Responsible Gold Guidance V9
Definitions
Artisanal and Small-Scale Mining (ASM): Formal or informal mining operations with predominantly simplified forms of exploration, extraction, processing and transportation. ASM is normally not capital intensive and uses high labour-intensive technology. It can include men and women working on an individual basis as well as those working in family groups or as members of cooperatives or other types of legal associations and enterprises involving hundreds and even thousands of miners. Small, mechanised mines can be considered ASM.
Board Committee (or committee appointed by the Board): Any committee that has delegated powers and authority of the Board for responsible sourcing.
Chain of custody: A record of the sequence of entities which have custody of minerals as they move through a supply chain from origin of the material to end consumer.
Conflict-Affected and High-Risk Areas (CAHRA): These areas are identified by the presence of armed conflict, widespread violence or other risks of harm to people. Armed conflict may take a variety of forms, such as a conflict of international or non-international character, which may involve two or more states, or may consist of wars of liberation, insurgencies, civil wars, etc. High-risk areas may include areas of political instability or repression, institutional weakness, insecurity, collapse of civil infrastructure and widespread violence. Such areas are often characterised by widespread human rights abuses and violations of national or international law.
Contribution to conflict: Contribution to armed aggression between two or more parties which leads to human rights abuses. The parties in the conflict may include government, militia, organised criminals or terrorist groups.
Due diligence: Research and analysis of a company or organisation done in preparation for a business transaction and throughout the relationship. Activities to be assessed, based on the Refiner’s appetite, should include those risks identified in the Annex II of the OECD Due Diligence Guidance, money laundering, as well as Environment, Social and Governance responsibilities.
Environment, Social and Governance (ESG): Decision-making that considers the ESG factors as outlined in Step 1.1.
Gold sources: For this Guidance, there are three possible sources of gold and gold-bearing material for which different due diligence is recommended.
Mined Gold (also referred to as primary gold): Gold that originates from Large and/or Medium-Scale Mines (LSM) or Artisanal and Small-Scale Mines (ASM) and has never been previously refined. This term means any gold or gold-bearing material produced by or at a mine, in any form, shape and concentration, until it is fully refined (995 or greater), fabricated into a gold refinery product (e.g., bar or grain) and sold.
Origin of Mined Gold: The mine where it was extracted, i.e., where the mine is located.
Subcategories of Mined Gold:
- Alluvial gold: Newly Mined Gold that has been taken from sand and gravel deposits, most often in or near streams, typically as very small but visible pieces of gold. Alluvial gold is usually in the form of ‘dust’, and occasionally nuggets, which is already concentrated in form, easily transported and may be easily melted and/or semi-refined into small ingots (normally of 85% - 92% purity). Alluvial gold in all of these forms requires refining before use as bullion or jewellery, but can ordinarily be directly refined, without further intermediate concentration or processing.
- Gold ore: Rock or gravel that contains an economically valuable concentration of gold. This concentration may be very small by weight, e.g., 1 gram of gold per tonne of ore, and still be economically recoverable in medium-scale and large-scale industrial mining. Gold ore, because of its bulk and weight, is ordinarily not transported far from a mine site for processing.
- Gold concentrate: An intermediate material produced from the processing of gold ore to achieve a higher concentration, but that still requires further intermediate processing to produce doré. A gold concentrate would ordinarily be transported to a nearby gold smelter for the creation of doré.
- Gold doré: A bar of newly Mined Gold metal alloy, generally originating from extensive processing of ores and smelting at mines to a high concentration (normally of 85% – 90% purity). Mined Gold in this form is not commercial quality and must then be transported to a refinery to be directly refined, without further intermediate processing.
Owned mines: A group of mines owned and operated by the same corporate group.
Mining By-product: Gold obtained from the mining of base metals, for example, from lead, zinc or copper ore, in which gold may be a trace constituent.
Origin of Mining By-product: This is an exception to the Origin of Mined Gold definition above. It is the point at which trace gold is first separated from its parent mineral ore (for example, at the refinery). The Refiner’s due diligence should ensure that false representations are not made to hide the origin of newly Mined Gold through Mining By-products.
Recycled Gold: This term traditionally encompasses anything that is gold-bearing and has not come directly from a mine in its first gold life cycle. In practical terms, it relates to gold sourced by an LBMA refiner, or downstream intermediate processor, including end-user, post-consumer products, scrap and waste metals, and materials arising during refining and product manufacturing, and investment gold and gold-bearing products which are returned to a Refiner to begin a new lifecycle. This category may also include fully refined gold that has been fabricated into grain, Good Delivery bars, medallions and coins that have previously been sold by a refinery to a manufacturer, bank or consumer market, and that may thereafter need to be returned to a refinery to reclaim their financial value or for transformation into other products (e.g., 1 kilo bars).
Origin of Recycled Gold: The point in the gold supply chain where the gold is returned to the refiner or other downstream intermediate processor or recycler.
Subcategories of Recyclable Gold:
- Unprocessed Recyclable Gold: Recyclable Gold still in its original form and/or fabrication scrap, before it has been returned for processing and refining (e.g., bullion bars, pieces of jewellery, ornaments, coins, machine turnings, etc.).
- Melted Recyclable Gold: Recyclable Gold which has been melted as the first recycling process and cast into rudimentary bars or some other form with undefined dimensions and variable fineness.
- Industrial By-product: A material produced while processing another material, not the primary intended product but nevertheless a separate useful material. For example, gold refining often creates low-value by-products such as furnace flue dust, spent crucibles and floor sweepings.
- Mixed Materials: Materials that include multiple sources (e.g., both mined and recycled
minerals/metals). Mixing of materials is not common practice and should be deemed a red flag. Due diligence should be conducted on those sources of mixed gold in accordance with the full requirements of the Responsible Gold Guidance (RGG).
Grandfathered Stocks: Gold investment products (e.g., ingots, bars, coins and grain in sealed containers) held in bullion bank vaults, central bank vaults, exchanges and refineries, with a Verifiable Date prior to 1 January 2012, which will not require a determination of origin. This includes stocks held by a third party on behalf of the listed entities.
Verifiable Date: A date which can be verified through inspection of physical date stamps on products and/or inventory lists.
The requirements for Grandfathered Stocks with a subsequent date, or without a Verifiable Date, are the same as for other gold-bearing material, i.e., the Refiner must provide the same level of origin and due diligence documentation.
Gold-supplying counterparty or counterparties: A gold supplier that is directly engaged with a gold Refiner.
Human rights: For the purpose of this Guidance, human rights are those defined in the International Bill of Human Rights. The Bill includes the Universal Declaration of Human Rights (1948), the International Covenant on Economic, Social and Cultural Rights (1966), the International Covenant on Civil and Political Rights (1966), as well as its two Optional Protocols (on the complaints procedure and on the death penalty).2 Refiners should also consider the United Nations Guiding Principles on Business and Human Rights. The United Nations has gradually expanded human rights law to encompass specific standards for women, children, persons with disabilities, minorities and other vulnerable groups, who now possess rights that protect them from discrimination that had long been common in many societies.3
Intermediate Refiner: Non-GDL Refiner that has performed a refining process on material prior to delivery to the GDL Refiner. An Intermediate Refiner typically consolidates various streams such as jewellery scraps, electronic scrap and process recoveries into viable batches for refining. Melting-only operations are not considered Intermediate Refiners.
International Cyanide Management Code: A voluntary initiative for the gold and silver mining industries, and the producers and transporters of the cyanide used in gold and silver mining. It is intended to complement an operation’s existing regulatory requirements (www.cyanidecode.org).
International Standard on Assurance Engagements (ISAE 3000) revised: This is the standard for assurance engagements other than audits or reviews of historical financial information, issued by the International Auditing Standards Board in December 2013. The standard stipulates that members of the engagement team are subject to the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA Code) and the firm is subject to the International Standard on Quality Control 1 (ISQC 1).
Know Your Customer or Counterparty (KYC): This is the process of a business identifying and verifying the identity of its counterparts and establishing the facts to have a clear understanding of the nature and background of the relationship.
Legitimate Artisanal and Small-Scale Mining: For the purposes of this Guidance, legitimate refers, among others, to Artisanal and Small-Scale Mining that is consistent with applicable laws. When the applicable legal framework is not enforced, or in the absence of such a framework, the assessment of the legitimacy of Artisanal and Small-Scale Mining will take into account the good faith efforts of Artisanal and Small Scale Miners and enterprises to operate within the applicable legal framework (where it exists) as well as their engagement in opportunities for formalisation as they become available (bearing in mind that, in most cases, Artisanal and Small-Scale Miners have very limited or no capacity, technical ability or sufficient financial resources to do so). In either case, Artisanal and Small-Scale Mining, as with all mining, cannot be considered legitimate when it contributes to conflict and serious abuses associated with the extraction, transport or trade of minerals.
Minamata Convention on Mercury: A global treaty to protect human health and the environment from the adverse effects of mercury. The convention entered into force on 16 August 2017 and includes a ban on the use of mercury in new mines, the phasing-out of mercury use in existing ones, the phasing-out and phasing down of mercury use in a number of products and processes, control measures on mercury emissions to air and on releases to land and water, and the regulation of the informal sector of Artisanal and Small-Scale Mining of gold (www.mercuryconvention.org).
Money laundering: Money laundering is the practice of disguising the origins of illegally obtained money. Ultimately, it is the process by which the proceeds of crime are made to appear legitimate. The money involved can be generated by any number of criminal acts, including drug dealing, corruption and other types of fraud. The methods by which money may be laundered are varied and can range in sophistication from simple to complex.
Politically Exposed Persons (PEPs): Individuals and their family members and close associates (either foreign or domestically based) who are or have been entrusted with prominent public functions by a particular country. These individuals can include heads of state or government, senior politicians and government officials, senior executives of state-owned corporations and important political party officials. The definition of PEPs is not intended to cover middle-ranking or more junior individuals in the foregoing categories. Many PEPs hold positions that can be abused for the purpose of laundering illicit funds or other offences predicated on the abuse of power such as corruption or bribery. PEP status does not predict criminal behaviour, but the additional risk exposure it brings means that Refiners must apply additional AML/CFT measures when establishing a business relationship.
Supplier: This term refers to any individual or organisation that is a participant in the supply chain for the supply of gold and gold-bearing materials.
Sustainable Development: Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.4
Terrorist financing: Includes the financing of terrorist acts, of terrorists and of terrorist organisations.
World Heritage Site: A landmark or area which is selected by the United Nations Educational, Scientific and Cultural Organization (UNESCO) as having a cultural, historical, scientific or other form of significance, and is legally protected by international treaties. The sites are judged important to the collective interests of humanity.
Protected Area: A Protected Area is a clearly defined geographical space, recognised, dedicated and managed, through legal or other effective means, to achieve the long-term conservation of nature with associated ecosystem services and cultural values. Protected Areas include national parks, wilderness areas, community conserved areas, nature reserves, etc.5
Ultimate Beneficial Owner: Refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement (defined as 10% or more ownership).
2 UN Office of the High Commissioner on Human Rights: http://www2.ohchr.org/english/...
3 They include the Convention on the Prevention and Punishment of the Crime of Genocide (1948), the International Convention on the Elimination of All Forms of Racial Discrimination (1965), the Convention on the Elimination of All Forms of Discrimination against Women (1979), the Convention on the Rights of the Child (1989) and the Convention on the Rights of Persons with Disabilities (2006), among others. UN Human Rights: https://www.un.org/en/global-i...
4 Brundtland Commission definition of sustainability
5 IUCN (2008)