Feasibility Study: LBMA Board Response
LBMA Board Response to ASM Feasibility Study
All Members of the Board found the independent report prepared by Gregory Mthembu-Salter and Dr Tom Salter to be a comprehensive overview of the main sourcing challenges and obstacles facing the ASM sector. The Board agrees with their frank and realistic appraisal of the significant barriers that perpetuate the sector’s marginalisation – including those created by its own Responsible Gold Guidance.
In response to the key recommendations made in the report, the Board accepts them and has developed a high-level delivery plan to act upon them. The overall recommendations strongly correspond to the strategic ambitions of LBMA to incorporate responsible ASM gold into the feedstock of its Good Delivery List (GDL) refiners.
In endorsing the conclusions and recommendations of the report, LBMA does not seek to solve all the problems faced by the ASM sector – including those of reputational risks and the current economic model that favours both the illicit trade and the recycled market. That said, the report is a first step toward promoting new engagement and sourcing alternatives to GDL refiners and ASM suppliers. Progress will be slow and will require LBMA to better understand imperfection and the efforts to mitigate shortcomings as sourcing practices into responsible supply chains. It will require extensive outreach in 2023 and beyond to listen and learn from new and existing ASM partners, most notably producer governments.
Develop a Strategic Plan to Support and Integrate ASM Gold into Good Delivery List Refiner Production
(Addressing key recommendations 1, 2, 3 and 5)
It is imperative for stakeholders across the value chain to come together to take action to integrate ASM into the global responsible gold value chain. The way forward will require some GDL refiners to embrace risk mitigation, rather than avoidance, of the ASM sector. LBMA will support this effort by considering ways to infuse progressive improvement into our compliance requirements, and by working with GDL refiners as they mentor and remediate sourcing challenges with intermediate refiners.
In order to support this work, we will set up an ASM Task Force (with membership comprising Good Delivery List refiners, representatives from Large Scale Mines (LSM) and the World Gold Council (WGC), Responsible Mineral Initiative (RMI) and civil society) which will be formalised with its own Terms of Reference. (Recommendation 1).
This ASM Task Force will:
- Determine the necessary and desirable criteria for ASM regulatory regimes in producer countries. (Recommendation 2)
- Define steps and identify workable models that support better ASM/LSM co-operation and GDL/intermediate refiner relationship. (Recommendation 2)
- Define the criteria and requirements that would enable GDL refiners to source ASM gold from intermediate refiners. This includes the potential creation of an ASM Good Delivery List as well as an agreement on how LBMA would review audits from intermediate refiners. (Recommendation 3)
- Review the Responsible Gold Guidance (RGG) to identify possible obstacles to ASM sourcing and propose amendments for inclusion in version 10 of the RGG. (Recommendation 5)
Once clear proposals have been agreed by the ASM Task Force, this will be launched for public consultation for additional feedback.
Communicate and Deliver on ASM Strategic Plan
(Addressing key recommendations 1, 3 and 4)
All ASM contexts are unique, offering unique opportunities and challenges. Some jurisdictions, by themselves or with the support of donor governments, large-scale miners and innovative NGOs, are laying the groundwork for a more responsibly managed sector that delivers greater stability and public benefit. Going forward, we need to come together to support all those actors – governments, mining communities and GDL refiners – who take the leap of faith to nurture and grow a more responsible ASM supply chain.
Therefore, effective engagement is required with select producer governments, industry partners and multistakeholder forums (i.e. the OECD) through sharing the goals and outcomes of the work of the ASM Task Force. Engagement will focus on how LBMA and GDL refiners can support ASM suppliers and producers in implementing the proposals or improving sourcing policies and practices. (Recommendation 1)
LBMA will implement the strategy determined by the ASM Task Force, to support progressive improvement.
In addition, LBMA will work with GDL refines as they mentor and remediate sourcing challenges with ASM suppliers, as well as with intermediate refiners. (Recommendation 3 and 4)
Create Responsible ASM Demand and Build Global Awareness (Addressing key recommendation 6)
Developing the right systems and controls to support responsible ASM is not enough. There needs to be meaningful demand and support for responsible ASM to be part of the supply chain.
A plan will be developed that helps identify the right stakeholders to create that responsible ASM demand and ways to support progressive improvements for ASM sourcing. Engagement with the downstream needs to be strengthened, through training and education, to explain all the work that is being done along the supply chain. (Recommendation 6)
LBMA will review the Responsible Gold Guidance (RGG) to identify possible obstacles to ASM sourcing and propose amendments for inclusion in version 10 of the RGG.