that aren’t cut off in the case of emergency, but have a longer-term view. So, knowing all those things and looking at – again, just the
picture of what we know – one refiner in our Responsible Artisanal Gold Solutions Forum on the next slide, I think he summed it up well when he said, “Our lifeblood is our ability to access capital from major financial institutions and participation in the metal exchanges and to that end, our team has been very cautious managing risk so as to not affect those foundations.” So, whatever is done in ASM, and however supportively, it still needs to meet those needs. So, you know, in summary, what does all that mean to me? Next slide, please. What do we need to solve for? We need a progressive due diligence, and progressive and collaborative due diligence, economies of scale for ASM sourcing, upstream and downstream system work at that frontier where they come together – so due diligence can be done on both sides – and cost and benefit sharing between upstream and downstream or upstream and midstream.

Speaker 2:
Okay, yeah, thank you, Jennifer. And thank you for, sort of, highlighting the risks that are involved, certainly with the refineries – obviously, with the Good Delivery List – we work quite closely with. And some of them, it is too risky, some of them are saying, “Yes, we know it's risky, but we're prepared to take the risk.” But we have to understand that the risk-reward ratio is something that determines whether refineries can take ASM material, and there are some people who are prepared to do it and some people that aren't. So, there are some challenges from a risk point of view, but also from a practical point of view – you touched upon industrial versus ASM. So, there's economies of scale here. There's also the size of the batch. Is it commercially viable to be doing little bits of gold here and there? And we have to look at solutions so that it becomes a commercially sustainable source of gold for the refineries. Okay, so that establishes where we are and the layout of the land, but obviously we have to look to the future. We have to look at, ‘What we are going to do now? What does the future look like?’ And hopefully you can, sort of, give some – shed some light on what the future for ASM looks like.

Speaker 3:
Well, I'll try, and I always like to consider the start of the discussion and invite others to join in as well and get in touch. But, fortunately, we do have things to build on and learn from, and there are things in the works. And, you know, there’s also – I think we're able to design solutions at this point. So, first, thinking about what's already going on, existing tools and emerging solutions? There are country specific projects. There are a number of global or regional programmes. There are due diligence specific programmes and tools that have been developed, even particularly developed for the ASM responsible buyer interface and also there's been a suite of work and discussion around
pandemic response and recovery. And again, just as noted in LBMA’s – in Ruth's notes – that was published and as well as in the OECD call to action, there's been, again, a heightened sense of how can we think about a kind of a restart or re-engagement with the artisanal sector as borders and travel restrictions are addressed over time? How can we use this as an opportunity for a responsible restart and even a scaling of the sector? So with these categories, I put together a list which I was really hesitant to do, but on the next slide, I just – at least – want to give a sense of the kinds of some of the initiatives underway, more to give a sense of the action and momentum necessarily
than meaning to being able to enumerate all of them. So, as I said, this is a partial list. So, apologies to any – I know that wouldn’t fit on a single slide or wouldn't be legible at least. But, you know, represented here. Again, we have work that's led by aggregators and, you know, traders and exporters within a higher risk country. We have work led by a Women Miners Association in Zimbabwe, in Africa. We have public-private partnerships that are supporting work. We have actual, sort of, buying clubs, if you will, with the Better Gold Initiative and Swiss Better Gold Association. We have certification systems that are set up, you know, particularly for ASM, and to assess those risks, and to support progress and improve performance of artisanal miners. And we have a number of donor funds that are about – but you use those words-commercially viable – that is one project, particularly in the Congo. The USAID Commercially Viable Conflict Free Gold programme as just one example of many donor programs that are underway. So, there's a lot there, and that's great. There's a lot to build on. And I think, at the same time, sometimes because of this busy space, it can be challenging for downstream actors, for buyers to know exactly what are some of those points of entry?

So, I would also want to point out – in that vein though – I think, because so much has gone on, we have been able to distil some of the lessons from across these. So, on the next slide, we have just, again, a partial list, but a list of some of the tools and templates that folks can go to – to look at – if you're interested in responsible sourcing of artisanal gold. Or, if you're actually looking at a particular supply chain, how do know? How do you make that assessment? How do you do the risk assessment and mitigation? What are the best practices? And so just a couple I've listed here are the Artisanal Gold Due Diligence Template from the Responsible Artisanal Gold Solutions Forum which LBMA helped create and also adapted on your own site and which is part of your LBMA Refiners Toolkit, which I’d encourage folks to look at. There's also from the OECD. Obviously, the OECD’s guidance stands above everything, but there's a particular publication, a frequently asked
questions document, which is quite helpful. And then also we have the CRAFT Code which was designed really as a due diligence code of sorts to interpret OECD for artisanal miners, and to give a real framework for the risk assessment, as well as for risk mitigation and progressive due diligence, which is so important in really being able to scale up with enhanced engagement with downstream responsible buyers. So, I think just again, sort of, in – I think – summary, to say what we need and what we want to achieve on the next slide. We have said we need progressive due diligence, upstream-downstream linkages, economies of scale, costs, and benefit sharing. And to do that I would posit we need collective and collaborative supply chain and stakeholder action rather than individual companies or miners working together. We need that broader look. We need an ability to go beyond site-by-site pilot projects to get to scale. We need those concrete linkages between mid and downstream and upstream due diligence systems. So, really thinking about how those puzzle pieces can technically fit together with audits, for example, and to that point engagement of banks and auditors who are also often – they are always in the background. They're always supportive. They are always part of these supply chains but aren't necessarily engaged. And also thinking about how we integrate the miner incentive.

So, on the next slide, Neil already reviewed a bit – some of the calls to action. I just want to call out in particular from OECD as well. Those calls to foster sustainable inclusion of responsible ASM projects into global supply chains and ensuring the right balance of maintaining integrity and flexibility in due diligence efforts. So again, I think there we really hear that need for, if we're going to
think about ASM as a pathway for economic development and resiliency post-COVID, as well as just the interest in de-risking supply chains. Not de-risking by keeping ASM out, but de-risking by mitigating the risks in the artisanal sector. I think these are really important themes and principles to bring into play. And I also want to offer just a particular tool to help with that, which is The CRAFT Code which I mentioned briefly earlier. But if we are going to have collective action, if we are going to have work across multiple sites and supply chains, we can't have, sort of, one-off solutions. So, on the next slide, just offering again some of the ways that that CRAFT can contribute. It is designed with OECD Annex II risks in mind, with a first level pass-fail for the serious abuses.

So, no question, certain activities – certain risks – cannot be part of any responsible supply chain. So, pass-fail on those serious abuses. But there's also a way to get to ‘yes’ on artisanal sourcing and commercial relationships which is really important. And not getting to ‘yes’ looks like risk mitigation and a real progressive improvement framework which is determined, in concert – between the buyer and the miners to meet their mutual interest and need. What does the cooperative want to achieve in terms of their performance? What's worth it for them and what does the buyer need in order to pass all their internal systems and maintain their programme status? So, again, so CRAFT – I think – provides the framework for that. It was created as a multi-stakeholder tool through engagement and vetting. Neil, as you mentioned, LBMA was involved as part of the advisory group – and the technical committee – along with other due diligence systems, artisanal miners and other stakeholders and downstream users.

So, it's also an open source code, which means that it's, you know, open and adaptable and applicable for anyone to use. It's applicable to any geography, and any mineral, and really it’s just – think of it as an upstream due diligence tool that can concretely link downstream systems like delivery, or Responsible Gold Guidance, RJC, RMAP, et cetera, to enable this clarity and progressive due diligence. I think it provides, sort of, a language and an architecture to do that. That's really important, and really it's that common vetted framework that everyone can call upon to implement, not just that the practices that we know so well from OECD and the traceability systems and all those things, but what are the principles that we're trying to achieve in responsible sourcing from high-risk and conflict affected areas? And, I think, CRAFT provides a code in a way forward on that. So, with all that said, as a bit of a proposal and to put that out there in the spirit of collaboration and having an open door for discussion and collective action – on the next slide – this is a concept RESOLVE has been considering and would love to engage with supply chain actors and other stakeholders on. So, thinking about, again, these key elements of scale and progressive due diligence. So, thinking at a global level, how can we have, sort of, a ‘Progressive Due Diligence Lab’, if you will, to really test out this frontier of upstream-downstream and what progressive due diligence can look like and thinking about, ‘What do we need to do to move the needle and really shift the perspective to progressive due diligence?’ Rather than what has been, in many cases, just an inability to say yes to the sourcing or to get over those hurdles of due diligence and risk mitigation. With that we need more work to develop some concrete tools and link to artisanal gold. So, we have a great basis for tools to start with, but we even need more, I think, technical support. How do we get audit friendly craft reports, for example, that make it much easier for an LBMA member or even an auditor, a GDL refiner, to make this happen and really troubleshoot some of those sourcing and due diligence bottlenecks as they come up? While at the same time, having a regional and multi-site implementation of due diligence with a business plan, a technical plan with miner and upstream incentives and capacity support built in and, sort of, CRAFT underpinning all this as again, that common language in gold – in framework – for due diligence and the upstream-downstream linkages. So, that's my proposal to put out there and something that we are working on and have been talking to a number of partners on and look forward to moving that forward as one way to pull all these pieces together.

Speaker 2:
Okay, fantastic. Thank you very much for that, Jennifer. So, I'd just like to reiterate the LBMA’s position is that we all always support – where it can – initiatives that ensure that responsibly sourced ASM gold enters the legitimate supply chains. And if there are challenges – if there are bottlenecks – we will investigate solutions. We will look at novel solutions. And Jennifer just mentioned the auditor's here. One of the things we're contemplating at the moment, and this is just a very high-level, is how do you do a virtual audit? And if the auditors can’t get to the site, or you can't do site visits in the current climate, how… there are people on site who can provide information that we would – in these circumstances – we are prepared to entertain. We are prepared to look for novel solutions in the current climate. And, certainly, what you're proposing, this sort of – the lab, as you like – it's a long time since I've been in a lab, but I'd be happy to be there again. If we can support it, if we have the capacity, we will support it. So, thank you for that. I would just like, just in conclusion is that a lot has been said, now. There's been a lot of acronyms. There's a lot of initiatives, but it's because we really want to come up with solutions and even allowing for all the risks that there are. The fact that ASM gold output accounts for roughly about a third of global noncaptive gold production, we've got to do something. We've got to come up with a solution to enable it to enter the legitimate supply chains. So, we’re really – the people on the call and people who will listen to this or watch this webinar in the future, it is being recorded, we hope that we can get together and we can come up with those solutions that are sustainable and viable. So, with that, I would like to finish now, Tayler.

Speaker 1:
Wonderful. Well, thank you, Neil, and thank you, Jennifer. It's really great to find out everything that's going on with ASM now and into the future. I'm going to finish up the webinar. If anybody has any outstanding questions that they've accrued throughout this webinar, please email them in to ask@lbma.org.uk and we will endeavour to answer you promptly. Once again, we thank you for your time and trust that you have a lovely afternoon. So, thank you.

Speaker 2:
Thank you.

Speakers:

• Tayler Birch, Events Coordinator, LBMA/Speaker 1
• Neil Harby, Chief Technical Officer, LBMA/Speaker 2
• Monica Rubiolo, Head Trade Promotion, Swiss State Secretariat Economic Affairs SECO/Speaker 3
• Diana Culillas, Secretary General, Swiss Better Gold Association/Speaker 4
• Jose Ramon Camino, General Counsel, Metalor Technologies SA/Speaker 5

Summary:

As part of our Virtual Summit Series, Neil Harby (CTO, LBMA), Diana Culillas (Secretary General, SBGA), Jose Ramon Camino (General Counsel, Metalor Technologies SA) and Monica Rubiolo (Head Trade Promotion, SECO) look at the complexities and challenges of artisanal and small-scale mining, explore the effective initiatives currently taking place, and reflect on the key factors necessary for cooperation across the supply chain.

Speaker 1:

Good afternoon, welcome to another LBMA webinar. As part of our Virtual Summit series, we have a panel who will be discussing both Switzerland’s Public and Private Support for ASM, focusing on complexities and challenges, exploring the effective initiatives currently taking place and reflecting on the key factors necessary for cooperation across the supply chain. We will hear from Monica Rubiolo, Head of Trade Promotion at the Swiss State Secretariat for Economic Affairs, SECO. Monica leads SECO’s efforts to foster trade in developing countries that is socially responsible, environmentally friendly, inclusive and sustainable. This includes supporting framework conditions for sustainable trade, enhancing international competitiveness and market access of SMEs and producers alike and, also, strengthening a resource efficient private sector in partner countries. We will also hear from Diana Culillas, Secretary General at Swiss Better Gold Association. Diana leads the SBGA, a pioneering network of industry, finance and service providers representing the Swiss Gold Industry, which supports sustainable development of artisanal small-scale miners and establishes responsible gold value chains from these operations to the end market. And, finally, we will hear from Jose Ramon Camino, General Counsel at Metalor Technologies SA. Jose has been working as a lawyer at the Swiss multinational companies since 2014 and has since become a member of its Executive Committee. He is responsible for the legal, compliance and communications affairs for the Metalor group. If you have any questions throughout this webinar, please feel free to write them into the questions tab on the side panel – or along the bottom of your screen, if you're using a mobile device – and our panellists will try to answer these at the end, should there be time. However, for now, I shall hand over to Neil Harby to open up the discussion.

Speaker 2:

Okay, thank you, Tayler. And, again, thank you Jose and Diana for joining us today. Unfortunately, Monica from SECO couldn't join us today, but we had a discussion about this webinar and we thought, even though Monica couldn't be here, I think the message that we're trying to get across here, was such an important – and it's such an important time to be spreading this message that, in terms of ASM and in terms of the LBMA and responsible sourcing and making sure that ASM gets into the responsible supply chains, this message that we're trying to get across today is that, it is important that we support ASM, responsible ASM, but it's also important to highlight initiatives that are working, and I think there's no better example of that than what SECO and the SBGA are doing here. So, that's why the LBMA is really happy to be hosting this webinar today, and I really look forward to hearing what the panellists have to say. But, like I said, Monica unfortunately can't be with us today, but she's kindly put together a short video, which really sets out where SECO is on this particular project. So, with that, Tayler, if you could start Monica's video.

Speaker 3:

Good afternoon ladies and gentlemen. My name is Monica Rubiolo, I’m the Head of Trade Promotion with the Swiss State Secretariat for Economic Affairs. It's a pleasure for me to be here and to contribute to this webinar of LBMA. Let me first thank the LBMA for this opportunity to share with you some of our experiences with artisanal small-scale mining. And let me start by saying that we absolutely support the OECD and LBMA call for action to work together and protect artisanal and small-scale mining, which is really a sector heavily under pressure through the impact of the pandemic. We know there are 40 million – more than 40 million people affected by this, and people that were already part of a very vulnerable group. In my contribution today, I will try to explain how Switzerland supports artisanal and small-scale mining. What is our role in this specific sector? And at the same time, explain you some of the features of the initiative. We are supporting a specific public-private partnership called Better Gold Initiative. The part of my presentation will cover this ‘first P’ – so, the public part – and will explain how we collaborate together with the private sector. They will be contributing later on, explaining the other P in this partnership.

There are several reasons for Switzerland’s engagement in Global Commodity Trading. And you know that this is a sector of particular importance for Switzerland, among other things, because of historical reasons. So, it’s a country with a long tradition in commodity trading and. in particular. in gold trading. But with this role at the international level there are also responsibilities that come along, in terms of things like human rights, environmental protection and also tackling corruption, which can be associated with a phenomena of the resource cause, as it is widely known. for extractive producing countries. So, because of these reasons, the Swiss Federal Council started to publish regularly, a commodity report which is trying to provide several recommendations to address the problems and the challenges in these sectors, and this is around five specific topics and issues. First of all, transparency: providing a number of measures in order to increase transparency and facilitate transparency. The second point is enhancing competitiveness, because we know that for artisanal and small-scale miners to be able to compete in global terms, competitiveness needs to be available. Supporting also innovation, the third pillar of the recommendations in order to face the opportunities that new technologies provide to facilitate transparency and traceability. Of course, at the same time, enhancing the overall sustainability which is the fourth pillar of the recommendations in the long-term of the whole value chain and as the first important pillar: supporting dialogue. Dialogue with the different stakeholders that contribute and participate in this
value chain. So, for all these reasons, artisanal and small-scale mining is a particular priority for the Swiss Development Corporation, and we try to support the sector through several bilateral and multilateral interventions. I will be explaining later, more in detail one of these bilateral interventions, Better Gold Initiative, but let me just give another example. Also, at the multilateral level, we cooperate with some of the developing banks in order to support the sectors and one very specific initiative which is currently contributing in a significant manner to tackle the impact of the pandemic is a multi-donor trust fund called EGPS – Extractive Global Problematic Support – which is implemented by the World Bank and has developed a particular window to support ASM in the aftermath of the pandemic.

SECO has launched some years ago, the Better Gold Initiative for artisanal and small-scale mining. As I said, this is an initiative implemented together with the Swiss Better Gold Association, and therefore a public-private partnership for supporting the sustainable development of the gold value chain in three countries where the initiative works: Peru, Columbia and Bolivia. The initiative is organized through three components. The first one, providing technical assistance and support to specific mining operations, which have the potential to improve the performance in terms of technical, organizational, social environmental aspects, and by advising them towards certification, working very closely together with the three main certification systems: for trade, for mine and the responsible jewellery council certification. The second component provides support to the local counterparts, to policy makers and organize the policy dialogue, in order to ensure the alignment of the initiative with specific national policies for formalization and legalization of the artisanal and small-scale sector. And the third component is the real link to the private sector in Switzerland, is channelling the demand for artisanal and small-scale mining from stakeholders in Switzerland, from these three countries. The BGI is a very special novelty, from pioneer, initiative because it combines these three components in two dimensions. It's not a purely developmental project and it's not a purely marketbased project but it is combining these two aspects, in our view, in a very responsible way. So, we are very glad to see what the results of these partnerships are, and throughout the years we have been able to export 5,000kgs of gold produced by ASM miners under good conditions, under sustainable gold production conditions. This initiative has been benefiting 5,000 miners in a direct form but because of all the families that are involved and other providers, we calculate there are 25,000 indirect beneficiaries from this initiative, which is quite a good result. And more than that, what we have seen is that participant miners have proven to be resilient even during the pandemic. We have been very fast in reacting to the pandemic in providing the support to the miners when they were requesting that, and also to the governments and partners in these three countries. And BGI was able to provide very timely support, be it in the form of food packages or in supporting the implementation of biosecurity protocols and hygiene measures in the three countries and it has been very good to see that the miners participating have stayed with the initiative, while in other countries we have seen that the value chains were completely disrupted. The miners participating in BGI have stayed with this initiative and have been very grateful for the support so this is really showing that when you accompany the stakeholders throughout the chain journeys – which may be difficult as the current pandemic. It is possible to preserve the value chains and to continue the work that is of course not completely done, but we are very hopeful for the future and we think that the initiative can continue to provide support to ASM in the future.

Speaker 2:
Okay. If, obviously, if Monica was on this call now, I would be thanking her for her contribution, but I'll make sure that she does realize how much we appreciate her contribution. I think it’s a very good introduction to what the next two speakers are going to talk about, but also there's some words that she uses, which are after my own heart, words like transparency and sustainability. And I think that's very important and this is something I've been saying for a long time. Something the LBMA supports is initiatives that are sustainable. And I think that's a key point here: sustainable. Not just during the good times, but sustainable during the difficult times. Our next contributor/speaker/panellist is Diana from the Swiss Better Gold Association. And Diana is going to give a short presentation on really the actual work that the Better Gold Initiative is doing. So, if I could hand over to Diana.

Speaker 1:
Perhaps we could hand over to Jose just in the interim while we're waiting for Diana to amend her audio and visual, if that would be okay Neil?

Speaker 4:
I think I'm back on the line. Can you hear me?

Speaker 2:
Okay. Yeah. Thank you, Tayler. Yes. Diana, I can hear you. So welcome.

Speaker 4:
Okay. Thank you. That’s a live event, what we call it, you know, in the action of it. So, thank you very much for hosting us today. Diana Culillas, Swiss Better Gold Association, just I maybe wanted to go through a few slides regarding our association. It's a very small association, so I think it's worth introducing it a little bit. Tayler, next slide please. Oh, I think we lost everyone. Neil, you’re back?

Speaker 2:
Alright. I think you can proceed. The people are still watching.

Speaker 4:
Okay. Okay. So, okay. Yes. The Swiss Better Gold Association, which has been created by the private businesses in Switzerland active in the gold supply chain. So those industry players who source, produce, refine, manufacture and manipulate the gold. It has been created in 2013 as just, Monica mentioned, in an intent to support artisanal miners in improving their working practices and enabling them to establish commercial routes to Switzerland, to channel this responsibly produced gold to the members of the association. We work in a cooperation with SECO, indeed on the publicprivate partnership. Here, we represent the second P of the PPP. And, so, we are working now in three countries: Peru, Colombia and Bolivia. Next slide, please. Okay. Thank you. We work on a continuous improvement approach. We have developed an escalator model because we think that artisanal mining needs continuous support to reach certain criteria. But we, the private sector, we can say eligible responsible criteria. So, it goes through a continuous process of accompanying the miners through this continuous improvement escalator as we call. So they receive the technical assistance of the Better Gold Initiative on the ground, so this is very practical, very local approaches and there is a process of a maximum of 24 months through which the mining operations climb on
the escalator until becoming eligible Swiss Better Gold suppliers or having an optional third step of the escalator, which are the certifications, fair trade for mine, RJC, that also Monica mentioned. Through the escalator, what we wanted to do is not only accompany the miners on a continuous way, but also offer these miners specific incentives at each stage of the escalator, so that there is some interest – continued interest – in remaining within the system and continuing climbing the escalators. So, there are different motivating factors at every stage. And, so, this is how we try to build this being very practical, very pragmatic. Next slide, please.

Another element, which is very interesting, of the Better Gold Initiative, our approach is that we developed an incentive – system of incentives – but we really want it to be a self-sustainable system. So, every gram of gold sold through the system generates $1 per sold gram, and that dollar is reinvested into the whole setting. So, there's 70% which go for the producing mine, in for specifically social and environmental projects, 15% go for the technical assistance of those mines who are yet on the early stage of the escalator, and they still need the technical assistance to be eligible Better Gold producers. And there is also another 15% which go for the SBGA cost, but also for the verification cost, so that is really a fully self-sustainable, as in the watchmaking industry, one would say, a self-winding mechanism. Now, next slide please. So, why – maybe, a very few words. Maybe the next one? Very few words, why artisanal small-scale mining? Why private businesses are interested in sourcing artisanal gold? Why is it becoming so important that we see creation of initiatives like the Swiss Better Gold Association happening is because maybe few things that we all know, but nevertheless, that artisanal gold represents 20% of the world gold, and we can’t ignore. It’s a lot. It's almost a quarter of the world’s gold. It employs 80% of its workforce in the mining, so it is forty million people and we can't ignore that. Also, there is more and more – private businesses are more and more questioned on GRC that governs risk and compliance. What kind of policies, what kinds of strategies they have in that respect? What kind of corporate social responsibility policies they have? And that is something that matures a little bit also in the private businesses and also the PPP, but this time with the people, profit and planet. So, again, private businesses are more and more conscious about the ASM sector and they really want to make their contribution into that sector. Next slide, please.

So, now coming to maybe more specific the question of the COVID. So, I think when we speak about artisanal small-scale mining, very often we forget that these are typical, small and medium enterprises, and the problems that this sector has, it is very specific to this sector. It is a very fragile, light management structure. They have difficulties in securing finance. They have to maintain the profitability within very small margins, and they also need to maintain the key staff. So these are, across any industry, these are the typical problems that small and medium enterprises face – and ASM is in that scenario. So, and now during the COVID, additionally, to these problems, typical problems, we saw also a lot of problems specific to the pandemic, so they have to deal with the sanitary situation. We had to approve or implement newer security protocols, the productions declined and, well, it is already difficult for them to maintain the profitability but with decreased production and processing volumes, it is yet more critical for them. Transportation, logistics, well, I think we all know how difficult it was and it is still during this period to export, transport gold, et cetera. So, it was very challenging. Of course, we had to review all the agendas for maintaining the due diligence on site visits, certification, all sorts of agendas. Everything has been completely changed. And of course, we also saw the demand fluctuation. So, under this situation, for us, the main challenge and the main priority was to maintain all the supply chains operational. So, to really – to act in a way that we maintain this and, there is no drop-off. Next slide, please. So, thank you. So, in order to maintain this, in order to achieve that goal, to preserve the supply chains, we have developed very short, very quickly – after the beginning of the pandemia – short-term and long-term actions where we analyse the supply chains, we analyse the needs of these producers, and we’ve been able to respond to these specific needs. So, in certain circumstances, it was about food parcels. In other circumstances, it was about security protocols and their implementation. It could be also like we did in Colombia, the payment of salaries and social contribution for the workers. So, to preserve the know-how, and the day the operations are back to normal, that they can still count with their workforce. And we also learned how to deliver our technical assistance – the BGI on the ground – through remote coaching and remote health and safety training, protocols, and admin support. So, it worked, for example, in Peru, mining operations were able to apply for certain subsidies from the government, but they needed help to even, to fill in those demands. So, the BGI team on the ground was really helping them to go through this difficult time. Next slide, please.

And then also of course, we have to mention the more longer-term actions, medium- and long-term actions that we also had to think of. And maybe sometimes we adjust, again with aim of maintaining of the supply chains. So, we of course continue the dialogue with our producers, so to understand exactly what they really needed and support them for this appropriate – with appropriate action. It was, many meetings were maintained virtually of course. I think we all learned a lot of that. So, we also did virtual trainings so that – to avoid the operations drop off the system, we maintain those which are in the process of the continuous improvement escalator, all the trainings that could be delivered virtually through online trainings. We did all that. So, of course, the field activities have been suspended, but at least that activity is running, and we maintain the dialogue with the miners. So, we continued working on establishing the commercial routes. So, all the discussions with the traders, refiners, the operations, logistic companies, all of that, we really maintain that – all the time open. And, so, in the first weeks, maybe the logistics were hectic and difficult, but even in those difficult circumstances, we managed to fully defy this and to really establish very regular exports. And, so, through that, I mean, we really, from our side as the private sector, really managed to confirm our support to the sector, so the we're really, we are engaged with them and we work with them through the period. I think that is more or less all from my side. Neil, back to you.

Speaker 2:
Okay. Thank you, Diana. At the risk of repeating myself – I'm sorry, you repeating yourself – in this, in the current climate, there are lots of initiatives out there trying to help ASM. What would be the key factors in the SBGA’s initiative, which has made it successful where others are currently struggling?

Speaker 4:
Oh, I think I would maybe identify two key factors. One issue, which is the proximity. So, the BGI team in the three countries is – the teams are on the ground and they really assess the needs very specifically to each operation. What is being needed. So, I mean, the fact that this proximity exists that’s, I think, that's a very important element. And the second element, I think, the solidarity and the engagement that the private businesses showed through the pandemic that we do not drop. I mean, there are difficulties but we will face this together and this fact together, that we are together, I think that is a very important element that we can see from the feedback with the miners we have,
that that is something that they really appreciate because they are not just producers anymore. They are part of the supply chain. They are suppliers. And that means a relationship, and that this relationship has not been suspended. It is there to stay.

Speaker 2:
Okay. Excellent. Now that's really good to hear. And it's going to sound like we've rehearsed this because that neatly leads – segues – into our next speaker: Jose at Metalor. Because I noticed on one of your slides, all of the Swiss LBMA GDL refineries are part of this project, and that's really good to see,

Speaker 4:
Yeah, we are very proud of it.

Speaker 2:
But what I would like to hear from Jose of Metalor is why are you involved in the Swiss Better Gold Initiative? You’re on mute Jose.

Speaker 5:
Okay, now I'm back. So, actually we have been a founding member of BGI since 2013, I mean, we have been already working in the past and actually it has been, actually as you know, back in 2019 we took a decision which was a very hard decision on our side. Yes, to simply to withdraw from artisanal mines at that point in time, even though we have been working now for more than 20 years in Latin America – in particular, in artisanal – in Peru, in Columbia, in other countries, but we came to the conclusion that because of the complexity of the supply chain, because of the need of ongoing and additional resources it has to control the tedious process and the supply chain, and also the challenging conditions of the countries and the SEM in particular. So at the end of the day this led us to reassess our approach and we said look, under these conditions, we cannot really continue anymore because this is something that we cannot do it alone as we used to do it simply because again, I mean, the complexity was very high and actually we, as a refiner, I mean, we cannot do everything. So we decided at that point in time just to leave nevertheless, a door open, and we said, look, if the conditions are in place and we are talking about a concerted action not only on the side of Metalor, but also with NGO associations and other institutions, including institutions at the local level that has given us the guarantee and the comfort to walk into whether we can engage again into this kind of business with artisanal mining. And, actually, since we did the announcement back in 2019, we started to work and look for projects. I mean, we approached again BGI and we came to the conclusion that yes, I mean, there was a potential project at the point in time which is Yanaquihua. We have been working, been on site – understanding much better what BGI is actually doing. And for us one of the great benefits is that they do have the expertise, which is not a given with any other NGO, let’s put it this way. They have the resources, they have teams on the ground, so and – based on that, and our assessment and our presence and our review of the situation, I mean, we came to the conclusion that, yes, this is something that is possible to do it. Maybe can be a challenge, but it's possible doing under the Metalor standards of course and the fact that SECO, our Department of Economy of the Swiss Government is behind this is providing us an extra layer in terms of comfort, so we decided yes to move ahead with this project. Actually, I mean, this is a business even though business wise, it's marginal, but we do it because even volumes are still modest. I mean, we believe it's the right thing to do for Metalor. I think your phone, your sound is disconnected Neil, I can hardly hear you.

Speaker 2:
Yeah, I have to be unmuted. Okay. No, no, thank you for that. But there are quite a lot of questions coming in, so if you will indulge me, we've got a couple of questions that I think would really sort of add to the discussion. So, the first one would be to Diana, is that why South America? Why aren't we looking at Africa and Asia?

Speaker 4:
Well, when we started the initiative in 2013, we started in Peru because it is one of the major producing countries. Second, where the artisanal small-scale mining the presence or the sector is, is very important. So, we started the initiative there. Then on the second phase of the initiative, we decided to extend to Columbia and Bolivia again, for the same reasons: producing countries, ASM sector. And so, and now we are consolidating within these three countries and well, who knows maybe the next move will be Africa or Asia or who knows. I mean, I think there are so many things to fix, so why not?

Speaker 2:
Okay, very good. And the other thing that, sorry, one other question, which is also something very close to what I've been following over the last few years is, you've got the $1 per gram, who's paying that? Is that coming out of the price of the gold, or is it a premium that the refiner’s paying? Who is paying the one dollar?

Speaker 4:
The $1 per gram, very good question, thank you. So, the $1 per gram is paid by the private companies who buy this gold. The Better Gold Initiative is a B2B initiative, so our clients are the members of the Swiss Better Gold Association. So, these are companies, you have seen the slides, so we have different watch, jewellery, brands, we have financial institutions, refiners. So, the premium is paid by the end client, meaning these companies in these brands. And, so, this is really the money that the private business is generating to support artisanal small-scale mining.

Speaker 2:
Okay, thank you Diana. And Jose, would you like to comment on that?

Speaker 5:
It may be, I think, what is the added value? The added value is that with this kind of project actually, and the added value for the customer, for the end customer is on one side. I mean, they do have what we may call a responsible ethical gold. I mean, this is number one, which is very important but, in addition, I think that the other important component is with this scheme and engaging this scheme. I mean, they are able yes, to make an impact and to improve the working conditions of the miners on site. So, at the end of the day, the combination of these two elements, I think is what is really making attractive, this for customers. And actually, I can tell you, I mean, we are seeing already a demand for that. I mean, there are some companies approaching us – and approaching BGI as well – seeking additional information, trying to understand better what is the scheme? What are the benefits? And the feedback we're getting so far is very positive, so this is encouraging us, yes, to continue to work on this basis.

Speaker 2:
Okay. So as a refiner it is sustainable over commercial?

Speaker 5:
Absolutely. Absolutely.

Speaker 2:
Okay. That's good to hear. Again, Jose, if we could stay with you again, I know we haven't got much time left, but there's some great questions coming through and I think that that's a good reflection on the panellists. Who has the enforcement powers to keep noncompliant gold from being greenwashed through your supply chains? And that's their words, not mine.

Speaker 3:
If I may take that question. So, the team, the BGI team is on the ground, and we do a very valued work of accompanying the miners through the escalator, as just shown. So, there is a relationship. There is a continuous – they know the operation and the operation evolves through the system together through these different stages. So, when the operation becomes eligible, a supplier of better gold, it's not as a surprise. So, it's an operation that we have accompanied for a while, so we know the source, you know. So, and then for the verification part, we think that it's very important that there is a verification, that this source is indeed eligible, and that is through a network of independent verifiers. So, the BGI has the role to groom these operations, let's say, and say, okay, well, we bring it to this level and then there is an independent verification saying’ Yes, indeed, it is compliant with the expectations set.’ Yeah.

Speaker 2:
And that obviously meets the requirements of Metalor’s due diligence processes?

Speaker 5:
Yes, yes. Indeed, this is the case. And in addition, I think, something that is important, and is a little bit different of this project versus the other projects. Here, we're talking about artisanal miners, you are talking about minerals, you're not really talking about gold doré, so, actually what Yanaquihua was doing is getting the mineral from the different artisanal miners, which are really working in their concession. By the way, transportation and control is made by Yanaquihua. So, this is something that is not done by the miners. So, actually, I mean, they know exactly from where a mineral is coming. I mean, this is going to the processing plant of Yanaquihua, being refined into gold doré. And at the end of the day shipped to us and being part of the BGI scheme. So, at the end of the day, I think is, there have – we verify the process, it is a strong one. I mean, as Diana was mentioning, the role of BGI is to supervise, monitor, accompany the miners and to improve and to continue to get the system up to speed. And this is what Metalor is actively supporting.

Speaker 2:
Okay, thank you. Again, I would love to carry on this conversation, but we’re running out of time. We need to wrap up. So, I'd just like to finish with one last question to the two of you. How are you going to share your successes with other initiatives? How are we going to ensure widespread change in the ASM sourcing space?

Speaker 3:
Well, I think initiatives like the one today where we share what we know, I wouldn't say best practices. I mean, this is what we can do. This is what we do. And, so, by spreading the word, engaging the private sector to be active in this ASM gold mining or ASM mining in general, spreading the word. I think this is how it will grow. I mean, we just hear Jose, I mean there is a business case, there is a social case, there is an environmental case, there is no reason why we should disengage from the sector.

Speaker 2:
Jose?

Speaker 5:
And, actually, from the side of Metalor yes, we believe that the system can be replicated. Why not? It's not simple. It's not simple because what you need is you need the right teams on the ground with the necessary expertise which is not easy to get. But if this could be the case, I mean, why not? I mean, this kind of process is not unique in the world. I mean, this is something that can be done again in other places, but the fundamental point again is having the right teams on the ground with the necessary expertise and assistance and on this basis, I mean, again, why not?

Speaker 2:
Yeah, okay. Thanks. Yeah. I think just to sum up with the right will and the right support, this responsible sourcing can happen, and the Swiss Better Gold Initiative is proof of that, and I'd really like to thank Diana and Jose, and I would like to hand you back now to Tayler to wind up, so thank you very much.

Speaker 1:
Yeah. Thank you very much for joining us today. We really appreciate your contributions to the webinar and also to the, to ASM. I do see that there’s a few questions that have come through that we were just unable to get to today, but we will follow up with you after the webinar. And as you can see on the screen, we have a few webinars upcoming in the next couple of weeks and we will be continuing this discussion on ASM next week. We will be hearing from Joanne Lebert who will be doing a case study of the efforts in Côte d’Ivoire and the DRC. The following week, we'll be looking at the gold jewellery industry right now. And we'll be hearing from Philip Olden, Iris Van der Veken, Mark Hanna and Neil Harby once again. And, so, I just want to take the time to thank you. And again, if you do have any questions that you weren't able to ask, please email ask@lbma.org.uk. So, one final time to our panellists, Jose, Diana and Neil, and of course Monica who is not with us today. I just want to say thank you, we really are very thankful for you being able to join us. Have a lovely afternoon, and we'll see you next week. Thank you for all.

Speaker 3:
Thank you, thank you all.

Speaker 2:
Thank you.

Speaker 5:
Thank you.

Speaker 2:
Goodbye.

Speakers:

• Tayler Birch, Events Coordinator, LBMA/Speaker 1
• Susannah McLaren, Compliance & Responsible Sourcing Manager, LBMA/Speaker 2
• Joanne Lebert, Executive Director, IMPACT/Speaker 3
• Luke Fiske, PhD Candidate, Queen’s University/Speaker 4

Summary:

Susannah McLaren, LBMA's Compliance & Responsible Sourcing Manager, Joanne Lebert, Executive Director at IMPACT and Luke Fiske, PhD Candidate at Smith School of Business, Queen's University discussed how the discourse of risk is perceived and how this can be detrimental to artisanal and small scale mining (ASM). Joanne and Luke enlighten us on IMPACT's initiative 'Just Gold' in Côte d'Ivoire and the DRC and provide suggestions on how to positively redirect the perception of risk. They also look at what can be done to encourage engagement with ASM in order to ensure it is a viable option in the supply chain.

Speaker 1:

Good Afternoon. Welcome to another webinar in LBMA’s Virtual Summit series. For those of you who joined us last week, we got an in depth look at the initiative taking place in South American ASM. Today, we are continuing that conversation by looking at the initiatives taking place in Africa as well as exploring the discourse of risk: how is it perceived? How can it be detrimental to artisanal and small-scale mining? Today, we're going to look at ways to positively redirect the perception of risk, encourage engagement with ASM, and ensure a sustainable supply chain. Turning to our panellists – a woman who needs no introduction, Joanne Lebert, Executive Director at IMPACT boasts an impressive resume, including work for Ottawa’s Human Rights Research and Education Centre, Peacebuild, OSCE, Amnesty International and CARE International, just to name a few. We have Luke Fiske who is currently a PhD candidate at Queen’s University in Canada. His focus is on the sustainability and management of multinational supply chains. Luke has also been a lecturer at New York University. Our host for today is Susannah McLaren. She manages LBMA’s Responsible Sourcing Programme for precious metals and is an expert in human rights and sustainability with over 15 years’ experience in the field, including work for SHIFT and a global contractor to the extractive sector. If you have any questions throughout this webinar, please feel free to write them into the question tab or email them through to us at ask@lbma.org.uk. So, without further ado, I shall hand over to Susannah.

Speaker 2:

Thanks, Tayler and good afternoon to everyone on this webinar today. Thanks for joining us. I'm absolutely delighted to be hosting today's webinar on what I'm sure you'll all agree is a very important and topical subject, particularly in this COVID climate. As Tayler mentioned, this is now the third webinar in our Virtual Summit series dedicated to the topic of ASM. And through these webinars, we're aiming to raise awareness of the excellent ongoing work in ASM and to demonstrate to the market that responsible ASM is possible and can be commercially viable if you engage in partnership with credible initiatives and organizations such as IMPACT. And this follows on from LBMA’s call to good delivery refiners, to engage in responsible ASM, which we launched back in October 2019 at our annual conference in Shenzhen, China. LBMA recognizes the importance of engaging and maintaining relationships with ASM. The sector provides a livelihood for many individuals and the communities across the world. Our Responsible Sourcing Programme recognizes that ASM’s input into the precious metals supply chain is fundamental and encourages good delivery refiners to source ASM material responsibly. Our call to action has become even more urgent in a COVID climate where ASM communities are more vulnerable now than ever before. And I'm assuming that Tayler has changed the slides to the graph that we've presented a number of times, many of you have seen before, which really underpins our call to action and shows currently the little uptake of ASM material there is by our good delivery refiners and something that we're looking to change. Even allowing for the risks associated with ASM, the fact that gold output accounts for roughly one third of global non-captive production, and also bearing in mind the drift lower for global mine supply – not to mention the weaknesses with recycling – all suggest that ASM can offer a tremendous opportunity for the industry. So, I'll now hand over to Joanne who will talk more about this in the context of the Just Gold projects that, in fact, is running in the DRC and more recently in Côte D'Ivoire. Over to you, Joanne, thanks.

Speaker 3:

Great. Thank you, Susannah, and thanks Tayler for your introduction, kind words, and thank you for this opportunity today to discuss the topic, I think, is not only timely, but extremely important and important to the livelihoods of millions around the world. If we can switch to the next slide, please. So, many of you know our non-governmental organization, a non-profit organization that has existed for well over 30 years. We first started working on responsible supply chains, responsible minerals trade in the late 1990s when we first drew attention to blood diamonds in West Africa and went on to co-found the Kimberly Process. We've since worked on gold, and three Ts, cobalt, and a number of other minerals and natural resources. So, we're drawing from that well of experience over the years and decades not only at the local level, but with regional governments, national governments and international multi-stakeholder initiatives and others. Next slide, please.

So, the Just Gold Project is one of our signature projects that first started in the DRC. We say it's an incentive-based approach to traceability and due diligence to bring responsible artisanal gold from mine sites to international market in alignment with market expectations and regional and international standards. And when we talk about incentive-based, we mean really an immediate reward for artisanal miners and supply chain actors upstream, who, especially in the, in conflictaffected areas, they are really living on the knife's edge of survival and so incentives to want to sell legally, transparently, in alignment with these standards have to generate some sort of immediate reward. And I think when we talk about a risk reward calculation, we tend to think about big business, but these are economic actors as well, who are making these very rational decisions in their everyday lives in order to survive. Next slide, please. So, when I – the type of incentives that we provide – that as we work in support of these communities and supply chain actors – is technical assistance to make sure that they're producing more efficiently, effectively, in ways that are more environmentally friendly, that for example, give them higher yields at the end of the day, which means more cash in their pockets. We are allies to them to advance fiscal reform and harmonization. And as you will see in my subsequent slides, fiscal reform and taxes and fees that are adapted to ASM and to that reality for ASM to be commercially viable is of critical importance, so we worked with them on that. Access to good credit on fair terms, so they're not being gouged by illicit informal lenders. International market access and inventory financing. And finally, most importantly, at least over the course of the years, what has been proven to be most effective is not only a better price, but pricing transparency. Miners and supply chain actors upstream want to know how the price is calculated in order to know how they fit in the global supply chain, but also to know that they're being treated fairly and want to be able to negotiate on fair terms. Next slide.

So, in the DRC, we've achieved several milestones and successes, some of which – well there's two here, two key ones. So especially between 2017 and 2019, we've supported the local supply chain actors there, the cooperative in particular to produce trade and eventually export responsible artisanal gold to the international market around 24 kilos worth. So that is a major milestone – the first of its kind really in DRC. And we've managed to couple those shipments in that work with real granular level evidence, data and data analytics that not only prove that the supply chain is responsible, i.e., chain of custody and due diligence, which means an understanding of the context in which something has been produced and traded to make sure there's no link to human rights violations or corruption, et cetera. But, also, we marry that with development and security data. So, to let us know whether or not we're helping the community and supply chain actors to realize the sustainable development goals or what we sometimes called ESGs – at least in the corporate world. So, that data is of critical importance and it accompanies the shipment, it accompanies the product and there is evidence. And I’ve shared a link to another PowerPoint – that I hope the LBMA will share – that lays out some of this data that shows evidence of improved food security, literacy, economic and conflict resilience, social cohesion, gender equality, all these things that are so important when and are essentially results from combining a market approach with an aid or development approach. Those two things for us go hand in hand in order to derive these types of dividends that are so important and key to sustainability. Now, of course there are many challenges, those that are most relevant or related to risks are for the purposes today, threefold: costs of legal operations, limitations of closed pipes and reputational risk. So, the challenges in the context of DRC around legal operations. a legal company, any legal operator in the gold sector upstream cannot operate a viable business because the costs of doing so – the taxes, the fees, the logistics costs, et cetera – are exorbitant, and so the incentive to… essentially, it’s a disincentive to operate legally. So, we have been working for a couple of years now with the government to document this – what the law and regulations say and what actually happens in practice – in order to kind of improve that environment to make sure the taxes and fees are eventually lowered. And, actually, there's an opportune time for that right now, there's some positive movement. What is also quite, I think, quite critically important that has been untapped is the role of large-scale miners in finding a solution, in being solution provider here because large-scale mining companies are operating in many countries, including the DRC, and they have figured this out. They have the logistics in place, they have the structures, they have the transport, the storage you know processes for export. And I'm not suggesting that LSM buy the ASM, but enable ASM, legitimate, responsible ASM to piggyback on the systems and structures that they have developed in order to allow to scale at the start-up level. And once that threshold of commercial viability is reached, then essentially you know, it can take off on its own. So, LSM has a role to play here to help us economize in order to make ASM more commercially viable until it can stand on its own. So, that's an untapped potential.

The other risk that, and challenge, that's there is about close pipe limitations and that refers to traders – small traders, in particular – we have learned that in order to scale and for our initiative to be sustainable, close pipe is highly limiting. And the traders outside that system become spoilers, but traders are seen by the community as often playing a critical role in bringing in goods and commodities and so we need to find a way to incentivize the right traders to get on board in order to provide us essentially the opportunity and the space to scale. So, that is, kind of, something we're doing as a next phase and is critical again to, like I said, to scale. And, of course, there's reputational risks in working with the DRC, but DRC is the size of Western Europe. It's like saying, ‘Because there's a conflict or there's armed groups in North Eastern France, you're not going to source from Southern Italy’. It's a bit ridiculous, and we need to have a more nuanced approach. Not all of DRC is problematic. There's, you know, people who are essentially earning a living, stable, and they need access to the market as well. And I should point out that the gold that reached the international market actually found its way, some of it finds its way into this jewellery in North America, in Toronto, with Fair Trade Jewellery Company – who's been an important partner to us. Next slide.

In Ivory Coast, we have essentially adapted what we learned from DRC – those years of learning in DRC – and in nine months essentially, an LBMA listed refiner has signed a commercial agreement with an exporter in an ASM cooperative. We have a first test shipment on its way to Europe and regular shipments to follow is promised as part of the commercial agreement. And, like I said, it's the same system that we've developed in DRC, but the conditions are very different in Ivory Coast. And essentially the Just Gold business model that's been adapted there has been particularly important in the time of COVID because as we've seen during COVID, there's been price gouging and severe discounting, which has really penalized artisanal miners who are desperate to survive. And we've seen discounts of up to 60%, 70%. And, so, the business model is one that's essentially consistently calculated as percentage of LBMA spot price. So, it helps essentially do away with that local volatility and that local opportunism. Inventory financing is being provided by the refiner. As I mentioned, that pricing transparency is so important. It's both for gold and for data, the miners get paid for both. It's valuing the data they provide when it's, of course, robust. They get paid for that data, that validated data, it's recognized as valuable. It's recognized as a commodity, in and of its own. So, all that data I was talking about – the due diligence, traceability, development data – it's valued, it's valuable for all the supply chain actors. They’re being compensated for it. Those data payments are invested back in the community, and we're now looking at how we can use those to nudge further improvements in the community. For example, well, this is, that's part of the price calculation: Mercury – the use of mercury is discounted. That's a way to kind of nudge behavioural change in the way you calculate the price as well. We show them the technology, how to work mercury-free, but the decision is theirs, and if they use mercury, it's discounted. So, it puts the decision in their hands. So, as I said, the data and the gold is both consistently calculated as a percentage of the LBMA spot price, it's both paid at point of sale, there's no waiting. Artisanal miners can't wait, they want the payment that day. And then all the costs and profit margins are discounted, so everybody wins. Everybody gets a margin, so it's already proving to be commercially viable, and if we hit, for example, this issue of traders, bringing in traders and finding ways to incentivize them as well, using this type of, you know, data price incentive or pricing transparency, we can scale. So, we're very excited about this opportunity in Ivory Coast and this kind of new model of doing things.

Reputation of ASM is still an issue in Ivory Coast, but what's interesting, it's more of an issue with the government than in DRC because the government still has, I would say an outdated view of ASM as one where you have to get rid of them because they're criminal actors. So that's also a big area of work in the context of Ivory Coast. Next slide. Okay. So, actually, I'll go back a slide. Before I jump into that. I don't know if Susannah, you had any questions in particular.

Speaker 2:
No, no. At the moment I don't. What I'd say is I think, you know, you're clearly providing a really balanced view about the fact that yes, there are risks and challenges along the way, but you've still managed to get this off the ground. And there is a positive story to be told and demonstrable in aspects like 24 kilos of responsible artisanal gold into the international markets. I wonder at this point, if you wanted, I know you've had – you've given a lot thought, as supported by the research from Luke at Queen’s University on what might be some of the underlying factors preventing more engagement in responsible ASM and, also, particularly attention to what some of those solutions may be. So, I wondered if you had any reflections on that for us today.

Speaker 3:
Yeah. I mean, I guess, you know, drawing a bit on what I've said already, this issue of reputational risk I think that's one that can be definitely addressed through partnerships. I think partnering with development organizations in particular to hit that sweet spot between trade and aid is critical – both play a role. It also means those types of partnerships a little bit where we support one another. You know, I think there is an advantage to working with an NGO who can also explain things from an NGO perspective, and we tackle risks together and explain our respective perspectives. And I think there's a role there in terms of taming reputational risk. I think the LBMA has a role to play in terms of thinking about how to reward real engagement. At the moment, there is, I would say a view perhaps that those who maybe do token CSR and those who really engage – like the refiner we're dealing with in Ivory Coast – essentially get the same reward, right. That they're treated the same. And, so, they – how do we recognize the real actors who are really investing for change? So, I think that's a critical one. The other one is evidence. I talked about data. I mean, you know, certification is important but, really, we need to go beyond and really look at the data and analytics. We've shown that it's possible to provide that. It's being costed out and paid for and shown that the margins are still doable. And that is a real, you know, tangible way that's relevant for everybody reporting etcetera, to know that, you know, that risks are being identified, attenuated and that development outcomes are possible. So, real evidence – robust evidence – is critical and available now, and I, yeah, so I think those are some examples.

Speaker 2:
Thank you. And I know you've been working closely with Queen’s University, and with Luke's team, and somehow if you can give an overview before we hand over to Luke, or Luke might want to do that himself, of how you play into this evidence and this discourse.

Speaker 3:
Sure, and so we work with Luke and Queen’s University in Kingston, Ontario – with the business school there – to essentially dive deeper, and really validate our methodology when it comes to this evidence-based approach to, you know, responsible sourcing, due diligence and development and security outcomes, because we wanted the methodology to be vetted and published, which I think is underway. And Luke's work there, and his team is absolutely critical, but it also, I think for them, you know, makes their research actionable and relevant to kind of the discussions we're having in our various fora, so I think there's a win-win there. If I may for a second too, one of the things I think that's important – which is also part of the discussion today – is about changing the discourse around ASM. So, before turning to Luke, if it's okay if I just present my slide on that? If we can go to the next slide.

Yeah. So from my side, what I'm hearing is that, you know, and what I've heard over the course of the years is, ‘LSM is good, recycled gold is, you know, set number two and artisanal gold is really the bottom of the barrel, and so not to be touched.’ And I think that really has to be challenged because, you know, we're not talking about the same scale across these three things. But all three also have vulnerabilities and need to be scrutinized and we need to address them together. And, so, to disproportionately essentially focus only on artisanal mining, for whatever reason – maybe it's easier, I'm not quite sure – but it's really an injustice and really has a negative impact on the millions of people whose livelihoods depend on ASM. If we look at, you know, industrial gold, we know what has environmental impacts and, you know, issues around indigenous rights and issues around remedy, corruption risks. Just in the last three weeks, there've been major headlines involving large scale mining corporations in DRC and Tanzania and elsewhere – sanctions busting, corruption – it doesn't bode well for the industry. And there'll be a lot more scandals like this, a lot more coverage of it, because I could tell you from the NGO side, at least from the advocacy perspective, there's a turning away from artisanal gold and say child labour, and there's a focus on. ‘What is the role of LSM?’ And so, you know, we have to work across, we have a responsibility across all these sectors. Recycled gold, like what is it? It could be a hundred years ago: gold that's been in existence, you know, in your grandmother's jewellery box; or it could be fabrication scraps that were just used once and then are considered recycling. There's no provenance, there's no due diligence. It's grandfathered in. There are no questions asked. And this is what my husband calls a sense, you know, “Indiana Jones” gold. It's like, things that have been pillaged then get melted down and recycled, but presumably that's better than artisanal gold. Those are false assumptions we really need to question. It's also at risk of blending with illegitimate sources and money laundering, so we really need to stop thinking about green as good and really ask hard questions and work on it.

Recycling is important, but it's not a solution in and of itself, and there's questions to address there. And, finally, artisanal gold. I mean, it's evident there are millions of people that are dependent on it. And what's particularly interesting for my organization and I think maybe new to the conversation, is the research we did with academics and with our Ugandan partners in the Great Lakes region have demonstrated that women consistently earn more in mine sites than outside of mine sites. Up to 335% more in Uganda. So, if we talk about boycotting, if we say, we're not going to touch it because it's dirty, these are the people that are affected. So, we need to change our misconceptions, okay, this is a livelihood issue.

Speaker 2:
Thanks! Joanne I'm afraid I'm gonna have to cut you short there. Really interesting. I will say that, you know, LBMA takes all these risks seriously and definitely recognizes that one doesn't necessarily weigh out higher than the other. Then there are inherent risks in each one as we are witnessing and as you've alluded to, but I want to make sure we give time to Luke who has some new and interesting insights around risk and reward that I think, you know, will be of great interest to those operating a commercial entity.

Speaker 4:
Thanks Susannah and Joanne, and to the LBMA for having us. It's always good to be able to have an excuse to get out of my pyjamas and talk to people. So, if we could move to our next slide. I know that risk has been addressed in a number of different webinars now. We've heard of people saying de-risking is not an option to the LBMA. We've heard interesting perspectives from companies like Metalor that have de-risked and then re-engaged with ASM. And I think it was Neil Harby who, not too long ago, really raised the question of the risk-reward ratio for refiners, and that's kind of what I want to focus a little bit on today. If we could move to our next slide? My sense is that a lot of the discussion around risk and reward up till now has been normative. There's been a lot of talk about, ‘We should engage with ASM because we should support livelihoods.’ My research is also focusing into firms that choose to engage with ASM for strategic reasons and are reward focused. And, in general, I'm very interested in how firms think of and manage social risks. So, I'm going to present some preliminary findings quite quickly today based on around 20 x hour interviews and a survey. If we could move to the next slide?

I think the first thing I really want to emphasize is that risk is actually a perspective, it's not a fact. We think of risk as being something that's inherent in an object or an activity. It's a number that just arrives on your Excel sheet but, in fact, there's a lot of research that shows that our values and our sense of values drive what we perceive as a risk. There was a recent study done in Spain, where they surveyed almost a thousand people living close to an oil refinery, and they asked them how they perceive the environmental risks from that refinery. And they found that people that had stronger environmental values, personal values were more likely to perceive the risks from that refinery, than those who didn't. And I think that the takeaway there is that our values often drive our sense of risks, and it's not inevitable. Equally, in a lot of my discussions with multi-stakeholder partnerships, I find everyone has a different view of the risk that ASM might pose. Firms will often worry about Annex ll, OECD risks, but governments will worry about what happens if we introduce private standard compliances. Will that dilute our chance to use legislation? So, the takeaway here is, if you get fourfive different groups in a room or people, everyone is going to have a different perspective on risk, and it's not inevitable. If we could just move to the next slide? I think another key assumption I'd like to attack a little bit is the assumption that ASM workers themselves don't perceive risks. I think there is a feeling that ASM don't worry about reputational risk but, in fact – based on some preliminary surveys we've run in the DRC – ASM workers do actually perceive there to be reputational risks if something happens in their supply chain. In fact, more so than downstream firms, and that I think is a result that's preliminary, but interesting. And if we could move to the next slide? Equally here, we see, you know of upstream firms, 58 – this is upstream ASM firms – 58% of them perceived there to be reputational consequences of a problem compared with only 33% of downstream firms. Again, preliminary, but an interesting trend.

And, if we could move to my last slide? One of the things I'm working on is characterizing what is a reward focused versus a risk focused firm? How do they differ? What are the characteristics? And I think they differ on three dimensions. I think that reward focused firms find that orientation driven right from the top. I also think that reward focused firms often have been birthed in a situation where they had to work with their community, right from the get-go. But, most interestingly, I think for our discussion today is that a reward focused firm where someone else sees risk, they see an opportunity. These are direct quotes from some of the confidential interviews I've had. And you'll see that a risk focused firm will say something like, ‘We're always worrying about protests, worrying about being kicked off the land. This is our fear. It's a risk.’ By contrast, a reward focused firm in working with ASM is gonna really think about the chance to develop assets later if they start building their community relations now and stronger. It's an entirely different orientation. And I think that's
what I would leave you with based on the research is that a) risk is not inevitable and, b) from a different perspective, a risk actually can literally be a reward. If we could just move to my last slide? And just a little plug. You know, it's an ongoing research I'm involved in. Maybe you heard something today I presented briefly, you disagree with, you react, you want to react to, you want to corroborate? If you want to share anything or you have a chance to talk to me completely confidentially, my email address is there. I'd really love to hear from you. And thanks again to Joanne and the LBMA for presenting this really briefly.

Speaker 2:
Thanks Luke, and really thank you for that well worth tour on what is some very unique and original work and research and I'm sure a lot of organizations, or our audience, are there trying to figure out which category they fit in. Are they risk focused firm or a reward focused firm? And how can perhaps they move towards the reward focus firm. So, I think we – it's not the last we're gonna hear from you. I know we've invited you to think about perhaps writing a blog for us, and I'm sure people look forward to that and please do reach out. And, I mean, I've certainly taken away a lot of food for thought in terms of, you know, what are some of the challenges, but also some of the opportunities and things for us to think about at LBMA in conjunction with our refiners and our wider membership – aspects we can integrate into, some of your proposals that we can integrate into our responsible sourcing strategy. Engaging responsibly and ASM is indeed one of our focus areas of the strategy. Meanwhile, why we remain focused on being part of the solution, we actively engage in the RAGS
Forum and continue to support the development of the CRAFT standard. We also developed an ASM self-assessment questionnaire to aid refiners in their endeavours to source ASM gold. I think, finally, it's important to say that our Responsible Sourcing Programme is continuously evolving to account for the developments in this area and to take on board stakeholder feedback including what we've heard from our panellists today. We will continue to identify ways to support refiners – and by ways, I mean, meaningful ways – to further align with our responsible gold guidance, which actually states that refiners should consider measures to create economic and development opportunities for ASM miners and assist legitimate ASM producers to build secure, transparent, and verifiable gold supply chains from mine to market. And as you’ve heard today, Just Gold is an excellent initiative that organizations should definitely consider supporting. I know that there may be some questions. I see that there's one, and that's probably about all we have for to take on today. And I think it's possibly one more targeted at Joanne since you started to pick up on this topic, which is, ‘What motivates LSM to play a role? How much buy-in has there been from the LSM community to date, if at all?’ I’ll hand over to you, Joanne. Just to remind you to take yourself off mute.

Speaker 3:
That's a great question. This is just something we're starting to – oh yeah, you can hear me – just something we're starting to explore in both country contexts. And there has been interest. It's still early days and we have been discussing with these enterprises together with, I would say, you know, obviously credible bodies that essentially facilitate that conversation. LSM has had an ASM problem for forever. And this is really the opportunity, again, to change the conversation because it is in largescale mining’s interest – and I think many companies have come around to this, but are still struggling how to do it – to, essentially, try to find a constructive way to work with artisanal mining communities that are adjacent to their concessions so that they can coexist in greater harmony. And this is a way to do that. I mean, to show constructively that you're interested in the wellbeing and access to the market for micro producers, being part of the solution is a way to do that. And, again, it's more of a development approach, but it's one that could be potentially hugely impactful at the local level. And, you know, if I was to be frank, large-scale miners, some companies have depended on ASM for decades, as well, to find deposits. So, there's been this kind of relationship that's been more in parallel and often antagonistic, unfortunately, and this is an opportunity to essentially look at constructive engagement and partnership going forward.

Speaker 2:
Thank you. And I see Tayler's allowed me one more question, which has definitely caught my attention, and I think will be of interest to our listeners today. So, what would it take to scale up from 25 kilograms to say 2,500 kilograms?

Speaker 3:
I go back to this idea of helping us with the cost at the initial stage, because the volumes stay small because the incentive is always to go to informal and illicit trade, which is more profitable. So, we have to get to the price point. And a way to offset that is to help us with those structural, logistical costs. Again, important role for LSM. Some of the headaches we have – we're trying to essentially recreate or reinvent the wheel for ASM when we can be piggybacking, quite frankly, off the systems that are already there, which would be a huge cost efficiency to help us scale. That, I think, that's a critical one.

Speaker 2:
Thank you and that’s probably all we have time for but definitely one for people to think about in terms of when they're engaging with organizations like yourself to ensure that there are fair prices. So, I think all that remains from my end is to say, thank you to both panellists for joining us. I know you joined us quite early in the day, so, and I'm sure you were at your computers earlier still, so thanks for making the time for us, and I'll just hand back to Tayler to close us out. Thanks everyone.

Speaker 1:
Yeah. Thank you very much for joining us, Luke, Joanne and Susannah. It's been a really wonderful webinar. We’ve had a lot of appreciation for it throughout the chat so that's really wonderful. I just want to let you guys know that we do, we are continuing the Virtual Summit next week with our ‘COVID-19 effect on Gold Jewellery and Supply Chains’. And then the following week we have two webinars. So, one pre-recorded, one live. One, ‘A Scientific Overview of Types of Security Features’ with Manfred Matzinger-Leopold, from the Austrian Mint, and then on Thursday, the 30th of July, we have the ‘LBMA Asia Update’. So, I really hope you can join us for those three webinars and I really thank you for joining us today. You've been wonderful. Have a lovely afternoon and a lovely weekend. Thank you and good afternoon.

Speaker 4:
Thanks everybody.

Speaker 3:
Thank you.

Speakers:

• Tayler Birch, Events Coordinator, LBMA/Speaker 1
• Philip Olden, Independent Consultant/Speaker 2
• Iris Van der Veken, Executive Director, Responsible Jewellery Council/Speaker 3
• Mark Hanna, Chief Marketing Officer, Richline Group/Speaker 4
• Neil Harby, Chief Technical Officer, LBMA/Speaker 5

Summary:

Gold jewellery accounts for nearly 60% of global gold demand. As part of our Virtual Summit Series, a group of gold industry experts and influencers review the impact of COVID-19 on the gold jewellery supply chain, how the industry will be affected in the future, and how it can deal with the growing pressure to support artisanal gold mining.

Speaker 1:

Good afternoon. Welcome to today's LBMA webinar entitled ‘The Gold Jewellery Industry in the Pandemic: Now and Future’. As part of our virtual summit series, our speakers will be reviewing the impact of COVID-19 on the gold jewellery supply chain, how the industry will be affected in the future, and how it can deal with the growing pressure to support artisanal gold mining. If you have any questions during the webinar, please submit these via the questions drop-down in the control panel on the right-hand side of your screen. If you are using your mobile device, this functionality can be found in the questions tab at the bottom of your screen. And if you are having difficulty submitting a question, please just email ask@lbma.org.uk. So, without further ado, I will hand over to you, Phillip.

Speaker 2:

Thank you, Tayler. And thank you to the LBMA for inviting me to host and moderate this webinar. As Tayler says, this webinar will be around 30 minutes and we will take questions if time allows at the end of the session, so please put them in the question box in your screen. Gold Jewellery Council around 60% of global gold demand. And today we have a fabulous group of gold industry experts and influencers who can talk about the impact of the COVID pandemic on the gold jewellery supply chain, how it will be affected in the future, and how it will deal with the growing pressure on artisanal mining. We have with us virtually, Iris van der Veken, who’s the Executive Director at the Responsible Jewellery Council – the responsible standards and certification membership organization for the jewellery industry. We have Mark Hanna, the Chief Marketing Officer at Richline Group, a Berkshire Hathaway company – one of the largest manufacturers and distributors of gold jewellery in the USA,with a global supply chain. And we have Neil Harby who has been on many of these webinars before. He's the Chief Technical Officer at the LBMA and responsible for the good delivery system with gold refiners around the world.

In April and May, we saw severe disruption in the gold supply chain and a devastating reduction in consumer demand across all markets. In that period of economic crisis, however, we've seen the gold price fulfilling its traditional role as the safe haven investment that we've seen high increases in demand for gold-backed investment products such as exchange traded funds and a gradual strengthening of the gold price. However, gold demand globally is dominated by gold jewellery at around 60%. And Metals Focus, one of the leading industry data organizations, has forecasted that 2020 would see the lowest levels in global gold jewellery demand for over 30 years. In the two largest markets around the world – India and China – we've seen that demand in India is recovering somewhat. Although sales in Hong Kong are still very low for political reasons, as well as for the pandemic but in India – the second largest market – demand is struggling as manufacturers and retailers are not operating at anything near capacity. In the third largest market in the world – in the USA – we've seen the largest retailers reporting sales down by around 40% in the last quarter. However, the USA is very dependent on the holiday season, around November/December for most of its sales, but jewellery retail in general is amongst the worst affected for all consumer goods as it's very much a nonessential, and a discretionary, category. I wanted to ask our panellists how they see the impact of the COVID-19 pandemic on the gold jewellery industry. So, as is the norm, we would take a question for ladies first. So, I'd like to ask Iris. Iris what do you see as the dynamics of the global jewellery industry now and how do you foresee what the new normal will be like?

Speaker 3:
Well, first of all, thank you Philip, and I'd like to take the opportunity to thank the LBMA for inviting the Responsible Jewellery Council. I think the key question that all industries are asking indeed, you know, what is going to be the new normal and you were already sharing some facts in the introduction. The jewellery industry is struggling, and if I look into the RJC, with over 1250 member companies, the first feedback that we received from our members is that, you know, there's a lot of uncertainty, companies are looking at cashflow trying to, you know, save their employees, their people, they need to pay their contractors or suppliers. Often you will have suppliers, definitely very, a lot of vulnerability in the middle of the supply chain. And then, of course, there's the consumer. If we don't have a consumer, there's no market. And I think at the same time we also sell for the industry. We need a call for action by the NGOs about you know, the vulnerability especially, for example, in artisanal scale mining and the necessity for responsibility. So, you know, a lot is happening. And I think there are three messages that I would like to share with our audience today is, first of all, the jewellery and watch industry – and I think it's a common denominator with also the other industries – cannot do this alone, so governments will have to step up. And for example, we see that, you know, there are temporary measures, but there's still sometimes not yet clear policies, let’s say, ahead, so we need, you know, these global and local policies to see, you know, how can companies survive and especially also in jewellery. Because the thing about jewellery, it's about creativity. It's about entrepreneurs. It's about, often, a lot of family businesses. So, how can government support businesses in the short run, but also in the long run?

So, the second element that I wanted to share is, you know, the consumer. We knew that before COVID, that we have this more conscious consumer – the millennial, the gen Z – and the consumer that is really looking at the purpose, looking at authenticity, looking at you know, the product. How the product is mad. What are the management systems? You know, how are you treating your employees? How are you treating your suppliers? What are you doing positively as impact? So, from do no harm to do good. So, of course, the key question that everybody asks now is we are in such extreme circumstances, you know, ‘How can we keep the momentum going and the movement going on sustainability?’. And I must say we as the Responsible Jewellery Council are very confident that responsibility is the only way for it to build a, you know, a resilient business. And I think there is the positive news, you know, in every crisis, you know, sees an opportunity, is that you have that younger consumer – that's quite critical – but of course you need to have that income to be able to purchase. And I think the final commentary that I have is that “business as usual” will not work anymore. We all – within the supply chain – must move beyond compliance to really build transformational partnerships because no company is on an Island. And I think when we look into the RJC, for example, you know, which is really an enabler to integrate different aspects of responsibility from human rights to labour rights to environmental impact into the operations of an organization. I think that's the only way forward. And we see that through regulations, we have the EU minerals regulation, but we also have the European Commission that's working on 2021 regulation on human rights and due diligence. So, this is only a trend that will continue to shape our industry. But I think at the end of the day, it's about, you know, ‘What as an organization can you do
beyond compliance, and in collaboration with others, if your supply chains are connected, they’re global and they’re multi-tiered?’ And, going back to your question, there is not going to be a new normal. We see at RJC also, we have taken action on temporary measures, you know, from the way we do audits as exceptional measures. We have specific guidance now during COVID, so, I think every organization needs to adapt, and we’re looking forward to doing that together with all the industry associations and organizations. Thank you.

Speaker 2:
Thank you, Iris. Yes, and very strong messages there about the new consumer. Mark, can you talk please about the impact of the pandemic on the US Jewellery market and how you see consumer demand being affected?

Speaker 4:
Yeah, I'm going to give a little bit of perspective from some previous recessions, but the coronavirus recession, which we now call various things – the great lockdown, the great shutdown – is quickly compared to the last recession of 2008 to 2010. There are some major differences, but the major difference here is this is about livelihoods and lives, and this makes the pandemic recession quite different than the past. It's, I think, why we hear so often the phrases ‘next normal’/‘new normal.’ And, this has become progressively clearer to the consumers, the supply markets that we're not going to go back to exactly the way we were before. So, that in itself brings up management even to say, ‘Oh, how do we change? What do we need to change? And how do we make this happen?’ There's no question that we're in the midst of a really big recession. The next slide, please that – hold on one second.

So, what you see here is, over the last couple decades, the recessions that we've been in. The last one I referred to was called The Great Recession from 2008 to 2010. Really, this was a period of general decline, observed globally through national economics throughout the world. And the scale and the timing of this was, from beginning to end, it was about a 19 month, but that's still referred to as V recession. The V is really meant that it was a very quick – a quick breakdown, quick recovery – deep stock, steep decline and recovery. I think the big difference this time around is probably the V in the Corona’s recession needs to be vaccine. And, you know, we in the US, I’m sure – everyone sees the numbers. We’re continuing to accelerate rather than abate the numbers or cases and so forth. The economy is quite different in a lockdown state and with the world wearing masks, particularly to the jewellery part of this business. But, if I cut the gold for a little bit, we've also going to be in the midst for this fall season of kind of a perfect storm of lower discretionary income and higher gold prices. This is really going to offer a little bit of a retail reset. So, the pricing and the ability to not create sticker shock, right when people are back wanting to borrow. So, you know, really what I'd like to say is that there's – right now, we've got kind of all the works. We've got a stock, a sharp rise in unemployment. We've got a 2020 stock market volatility, the tourism and hospitality industries that really totally collapsed in the States and there's been some destabilization in the energy industry. Everyone knows what's been going on with oil. And of course, the major downturn in consumer activity and consumer activity really drives the United States. And so that, GDP has taken a big hit. And we're in not the tough situation that we can't overcome. We're in a tough situation that as Iris mentioned, this just calls for a real strong management process throughout this period of time. If I digress a little bit to the supply chain. There's sort of three factors here that are going on in the supply chain that you know, the names are health, economics and political, but you know, more, in a more finite basis transit times and transportation are quite difficult throughout the world in this particular time. Absolutely factory capabilities have been shortcutted. And, you know, speaking for our own facilities, we're beginning to get opened again a little bit in some of the locations worldwide, but having facilities in China and Thailand and India and Italy and places throughout the world. Places like Italy have been exceptionally crippled, in terms of the supply chain part of this, though, people are beginning to get back to work somewhat, but it's very limited. Social distancing is a must. The way we and many others in the supply chain are forced to work is certainly going to limit supply. So, the factory capacity location/situation, excuse me, in particular will be sort of a new road for management to travel with demand sort of stagnated at the moment, yet we believe that will come once there's an end in sight here. But the factories are now being prepared for that and not being able to produce the forecast and so forth. This could lead to more of a supply situation further down the line. Next slide, please.

So, as I, this is kind of, as I mentioned – we've got production issues, delivery issues, many of – in gold, specifically – many of the refineries worldwide, most refineries worldwide were completely shut down. So, the point of processing gold at the very first fabrication step was already hurt by this particular situation. So, it is something that is impacting all of us in this industry: how we manage it, how we forecast. Our levels of pessimism, our optimism in terms of our future purchasing and procurement are severely impacted. And we're all doing our best to forecast our own situations and move on to what we believe is going to happen on the other side of this. So, next slide please? To get to this, about the US. This is unprecedented that there are about, somewhat less than a half million total retail stores in the US and a very short period of time, about a one week period, in the beginning of March and April, over 10% of those stores closed. The jewellery shutdowns were substantial because of the up-close and personal needs of the jeweller. This impact is going to continue from two points of view. Firstly, many of these stores that are closed are not going to ever reopen. The percentage of that is yet to be seen, but it's hit some industries very severely. The people like staples of the middle-American market, like JC Penny have (inaudible) and they will be closing entirely. So, the combination of this, and with very high-visibility to the consumer, in terms of the impact on stores, the unemployment not just created by this, but the unemployment rates, which have skyrocketed in the United States – I think it's about 11% now, but it was as high as 20 or 18%, just a short time ago – it's an environment of economic fear not to mention health. So, the economy is not in a great place, it's in a rather bad place at the moment. And, in addition, the factors that we have to look at as management is, we've got to look at health. We've got to pay attention to our people in particular, everyone does. Your first responsibility is to your people and their health and wellbeing. So, that's an attention span much greater than it's ever been before for all of us. I mean, second, we've got the economic conditions we talked about, but thirdly, and not to be underestimated in the US and on top of everything else we've got going on – this is an election year. And an election year for presidential election has always created some level of stagnation during that period of time, so we're facing a pretty tough situation in the US right now. The jewellery industry certainly comes along with that retail concern. Next slide, please.

Yeah, optimism is up a little bit by the consumer. The consumer's attitude towards their own economics and its impact on the country was quite dark in the midst of April. That optimism has come back somewhat. There is hope that social distancing and things are working, although it appears we're in a second wave at the moment. So, I come back to our chances of a V recession are most dependent on the world vaccine. One more slide, please. So, really what – in conclusion, and what I'd like to say is, yes, we've been through numerous recessions, some have been much worse than others – 2008/2010 was quite severe for our industry – and yet as an industry, it's just 60 years of onward and upward. We've had 60 years of actually finding the proper way to recover from these situations. And the health crisis this time makes it different. The jewellery industry and the gold industries have been good about recovery. I think it will, we will manage the recovery well, once again. The health issue was somewhat out of our control. So, hopefully that's going to be managed in a way that will alleviate some of the fears. And you know, we went over this with management to – what do you call it – ‘the new normal’ or ‘the next normal’. It's certainly not normal. And we all, and thousands throughout the world are working on how you're managing this next generation of our industry. Thank you very much.

Speaker 2:
Thank you, Mark. Neil, so – can I ask you how has the pandemic impacted the refining industry specifically and has there been adequate supply? Has it increased risk in the supply chain, do you think? And can you also talk about how it's affected developments on the conflict minerals legislation, particularly in the European Union?

Speaker 5:
Yep, sure. Thanks, Philip. And you totally have my sympathies, Mark, that the jewellery industry – and that's why we're having this webinar now – is certainly from the LBMA’s point of view, obviously our members are banks, the investment market is what we've been focusing on. To quote an English author, it really is a tale of two cities: the demand in the investment world and the demand in the jewellery world is quite different. When the pandemic started, obviously it had a massive effect on the refineries as Mark has already said, but what happened very, very quickly is people put business continuity plans in place. The vaults certainly had business continuity plans straight away, but also the logistics companies. Yes, they had to adapt because as you know, most of the gold is traveling on passenger flights around the world, the passenger flights stopped, so the logistics companies had to find other alternative ways of moving the gold around and that affected the ability for the doré to get to the refineries, but also that the refined material to get from the refineries to the markets. But, I'm very pleased to say that the logistics companies adapted very well and they managed to get to a situation where, yes, it's probably a little pricier and some of the shipments might've had to find novel ways of getting to places, but the logistics industry is – under the circumstances – is running very well.

And because of that, the refineries are effectively – there is a minimal effect on refining capacity at the moment. The gold, the doré is getting to the refineries and the gold is getting to the markets. Now, what we saw also very early on is a couple of the Swiss refineries, certainly in the South of Switzerland have had issues because that was really where things started off and yes, they did close down, but they’re now back up and running. Obviously, a lot of the Swiss, their demand – who was buying their products – you had to wait for the watchmaking industry to start up again, you had to wait for the jewellery industry to start up again for them to supply those markets. But the reality is the demand from the investment market is really keeping the refineries really running it at what capacity they can run at. So, the refiners are not in a good place, but certainly operating as well as can be expected under the circumstances. So, we're quite comfortable in the investment space, but yeah. The jewellery space is just something different, hence the need for this webinar.

Speaker 2:
And how has it affected conflict minerals legislation Neil?

Speaker 5:
Yeah, so we, the LBMA’s programme – as well as the other programmes work – we're going through a review by the European Union to make sure that the programmes would meet the requirements of legislation that's coming into effect next year. So, that process is well under way. We’ve done – the third-party people who were brought in to do that work, we had our meetings with them. We demonstrated our programme and we're in a good place. The next step in that process was for them to perform shadow audits, which meant that they would go and follow the auditors in the refineries and see what they were doing to make sure that the systems were robust enough to meet the EU conflict minerals requirements. Now, those haven't happened. Now, we're slowly getting back up and running and getting the audits done, so we are starting to see, especially from the far East, those audits are happening, we are seeing the audit reports, but it's not necessarily the availability of the auditors, because a lot of the auditors are in country. It's the ability of the people appointed by the European Union to be able to shadow those audits. So, what my understanding from the European Union is that they understand that and what they will do is unless there is any – let's call them red flags – that have popped up during the initial process, our systems will not necessarily be recognized, but you'll still be able to carry on operating under their old services until the time comes that they can finish that process. And as Iris said, you’ve had to come up with new solutions. You’ve had to come up with novel ways of tackling these problems because let's make it quite clear: we're not going to drop standards. That's the last thing. This is not an opportunity to drop the standards. We will maintain standards or find better ways or alternative ways of doing things. And just one example of that is we're investigating the possibility of doing virtual audits, where you'll have somebody on the ground doing the work who is already in country but have a virtual oversight of that audit process. Obviously, we would not do that in high-risk circumstances, but in low-risk circumstances, that is certainly a viable alternative.

Speaker 2:
Great, thank you, Neil. And we can see the impact is significant and it's going to be longer term, and there's been significant impact and disruption. One of the other things we wanted to talk about in the little time we have left is, going back to you again Neil probably, is the increased desire through the industry to look at how to deal with artisanal sourcing, and integrate artisanal sourcing into the mainstream gold supply chain. How do you believe the gold refining industry can look at sourcing more artisanal gold without the risk, as you said, of dropping standards? And what's the LBMA’s position on accepting artisanal gold into the good delivery system.

Speaker 5:
So again, I'll start with a statement to say that the LBMA supports any initiative that enables responsibly sourced ASM material to enter the legitimate supply chain. That's the fact. That’s where we stand. There are an awful lot of people doing an awful lot of good work to make sure that ASM can be responsibly sourced. I think the last webinar that I did here was with the Swiss Better Gold Initiative. And that's fantastic because you had a refinery like Metalor who initially said, ‘We've been so beaten up over this. We're not going to do it because the risk-reward ratio doesn't make sense.’ Now you've got them coming back and saying, ‘We've now identified a programme that will give us the comfort that we can take that material safely.’ It's always going to be high risk. There's always a risk of other stuff getting into that legitimate supply chain. But as long as those risks are minimized, and we can see that in the audit reports that refiners have made the effort here to try and do a good job. They’ve worked with NGOs; they've worked with government banks systems. That's the way forward. They've used things, for example, like The CRAFT Code, which says, ‘If you do this, there's a good chance you're doing a good job.’ Nobody is perfect. Mistakes are going to get made. So, the key message here is if somebody is trying to do a good job, but something goes wrong, judge them on how they react to it going wrong, not the fact that it went wrong. And that's the key message is we've all got to work together, but if something comes along, like COVID, which puts the supply chains at risk, how do we react to that to try and make sure that they can still happen?

Speaker 2:
Yeah and Iris, is that the same with the Responsible Jewellery Council? How does the RJC look at ASM sourcing?

Speaker 3:
Well, we have the same, I would say, strong commitment and position as the LBMA. And, of course, the RJC already works, you know, with ASM standards such as the Fair Mine’s Standard with our code of practices and also the Fair-Trade Gold Standard with our code of practices and COC Standard for mine material. And also, the RJC allows members who source, for example, and you referred to it Neil, from CRAFT gold to make provenance claims regarding the material, and we also believe that's the only way forward. We do not want companies to step away. I think it's like Neil says, it's also about OECD due diligence. It’s steps of continuous improvement and indeed, I think, every organization we need to support to really support artisanal scale miners. I think it's a collective responsibility of the industry and we fully support a call of action also from the NGOs on that. So, yes, we have a very strong commitment to do that.

Speaker 2:
Great. Mark, Richline was one of the only companies that was able to supply artisanal gold from the Congo through an LBMA good delivery refinery about 18 months ago. What’s Richline’s view on ASM gold? Do you see more demand from consumers? And is it something you would like to get more involved in?

Speaker 4:
First of all, I echo what Neil and Iris said about the standards. There are some good standards – CRAFT standards – quite good. I'm certainly a fan of the Fair Mine Standards, and some of the others, but so that still comes first. It still is risk mitigation. Well we’ve learned from the two-year process of our Congo project is that the pilot requires multiple things, it requires the land rights to be verified. It requires miners to be counted and certified and registered. It requires on the ground oversight for everything from human rights to conflict minerals, but it can be done. And, you know, we felt from our project that the wind wasn't moving gold, the wind was creating a template of which CRAFT is very much a beneficiary of – the CRAFT standard – of looking at the templates and looking at how we do verify responsible practices and mitigate risks. So, with that said first, our position is that we believe in fair mixed. And what I mean by fair mix is that, you know, large manufacturers as us are mostly based upon a mass balance standard, where we're bringing in gold from many, many different mines and many different refineries and taking it from there. So, we believe there's absolutely a position for artisanal mining in that mix of our mass balance. We believe that supporting them helps them cure themselves where there are responsible needs within their change. So, that will never help solve the problem of risky mining operations unless we support them in a positive way and help them contribute towards new levels of responsibility. So, yeah, we're quite a strong believer in finding ways to support the smaller mines.

Speaker 2:
Thank you, Mark. We – I think we've got a little bit of time for some questions. If we can be quite quick with the answers? The first one I have is for Iris, or maybe to Neil. Neil, sorry. Let me just – yeah, it’s Iris. Do you have examples of the types of innovative partnerships to be inspired by that you talked about at the beginning of the session?

Speaker 3:
Well, yes. Well, I think first of all, partnerships is throughout the supply chain is partnerships, for example, two organizations working together like the LBMA and the RJC on harmonization, standardization, and to help companies through the journey of integrating human rights, labour rights, environmental impact into their operations because it’s complex and it's often challenging. So, I think the more we can help members on that journey, the more we will have confidence. And I think we’re working already closely, but I think we can always accelerate. I think our partnership that, for example, the RJC has set with the UN Global Compact again on the SDGs and impact. We didn't touch the topic today, but you know everything is about environment, social and governance frameworks for organizations, again, to protect their brand equity, to protect their operations. But I think one, the RJC, already works with many trade organizations and associations around the world. We will continue to do so. And I think finally, with one outcome is about impact. We work in an industry of beauty and emotions. So, we need to show how our product throughout the supply chain touches the lives of people and contributes to development and ‘to know is to show’. So, I think you know, a lot of work can be done on telling the story and, you know, not only the positive stories, but
also the challenges and the opportunities. So, and I would also invite you to go to our website where you have a big overview of all the stakeholders we collaborate with, and I’m always happy to take, of course, any question offline.

Speaker 2:
Thank you, Iris. Mark, we have a question about what you talked about earlier on which is, ‘Do you think that consumer perceptions would be different from what we talked about earlier on, if the poll were taken today, after the increase of the virus in the USA since May?’

Speaker 4:
No, that was the most recent one I saw. In fact, it was about two days ago – was from McKinsey. McKinsey was putting out – McKinsey and Bloomberg are both pretty good about putting out weekly or 10-day updates on consumer attitudes. That optimism seems to extend not as quickly as it did to the month of June. But the consumer confidence did increase a little bit more. The point is well made that – and probably the polls trail some response – but there is great fear obviously for a second wave and no one can say whether that's real, not real, controlled, not controlled. So, the consumer attitude is going to go very much with their safety. We have changed to a world where selfinterest is first and foremost health and wellness, of themselves and their families. So, attitudes will certainly track their feelings about that.

Speaker 2:
Thank you. One for Neil. It might be our last one. Which is, how are gold importers and refineries and manufacturers adapting their business to meet the oncoming EU conflict minerals regulations?

Speaker 5:
How do they adapt?

Speaker 2:
Yes.

Speaker 5:
Well, I think the whole point of this is if you're following one of the existing programmes, you should already be there. I think that – it's not a glib answer but then, if you are following the RJC, LBMA, or even RMI you know, you’re already meeting those requirements. The EU were part of the alignment assessment that the OECD did a couple of years ago, where our programmes were first checked against the OECD Guidance to make sure that we are following the five steps. So, the EU were part of that, and they certainly didn't want to reinvent the wheel, so it was the same people involved in that assessment that are doing the work now. So, we weren't expecting any red flags. We weren't expecting any serious deficiencies. So, if you're already following one of our programmes, you should already be there.

Speaker 2:
Thank you. I think that probably takes us to the end. We can see from our very brief discussion that the impact on consumer demand around the world – in the jewellery market – for gold is going to be very significant and it's likely to be long-term. The supply chain has been disrupted, but things are slowly getting back to normal in some markets, particularly in refining. However, I think what we’ve seen from our speakers, when things start to return to some level of normality, it's not going to be the same. And most of our speakers have spoken about a more discretionary consumer, more interest in provenance, and particularly in terms of compliance to international standards such as those and the LBMA and the RJC. So, I think that probably takes us up. I'll pass back now to Tayler at the LBMA and thank you everybody for listening.

Speaker 3:
Thank you all.

Speaker 4:
Thank you all.

Speaker 1:
Yeah. Thank you all for your great insights today. I apologize to our attendees for running over, but we just had such great material to cover. And, also, I'm sorry that we couldn't get to all the questions, but there were just so many, so we will follow up with you in due course. LBMA will be taking a break for the month of August for our webinars. But please join us for our final week of webinars before we break up for the summer. We have included an extra webinar on Tuesday 28 July at 3PM BST where Manfred Matzinger-Leopold from the Austrian Mint will provide ‘A Scientific Overview of Types of Security Features’. And, as our last webinar before the break, on Thursday, 30th July, we are providing LBMA’s Asia Update with Jeremy East of LBMA, and Sunil Kashyap of Scotiabank. You can also access our library of webinars anytime. So, with that, again I'd like to thank all our panellists, Iris, Mark, Neil, Philip, and all our attendees. It's been wonderful to have you on, so thank you.

Speaker 2:
Thank you very much bye bye.

Speaker 4:
Thank you all.