On 17-19 April 2018 stakeholders came together in Paris for the annual OECD Forum on Responsible Mineral Supply Chains. This year’s event, the 12th since its launch, saw over 700 participants attend from across the mining sector, to downstream buyers from major global brands, to INGOs and the media.
Forum discussions spanned various minerals, industry programs, regulatory and policy developments, technology tools for supply chain transparency and traceability, and company risk mitigation and reporting. The OECD’s own portal for supply chain risk data was also discussed.
While the conference was held under Chatham House rules, there were several interesting themes which emerged during the week-long event.
1. The cobalt challenge continues
- As with the latest Amnesty International report published at the end of last year, there was an acknowledgement at the OECD Forum that progress had been made in addressing the unique set of responsible sourcing challenges present in the cobalt sector.
- But there was also a general sense that efforts, particularly within the downstream, need to be more proactive and more coordinated. Linked to this, there were also further calls for greater coordination among the various existing upstream and downstream initiatives.
- In addition to the general discussion there were also a number of tools profiled during the Forum:
- The Responsible Minerals Initiative (RMI) profiled their new Cobalt Reporting Template (CRT) for the identification of choke points and collection of due diligence information in the cobalt supply chain.
- Two new ethical supply chain pilots were likewise profiled at the conference. Pact, Trafigura and Chemaf announced a collaboration to explore the delivery of ethical ASM cobalt while the Better Cobalt pilot initiative was profiled at both the main technology session within the conference and in a dedicated side-event.
- The landmark Better Cobalt initiative is being launched by RCS Global, Better Sourcing, and Bon Pasteur in collaboration with launch partners Huayou Cobalt and Somika. The pilot will deliver up to five fully traceable cobalt supply chains from the ASM or semi-mechanised cobalt sector in the DRC.
2. OECD alignment is progressing and becoming easier
- One of the key sessions at the Forum was the progress update on the alignment of industry programs with the OECD’s Due Diligence Guidance.
- A pilot program has been running since 2016 to assess the alignment of industry schemes with the OECD Guidance with the iTSCi, LBMA, RJC, DMCC and RMI schemes taking part. In the latest review round, which was completed this year, all of the above-noted schemes have been classed as at least “partially aligned.”
- Critically, both the assessment methodology and alignment assessment tool are now both publicly available on the OECD website meaning other industry schemes looking to further align with the OECD Guidance can use the same process.
3. Demand for data now, blockchain on the horizon
- The demand for more and better data from the upstream continued last week in Paris with several downstream participants calling for more risk and incident data and more development data to be made available in a form which can be assessed and used as a core tool for downstream due diligence programs. This trend in data was linked heavily to another key theme of the conference, namely, technology tools like blockchain.
- Several closed door meetings on blockchain took place while the main public blockchain session was one of the most well-attended of the week. During the main session the RCS Group blockchain company RCS Technologies, BCG Tech, and Consensas all outlined their approaches to mineral supply chain blockchains.
- To mark the session the ICMM also announced the publication of a research paper produced by RCS Global looking at the potential for blockchain in minerals supply chain traceability. You can access the paper on the ICMM site here.
- While the panel agreed that beyond cryptocurrencies, mineral supply chains represented the most obvious use case for blockchain, there was still some concern about how such an approach could be commercially viable. Yet, as highlighted during the session, several business models are emerging and will be piloted over the next year notably in diamonds and, potentially, cobalt.
- The other key concern with blockchain in mineral supply chains – especially in Artisanal and Small-Scale Mining – is ensuring quality data inputs in the upstream. A small number of initiatives, including the Better Sourcing Program, are addressing this issue directly with upstream validation and data tools but the “junk in; junk out” analogy is still an issue for blockchain in this context.
4. Details on the implementation of the EU conflict minerals regulation are emerging
- This year’s Forum included a session on the upcoming implementation of the EU conflict minerals regulation, which will come into force on 1 January 2021. The European Commission will launch a number of “supporting elements” to the regulation including:
- a delegated regulation to recognise existing industry schemes (preceded by an assessment of the schemes) and a global list of responsible smelters and refiners taking into account existing initiatives;
- guidelines on conflict-affected and high-risk areas (CAHRAs) including an indicative, non-exhaustive list of CAHRAs, which will be prepared by an external expert and regularly updated;
- guidance for EU Member State authorities on conducting ex-post checks;
- a review of the regulation in 2023 and every 3 years thereafter.
- In addition, the European Commission is developing a number of “accompanying measures” to the regulation. They comprise a transparency platform on downstream due diligence initiatives, support for SMEs to implement the regulation, guidelines on reporting (also for downstream companies) based on the EU Directive on non-financial reporting, funding for development aid and outreach to third countries.
5. Gender becoming a material issue in responsible mineral supply chains
- Finally, a number of companies and organisations have begun to examine the role of women in mineral supply chains.
- Following the launch of a joint “Women in Jewelry” project in January 2018, Business for Social Responsibility (BSR) and Swarowski convened a meeting of jewellery companies in conjunction with the OECD Forum to explore how companies can identify, create and implement opportunities for women in jewelry supply chains. A White Paper on this subject has also been published.
To speak with the RCS Global advisory team about the OECD Conference or any other industry research or advisory issues please contact our practice heads:
Sam Hardy: [email protected]
Alice Valvodova: [email protected]