Conclusion

21 tonnes of responsibly mined ASM gold was refined by LBMA GDL members in 2021. This is a lot of gold, but it is not enough when around 700 tonnes of ASM gold are being mined every year. For the good of the gold industry, the LBMA GDL and, more importantly, for the livelihoods and living standards of ASM miners, and the environments where they work, more ASM gold needs to be demonstrably mined responsibly, and more of this gold should be refined by LBMA GDL refiners. In this report, we have sought to make the case for this, to understand the main obstacles to responsibly mined ASM gold being refined by GDL refiners, to propose what we think are the best ways to reduce the impact of these obstacles, and to suggest ways in which the process can be taken further.

We think that an ASM GDL is one way to reduce the impact of the obstacles we have identified, but judge that it is perhaps only a rather limited one. For numerous reasons, which are all detailed in the body of the report, we have concluded that the establishment of a GDL for processors and intermediate refiners has the potential be more effective than an ASM GDL in lessening the impact of these obstacles, and could for this reason potentially result in many more tonnes of responsibly-mined ASM gold being refined by LBMA GDL refiners.

We have outlined possible criteria for a processors and intermediate refiners’ GDL, and proposed that they align with the RMI’s RMAP audit criteria. Regarding the appropriate third-party assurance mechanism, the RGG currently requires for GDL refiners that their Assurance Providers be approved by LBMA and must be capable of performing an assurance engagement in accordance with the ISAE 3000 revised assurance standard. We do not think, however, that this is an appropriate requirement for third-party assurance of potential members of a processors and intermediate refiners’ GDL and certainly not for potential members of an ASM GDL. First, it is a challenge even to find auditors who are competent to evaluate the ASM sourcing practices of processors and intermediate refiners. Secondly, this level of auditing is likely to be prohibitively expensive. We think, by contrast, there is merit in the RMI’s approach, which requires that the assurance process for processors and intermediate refiners should be more flexible and developmental in its approach, as has been the case in Earthworm’s engagement on behalf of PX Precinox, at Dynacor.

We have also proposed that GDL refiners and the LBMA explore between them the core components of the regulatory environments in ASM-producing countries that they would wish to see in order to boost their uptake of ASM gold, and that the LBMA and its members also work with other stakeholders on this issue, with a view to trying to have the necessary reforms enacted. We have also outlined in the report what the GDL refiners who have commented on the issue to us think these core components should be.

In addition, we have proposed that the LBMA work with the WGC and with other stakeholders to identify and articulate the regulatory environment requirements needed to facilitate and to deepen the cooperation of LSM miners with ASM on their sites, which will encourage and enable off-take by GDL refiners.

We think that if the measures we propose are implemented, the result will be a significant increase in the amount of responsibly mined ASM gold being refined by LBMA GDL refiners.

We again caution, however, that even if everything works out, we might all end up being somewhat underwhelmed. Responsible ASM mining is more challenging than ASM mining with no such requirements, and refiners that have no due diligence requirements of their ASGM suppliers will still have lower costs in this regard than those with due diligence requirements, even when – as we propose - the costs of due diligence are spread more evenly across the supply chain. We therefore anticipate that even if our proposed reforms are implemented and succeed, most ASM gold will still not be mined responsibly, or, at least, not demonstrably so, and that most of it will continue to be refined by non-GDL refiners.

With formal sector pre-financing options for ASM likely to remain highly constrained for the foreseeable future, and equity investment from the downstream supply chain also set to remain scarce, it will remain likely that most ASM gold will be pre-financed by the current, often informal and sometimes criminal trading networks. Partly for this reason, it is also likely to remain the case that this gold will continue to go to intermediate and final refiners who have little or no interest in due diligence.

We conclude, however, on a more positive note. This report was commissioned by the LBMA because of the association and its members’ commitment to increasing GDL refining of responsibly mined ASM gold. This commitment is there partly to safeguard the reputation of the LBMA and the gold industry in general, but it is also because of the LBMA’s intention to see realised the anticipated pro-poor, and positive ESG impacts resulting from increased production and GDL refining of responsibly mined ASM gold. We have proposed ways to translate this commitment into reality, and have additionally sought to identify the paths to extending and deepening this work, by improving LSM/ASM cooperation, and by building better, more cooperative relationships between the LBMA, its members, processors and crude refiners, and ASGM. There is much to be done.