Too many countries that are rich in natural resources are blighted by armed conflict, poverty and poor governance. How can mining companies guarantee they are not funding conflicts?
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The Democratic Republic of Congo (DRC) has vast mineral resources, such as gold, diamonds, tin, tantalum, cobalt and copper, that could, in theory, provide the nation with great wealth. Instead, much of the DRC is remote, dangerous and extremely poor; its decades-long civil unrest funded in part by the theft and misuse of part of this mineral wealth.
This is part of what economist Paul Collier, in his book The Bottom Billion, called “the resources trap”. According to this theory, poor countries with substantial natural resources often do not benefit from them. On the contrary, a range of negative consequences – for instance various types of armed conflict erupting as groups battle to gain control of those resources – arise as a result, making those countries poorer than ever.
But an increasing number of organisations now believe industry has a significant role to play in helping governments and civil society break the link between natural resources and unlawful armed combat.
The Organisation for Economic Co-operation and Development (OECD), for instance, has created a due diligence process that provides guidance for sourcing minerals in conflict-affected areas. The London Bullion Market Association also requires that gold refiners comply with its Responsible Gold Guidance.
In October 2012, the World Gold Council established the Conflict-Free Gold Standard to combat the potential misuse of gold to fund armed conflict. It provides a common approach by which gold producers can assess and provide assurance about the ways their gold has been extracted.
The standard offers gold producers a way to show that any gold they mine is “conflict-free”. This process includes a public commitment to human rights, transparency over payments to governments or other officials, and steps for reporting any infringements of these procedures or resolving grievances raised by local people. Conformance to the standard will be externally assessed at least once a year, with the first reports expected to appear in early 2014.
Terry Heymann is director, responsible gold, at the World Gold Council. “We wanted consumers to have confidence that gold was produced in a way that didn’t contribute to conflict anywhere in the world,” he says.
In recent years, much attention has been paid to the role of minerals in partially funding the conflict in the DRC. Although it is responsible for less than 1% of the world’s gold supply, the value of this gold to a country as poor as the DRC is significant and has led to armed groups controlling gold mines.
However, the standard is designed to apply to gold-miners operating in any country. Heymann says: “We work in collaboration with donor governments, development agencies, such as the World Bank, and NGOs. We need to work together for solutions that don’t stigmatise responsibly produced gold.”
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