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Promoting Responsible Mineral Production through Partnerships and Certified Trading Chains

This presentation discusses the problem of illegal mining and trade of mineral resources, which contributes to regional instability and funds violent groups. It explores the concept of certified trading chains and the potential for establishing a certification system for raw materials in the artisanal and small-scale mining sector.

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Promoting Responsible Mineral Production through Partnerships and Certified Trading Chains

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  1. 8th annual CASM conference - partnerships CTC- CertifiedTrading Chainsin mineral production:thepresent context Markus Wagner BGR – Federal Institute for Geosciences and Natural Resources Brasilia, October 9, 2008

  2. the general concept • bilateral projects • regional partnerships the general problem: illegal mining and trade of mineral resourcesis a source of finance for violent groupsand contributes to regional instability 2 of 25

  3. CTC background 2007 G8 - RESPONSIBILITY FOR RAW MATERIALS:TRANSPARENCY AND SUSTAINABLE GROWTH 86. the artisanal and small-scale mining sectorprovides important livelihoods to many people in developing countries… these activities often are conducted in an informal manneranddo not meet minimum social and environmental standards. •  (therefore, we) support a pilot study, in co-operation with the World Bank and its initiatives (CASM), concerning the feasibility of a…certification system for… raw materials… (with) focus on the artisanal and small scale mining sector… 3 of 25

  4. Why ASM? German mineral consumption 5 g gold – 10% total consumption 50 g 60 g tantalum – 20% statistical share of ASM 300 g 100 g silver – 8% 1.200 g 600 g cobalt – 30% 2 kg 450 g tungsten – >6% 7 kg 5 kg tin – 25% 20 kg 10 kg lead – 3% 350 kg 7,5 kg zinc – 1% 700 kg Source: BGR databank 5 kg copper – 0,5% 1.100 kg 1.350 kg iron ore – < 4% 35 t statistical consumption per capita during an average 79 years lifetime 4 of 25

  5. tantalum ore: african production statistics „coltan boom“ 300 250 Burundi Rwanda (REDEMI) 200 Mozambique Ta [t metal content] 150 Zimbabwe 100 DR Congo Namibia Rwanda 50 Nigeria Ethiopia 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: USGS Minerals Yearbook, BGR databank 5 of 25

  6. CTC dual policy objective: panning, Kwara State, Nigeria • utilize mineral potentials in developing countries for the alleviation of poverty and the strengthening of regional stability • create open and fair access to the worldwide potential of strategic raw materials indispensable to the industrial value chain through creation of alevel playing field 6 of 25

  7. <1 kg 100 kg 10 - 100 t 10,000 t 100,000 t low value prohibits ASM what minerals? the CTC window 18.5 USD/ct 100.000 industrial product 650 USD/oz gold artisanal product 12 USD/ct 10.000 diamonds 400 USD/oz 1.000 high value impedes cooperative 100 tantalite: 77,000 USD/t value per unit [USD / kg] Co: 35 USD/kg coltan: 12,000 USD/t 10 Sn: 7,000 USD/t Cu: 5 USD/kg cassiterite: 1,500 USD/t 1,0 heterogenite: 250 USD/t 0,1 iron ore: 80 US cents/mtu 0,01 Cu (75), Co (29) Sn (2.5), Ta (1) Au (0.004) FeO (9.1%) Diamonds (0.0001) commodity, relative crustal abundance [ppm] Source: BGR databank 7 of 25

  8. CTC key features hauling, Kayonza, Rwanda • focus on industrial commodities • directly link business partners • certification of specific mine sites • introduce minimum standards (e.g. OECD) on origin and CSR by voluntary certification adapted to the local context • implement the CTC concept on a regional / multinational level 8 of 25

  9. matrix for responsible use of mineral resources good governance certification • guarantees on trading volumes • administration of mining titles • verification of origin • record of production and trade transparency • organizational structure of the mineral producer • documentation of state financial revenues • definition of standards • security of tenure for ASM • implementation of standards • adapted legal framework standards • regular inspection on the compliance with standards • third party verification, audit 9 of 25

  10. benefits of CTC assessing, Nemba, Rwanda • benefits for producers and artisanal miners • improved market access • fair returns and improved working conditions • increased capital for investment available • benefits for the government of the producing country • regulation of informal mining • increased state revenues • competitive image of the mineral sector • conflict prevention 10 of 25

  11. benefits of CTC (II) weighing, Kayonza, Rwanda • benefitsfor mineral consumers • access to mineral production without reputational loss • enhanced supply security through diversification of sources 11 of 25

  12. government ofconsumercountry expert (developmentprogram etc.) consults, supports reputational protection producer: cooperative,small scale mine customer: industrial consumer contractual agreement delivers certified product support through fair price and technology transfer engages auditor reports assesses revenues reports commissions nationalcertification unit government of producer country places request dialogue accompanies internationalpartnership gives feedback CTC concept 12 of 25

  13. Uganda Rwanda DRC Burundi „Kibaran“ CTC analytical fingerprint for coltan ores geology geochemistry modal mineralogy radiometric age trace elements major elements 13 of 25

  14. DRC:post-war illegal trade estimated unrecorded annual exports(2005 - 2006) rough diamonds 18 Mct. 450 MUSD gold 9,000 kg 250 MUSD cassiterite 35 MUSD 12,000 t Sn metal content 50 t Ta metal content coltan 30 MUSD total market value 765 MUSD 14 of 25

  15. DRC: two modules, one programme transparent material flows CTC Module 1 Module 2 minesupervision, certification sustainabledevelopment mineralproduction fiscalisation transparent revenue streams 15 of 25

  16. consumers SAESSCAM supports reputational protection producer: cooperative,small scale mine customer: processing company fair price delivers certified product Division desMines reports assesses revenues reports commissions CEEC revenue authoritiesDGI, DGRAD dialogue accompanies IC/GLR CTC in DRC 16 of 25

  17. CTC in Rwanda ASM, Kayonza 2, Rwanda 17 of 25

  18. REDEMI: Official Mine Production Figures 250 1,000 cassiterite coltanboom coltan 200 800 wolframite 150 600 cassiterite [t concentrate] coltan, wolframite [t concentrate] Rwanda crisis 100 400 50 200 1990 1992 1994 1996 1998 2000 2002 2004 Source: REDEMI, BGR databank „the Congo wars“ 18 of 25

  19. Gifurwe CTC in Rwanda Rutsiro Kayonza • national approach, government agencies (OGMR, RBS, REMA) Gatumba Nemba SnO2 , Ta2O5 • adaptation of CTC standard to local context WO3 • participation of willing firms operating in Rwanda • technical assistance to support best practice and compliance with the standards • in accordance with the key mineral policy strategy of Rwanda 19 of 25

  20. co-opted countries involved International Conference on the Great Lakes Egypt Sudan Ethiopia CAR Nairobi Uganda Kenya DRC Congo Rwanda Bujumbura Burundi Tanzania IC/GLR member states Angola Sambia Malawi Zimbabwe Namibia Mozambique Botswana www.icglr.org 20 of 25

  21. IC/GLR: a house for peace-building anddevelopment / www.icglr.org regional follow-up mechamism (RFM) technical instrument:regional programmes of action legal instrument:protocols financial instrument:special reconstructionand development fund peace and security democracy and goodgovernance economic development and regional integration humanitarian and socialissues pact on security, stability and development: the Dar es Salaam Declaration 21 of 25

  22. CTC partnership ICGLR - PROTOCOL AGAINST THE ILLEGALEXPLOITATION OF NATURAL RESOURCES 11. member states undertake to establish a regional mechanism […] to serve as a tool for combating the illegal exploitation of natural resources. this mechanism shall institute accredited standards as regards natural resource exploitation and shall include provisions on certification of origin […]. 22 of 25

  23. IC/GLR: regional initiative against illegal exploitation of natural resources • stocktaking exercise on ongoing initiatives and proposal for integrated initiative • meeting among member states on implementation strategy • integration within national initiatives • revised and endorsed project strategy 23 of 25

  24. CTC road map • 10/06 – 05/07: elaboration of concept • 06/07: G8 summit Heiligendamm • 10/07: baseline audit “assessing corporate social responsibility against international standards” conference, Berlin, Germany • 12/07: Berlin conference on “transparency in the mineral sector” • 07/08: TOR study “CTC in mineral production - towards technical assistance” • 09/08: scoping study ”CTC & EITI: synergies and scope for collaboration” • 10/08: consultation “8th annual CASM conference” • 11/08: consultation “fatal transactions conference” • 12/08: implementation workshop / round table “pilot project Rwanda” • 03/09: start-up bilateral project “transparency and control in the mineral sector of DR Congo” 24 of 25

  25. muito obrigado! for more information: Markus Wagner Bundesanstalt für Geowissenschaftenund Rohstoffe (BGR) e-mail: m.wagner@bgr.de 25 of 25

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