sharing in governance of extractive industries
Gold producers are planning to join the diamond industry to create a system to certify that bullion purchases aren’t funding conflict in Africa.
President Barack Obama signed in July an amendment in the U.S. financial reform bill requiring U.S. companies that buy minerals from the Democratic Republic of Congo and neighboring countries to certify that purchases are “DRC conflict free.” The World Gold Council, representing 60 percent of output, said today it produced a draft framework to track conflict-free bullion from the mine to the end user, and to ensure gold mined in a conflict zone doesn’t help finance armed groups.
The framework may be similar to the Kimberley Process, started in 2003, requiring nations to certify rough diamond origins in order to block proceeds from funding civil wars. The gold council said in March that while it supports the legislation, it may unintentionally trigger a boycott of minerals from the region. Sales of tin ore from the DRC’s North Kivu province fell more than 90 percent in April as companies avoided trade, a provincial mining official said last month.
“Responsible gold mining contributes positively to economic and social development in producing countries,” Aram Shishmanian, the council’s chief executive officer, said today in a statement. “The misuse of gold to fund conflict is wholly contrary to this mission and is a threat to the reputation of gold.”
Democratic Republic of the Congo
“Conflict” gold is mainly considered to be from the DRC and surrounding countries, according to the London-based council. The DRC accounted for 0.6 percent of total supply last year, researcher GFMS Ltd. estimates. Surrounding nations mined about 2.1 percent of total output, though most of the bullion isn’t considered to be funding armed conflict, the council said.
Gold has risen in value during the past 10 years, having the longest run of gains in at least nine decades, and reaching a record $1,577.57 an ounce on May 2. It traded at $1,538.20 by 4:38 p.m. in London. Jewelry accounted for about 47 percent of total global consumption last year, according to GFMS.
Conflict diamonds account for less than 1 percent of the global trade in the gems, compared with estimates as high as 15 percent in the 1990s, according to a statement on the Kimberley Process website. The effort helped end brutal fighting in Sierra Leone, Liberia and Congo, said Annie Dunnebacke, senior campaigner at the London-based human-rights group Global Witness.
“It is difficult to track specific consignments from the mine to the end user because gold is easily melted down and co- mingled with gold from other sources,” Shishmanian said. “The success of any certification system will depend upon the co- operation and commitment of many parties in the gold supply chain.”
The gold council, which has 22 members, said its draft standards are being stress-tested by leading gold producers and refineries. Comments on the draft are expected by Sept. 1.
Add a Comment