International agreement aims to improve control standards in the commercialization of mineral goods
The OCB System and the Alliance for Responsible Mining (ARM) have entered into a partnership to bring to Brazil the OECD (Organisation for Economic Co-operation and Development) international reference of Due Diligence, adequate to the reality of artisanal and small-scale mining (ASM) with the implementation of the CRAFT Code.
The code will be parameterized to the Brazilian normative and productive context.
The cooperation also aims to raise awareness among cooperative leaders and the market, as well as create a national network of trained technicians who, together with the OCB System, can support Brazilian mineral cooperatives to advance in challenges related to traceability, management and risk mitigation.
The OCB System has 62 mineral cooperatives that bring together more than 15,000 cooperative miners. In 2022, they held 422 mining titles under production (mining concessions, permits and licenses). In the same period, they traded 5.6 million tons of ores, such as gold, tin, quartz, limestone, tantalum, clay, diamond, sand, and others. In Financial Compensation for Mineral Exploration (CFEM) they collected R$ 62.58 million.
The CRAFT Code, developed by ARM in alliance with RESOLVE, takes into consideration requirements such as legality, human and labor rights, social welfare, governance, use of mercury, natural resources, traceability and gender. A 2022 study by the Federal University of Minas Gerais estimates that 30% of the gold traded in Brazil has irregularities in its commercialization. Many mineral rights holders involved in gold extraction do not have systems in place to verify the origin of the ore.
Due to this context, the National Mining Agency (ANM) has also been creating normative instruments to establish control mechanisms related to money laundering using gems, gold and other precious metals. However, there are no instruments and certifications recognized by the market and regulatory agents that attest to the origin of the ore.
The project to be developed by the OCB System and ARM will benefit not only the 62 cooperatives, their technicians and directors, but also organizations from the public authorities (Ministry of Mines and Energy, ANM, Central Bank, Securities Distributors and Gold Buying Stations, Securities and Exchange Commission, Federal Police), civil society, mines, and the national and international markets, among others involved.
“This issue is very necessary for our mineral cooperatives that have low control capacity in the commercialization of gold. This opens loopholes for tax evasion and foreign exchange evasion. So, we need to improve our control standards in the production chain. We have been dealing exhaustively with the subject within our thematic chamber and in technical cooperation agreements and partnerships with the Ministry of Mines and Energy, with the National Mining Agency and with the University of São Paulo. The actions underway seek to improve the standards of control and compliance in these processes.”
Traceability and Responsible Chain Project in the Brazilian Mineral Cooperativism
The partnership between Sistema OCB and ARM, initially planned for a 12-month period, involves the translation into Portuguese of volumes 1, 2.A, 2.B and 3 of the CRAFT Code and the document Parameterization of the CRAFT Criteria of the Mining Comprehensive Evaluation to the Brazilian context.
Also planned is an online webinar for mineral cooperative leaders and other local and national players in the mining ecosystem.
There are also plans for a course for technicians who work with gold mining cooperatives, in addition to a closing event with context analysis and the building of potential bridges between the main actors in the ASM chain.
“This course will focus on the transfer of ARM’s existing social technology on traceability. Its objective will be to train the participants and share tools so that they can lead improvement projects autonomously in alliance with Brazilian mineral cooperatives and with the OCB System. The improvements are intended to improve the organizational regulatory framework and implement a traceability system to mitigate the risks associated with chains that do not have a structured monitoring system that covers production as well as transport and marketing,”
ARM’s performance in Brazil
In 2015, ARM established its first partnership with Brazilians through the Center for Mineral Technology (CETEM), to conduct a feasibility study on implementing certification. In 2022, through a project funded by WWF Brazil and the State University of Campinas (Unicamp) and Cardiff University in the UK, ARM held a virtual CRAFT course with national reach for dozens of actors in the gold chain.
After the conclusion of the project, two CRAFT assessments were conducted on cooperative mines with preliminary analysis of the supply chain and other market potential for responsible gold. The critical criteria parameterization process that made these pilot assessments possible was carried out thanks to the partnership between ARM and the OCB System.
This is one more measure of the Brazilian cooperativism aligned to its ESGCoop Agenda. “The market has increasingly demanded more control and traceability of the origin of the gold. This project can contribute to establishing a necessary basis for structuring the chain, improving management and governance standards. It is important to emphasize that we are enhancing actions in a segment that lacks guidance and assistance,” said Clara Maffia, Institutional Relations Manager of the OCB System.
About OCB System
The OCB System has been the representative of the Brazilian cooperative movement at the national level for more than 50 years, bringing together multi-actors and strengthening the interests of the sector, a process that began through the foundation of the Organization of Brazilian Cooperatives (OCB), in 1969. After the 1988 Constitution, the promotion and support of the cooperative movement started to be done through the CNC (National Council of Cooperativism) and Senacoop (National Secretariat of Cooperativism). Ten years later, the National government issued a Provisional Measure 1715, which created the National Cooperativism Learning Service (Sescoop). With Sescoop, the cooperative movement began to invest heavily in the process of professionalizing people in the movement. In 2005, the National Confederation of Cooperatives (CNCoop) was created, consolidating the system of Union Representation of cooperatives in the country.
In 2011, OCB, Sescoop and CNCoop formed the OCB System, as it is known today. Since then, constant dialogue has been in place between the three institutions to advance on political and technical aspects that are fundamental in building a better, more solidary and, above all, a fairer world for millions of people who have made, and continue to make, cooperativism their way of life.
According to the 2022 Annual Report on Brazilian Cooperativism, with data from 2021, the OCB System has 4,880 registered cooperatives, representing about 19 million Brazilian cooperative members in the sectors of agribusiness, credit, education, infrastructure, minerals, health, work, transport and others. The cooperatives have generated in this period 493,277 direct jobs, an increase of 8% when compared to the previous year, once again demonstrating the ability of the movement to generate work and income for the population of the country.