Mining News

Conflict-Free Gold Standard under development by the World Gold Council

Posted by Alana Wilson on 4/5/2012 1:42:56 PM

The World Gold Council (WGC) is working to develop a new Conflict-Free Gold Standard. This standard aims to ensure any gold produced under its guidelines does not fund armed groups, fuel armed conflict, or contribute to the human rights abuses associated with these conflicts. The standard has been developed with stakeholder input, including international mining companies, and will be third-party audited.

Increased gold prices and market volatility

The value of gold has increased significantly since 2009, as investors purchase gold as a shelter from market volatility. [1] In addition to being a store of value, gold is also used in electronics, medicine, energy efficiency and environmental science due to its unique properties. [2] Yet its portability and intrinsic value also make gold a potential source of finance for armed groups involved in civil conflicts and insurgencies. [2] Of particular concern is the Democratic Republic of Congo (DRC), where looting of rich mineral endowments by warlords has contributed to funding militias. [2] Fortunately, the amount of newly-mined gold used to fund conflict is very low and estimated to be less than 1% of total annual gold production. [2, p.2]

Conflict Free Gold Standard

The Conflict-Free Gold Standard takes the form of a decision-tree split into five assessment sections, with key questions in each section used to determine whether gold is produced in compliance with the standard. [2] The first step involves an assessment of whether the area or country where a company is operating is considered ‘conflict-affected or high-risk’ according to external criteria (such as the United Nations Security Council).[2] Mining in ‘conflict-affected or high-risk’ areas is not in itself a violation of the standard however, since the “ withdrawal by responsible operators – with the consequent loss of livelihoods, tax revenues and economic and social infrastructure –may make it more difficult to stabilize a conflict situation or to achieve post-conflict reconstruction”[2, p.5]. Instead, the focus is on whether a company operating in a conflict or high-risk area has the right policies, systems and skills to allow it to operate responsibly, accountably and in a transparent manner. [2] The standard also assesses how gold is handled and transported, covers gold sourced externally, and lays out a framework for gold traceability from the mines to the end of the refining process. [2, 3]

Artisanal and small-scale mining considerations

The Conflict-Free Gold Standard must balance excluding conflict gold from the market, while at the same time ensuring that any standard does not harm the livelihoods of gold miners in vulnerable communities. Approximately 10% to 15% of newly-mined gold comes from artisanal and small-scale mining yet “[w]eak governance, poor security and the opaque and fragmented nature of the artisanal mining groups make them easy prey for control or extortion by armed groups”[2, p.3]. Additionally, 70% of new gold production originates in non-OECD countries, contributing to employment, economic growth and development. [2, p.7]

The World Gold Council has 24 members including Canadian mining companies, and represents approximately 60% of global gold production. [4] The latest draft of the Conflict-Free Gold Standard was released March 29th by the World Gold Council (WGC). Comments and feedback from stakeholders is invited through to July 2012. [2]



Show References

References

1 Canada, Natural Resources Canada [NRC]. Gold. Canadian Minerals Yearbook 2009 [cited 2012 March 30]; Available from: http://www.nrcan.gc.ca/minerals-metals/business-market/canadian-minerals-yearbook/2009-review/3857.

2 World Gold Council, Conflict-Free Gold Standard: An Introduction, 2012, World Gold Council.

3 Goldfacts. Gold and conflict: acting responsibly. 2012 [cited 2012 April 3]; Available from: http://www.goldfacts.org/en/gold_and_conflict/.

4 World Gold Council. About Us: Members. 2012 [cited 2012 April 3]; Available from: http://www.gold.org/about_us/members/.




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