Authors: Louis Maréchal and Luca Maiotti
For several years, the international community, civil society organizations and consumers have developed high expectations to ensure that the production and trade of raw materials, especially gold, are not linked to human rights violations and conflict financing.
In 2010, governments of OECD Member countries supported by representatives of Central African states initiated the development of a set of recommendations that would allow private sector companies to ensure that they did not contribute to the financing of armed groups or human rights violations through their mineral sourcing.
The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals, adopted with its gold supplement in 2013, has led an ever increasing number of companies to implement risk identification systems through an information analysis exercise which is called due diligence.
Of course the capacity of a small mining cooperative in Latin America or West Africa may be limited, but it is important that each economic actor commits itself and contributes to collective efforts within its means.
What is due diligence?
Due diligence involves a set of practical actions that vary according to the position of the company in the value chain, and of course its size. Essentially, each company is expected to put in place a process to identify, prevent and mitigate risks related to its operations, suppliers and business partners. The higher the risk identified by the company, the more stringent controls should be. If the due diligence exercise can’t fully guarantee that the extraction or transport of a mineral has not contributed to conflict or human rights violations, it must progressively and collectively strengthen the integrity and transparency of global supply chains. It does not aim to be perfect immediately, but it is essential that companies start to implement it and commit to gradually improve their performance over the years.
Moreover, the implementation of due diligence must be a shared responsibility by all actors in the supply chain, including economic entities practicing artisanal or small-scale mining. Of course the capacity of a small mining cooperative in Latin America or West Africa may be limited, but it is important that each economic actor commits itself and contributes to collective efforts within its means. In practice, this essentially consists of two things: to ask questions about the conditions in the extraction and trade of the raw material and not to turn a blind eye to questionable practices in favor of an economically more profitable operation.
How to enable informal actors to participate?
It is estimated that artisanally mined gold accounts for about 20% of world production. However, in many producing countries, the category of artisanal miner is in a legal limbo – between informal, illicit, illegal – but is de facto largely tolerated. As a result, non-state (and sometimes even state) armed groups benefit from their vulnerability. It is estimated that FARC revenues from the extortion or “protection” (vacuna) activities of artisanal miners in the Colombian department of Antioquia reached $ 2 million dollars per month in 2013.
The OECD Guide is the first international standard supported by governments to openly acknowledge the positive contribution of the artisanal sector to local economic development and which invites all stakeholders to develop strategies to support the formalization and legalization of responsible operators. In this respect, much of the activity of the implementation program of the OECD Standard is aimed at getting international buyers to favorably consider responsible artisanal production and to support its inclusion in formal and legal supply chains.
While the road is still long, much progress has been made in recent years, particularly in understanding the importance of the phenomenon of artisanal mining at the local level and its potential contribution to economic development. The OECD and all its partners will continue to promote this sector and develop solutions that permit responsible actors to benefit from their hard work.
Non-state (and sometimes even state) armed groups benefit from their vulnerability. It is estimated that FARC revenues from the extortion or “protection” (vacuna) activities of artisanal miners in the Colombian department of Antioquia reached $ 2 million dollars per month in 2013.
Louis Maréchal joined the Responsible Business Conduct Unit of the OECD in September 2014. He specifically works on projects related to the implementation of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Prior to joining the OECD, Louis Maréchal worked for four years with the Ministry of Foreign Affairs of France on issues related to transparency and governance in the mining sector, and security of supply of strategic metals. He started his career with a strategic consultancy firm focusing on the defence and extractives industries. Louis Maréchal holds a master’s degree in international relations, with a specialization in the defence industry.
Luca Maiotti is a Junior Policy Analyst in the Responsible Business Conduct Unit at the OECD, where he is working on training programmes in mineral-producing countries and engaging in policy advice and outreach activities in Latin America, West Africa and Central Africa. Previously, he worked in development cooperation on illicit financial flows and in three different research centres on water, migration and security in the Mediterranean. Luca holds a Master’s degree in International Security from Sciences Po Paris, with a focus on Middle East and Diplomacy.