In region / upstream efforts to encourage legal sales of gold DUTCH TETRA TECH ITOA BGR PAC

Transcription

1 In region / upstream efforts to encourage legal sales of gold DUTCH TETRA TECH ITOA BGR PAC

2 Challenge ASM Gold vs. 3Ts Tin, tungsten & tantalum Gold Limited # of international destinations (smelters) = choke point Most smelters concerned with US legal compliance (DF) CFSI pay more for material than noncompliant smelters = strong incentive to comply with traceability mechanisms Vast and diversified web of buyers (Dubai, India ) Not as concerned about US laws or opinion of US Gov t High value/volume ration of gold; narrow price margins; differing taxation levels between Great Lakes countries = strong incentive to engage in contraband & smuggling = virtue is rewarded = vice it its own reward Actors on the ground are entirely different (creuseurs, negociants, exporters, overseas buyers etc); no crossover.

3 Artisanal Gold - DRC 12,000,000 10,000,000 10,000,000 GOLD (Kg) 8,000,000 6,000,000 4,000,000 GOLD (Kg) 2,000,000 0 Total Artisanal Production (est) 216 Legal Artisanal Exports (declared)

4 Just Gold/Or Juste - DRC seeded by the PPA, Humanity United & Apple currently supported by IOM-USAID & the Department of Foreign Affairs, Trade & Development, Canada

5 Project Goals 1. Create a traceable conflict-free mineral chain for artisanal gold from the eastern DRC 2. Demonstrate that it can be done! from mine site to refiner Legal Exports Formalise Artisanal Producers Leverage project to Eliminate Conflict in Project Areas & Address the Drivers of Smuggling Pilot Project Try out new techniques How to scale up and make it sustainable Broader community beneficiation

6 The Grand Bet Technical Assistance in exchange for Legal Sales (Incentive) Higher Yields make up for Lower Price

7 Example of existing technology used in pilot site 1 (Mangi) prior to provision of technical assistance

8 Technology used prior to technical assistance (pilot site 1: Mangi) Panning Concentrate

9 Technical Assistance pilot site 1 (Mangi) Scavenger Sluice Yields increased by 30%! Distribution of equipment to 52 teams (275 diggers)

10 Traceability Pilot traceability system based on monitoring & recording of production/sales of gold at each step in sales over 2 mo. Digger (écuries) Small trader (Cat B. négociant) Large trader (Cat A. grand négociant) Exporter (comptoir) Refiner

11 Lessons Learned 1. Technical assistance can > gold yield (25-30%) 2. Increased yields (immediate return) can be an incentive for legal & tracked production; 2 months of data suggests very strong project loyalty (91%) ** Traceability is important BUT insufficient and does not motivate gold producers to sell via legal channels

12 CBRMT Gold Pilots Progress to Date Assessment of artisanal gold sector and potential models for establishing legal and responsible ASM gold supply chains in DRC (Shawn Blore, PAC) Independent expert peer review of the assessment (Kevin Telmer, AGC) National Workshop in DRC and experts working session to identify a framework for the piloting of legal and traceable artisanal gold from the DRC. Draft Implementation Plan for Piloting Responsible ASM Gold submitted to USAID for approval.

13 CBRMT Gold Pilots Near Term Next Steps I. Upon approval from USAID, release Requests for Proposals (RFP) for two initial pilot projects in DRC. (Expected June 2015) II. Review and select two implementing partners and execute subcontracts. (Expected July/August 2015) III. Launch of ASM Gold pilot projects (Expected September 2015) IV. Consistent collaboration with other ASM gold formalization efforts in the DRC, including BGR and LSM mining, to ensure synergies.

14 BGR To pilot traceability for gold in 2015 Maniema province Technology to be determined (e.g. GeoTraceabilité?) Reconsidering approach at the moment

15 Initiative de Traçabilité de l Or d exploitation Artisanale «ITOA» ) Kinshasa, le 28 octobre 2014

16 II.3. MISE EN ŒUVRE DE L ITOA L initiative de traçabilité de l or d exploitation artisanale, une fois mise en place, permettra de parachever l objectif de la RDC d assurer la traçabilité des minerais désignés (3T+or). A la différence de l ITRI qui s occupe de la traçabilité des 3T (l étain, le tungstène et le tantale) qui constituent une matière pondéreuse, ITOA tient compte des spécificités de l or en général et du secteur d exploitation artisanale en particulier.

17 II.3. MISE EN ŒUVRE DE L ITOA (suite) En effet, à l instar de l ITRI dont le mécanisme de traçabi lité repose sur l étiquetage, l ITOA reposera sur l ensachage au moyen des sachets inviolables instau rés à travers toute la chaine de possession c est-à-dire depuis les sites de production jusqu à l exportation. Elle sera prise en charge par le logiciel de certification des minerais désignés (LCMD).

18 IV.3. MISE EN ŒUVRE DE L ITOA (suite) Ce logiciel conçu par le CEEC s occupe actuellement de la prise en charge de la traçabilité de l or d exploitation industrielle. A ce jour, son fonctionnement n a posé aucun problème. Le processus de sa conversion en web va bientôt être lancé.

19 IV.3. MISE EN ŒUVRE DE L ITOA (suite) Les sachets inviolables, élément de base de cette initiative, auront des couleurs et des formats différents selon qu il s agira du site minier (Modèle A), du centre de négoce (Modèle B) ou du comptoir d achat (Modèle C) ou de l exportation (Modèle D). Tandis que le (Modèle E) sera utilisé dans l exploitation industrielle. Ils porteront les signes distinctifs de la République Démocratique du Congo ainsi que d autres indications nécessaires à la traçabilité.

20 Challenges to creating legal sales chains of conflict free ASM gold and to scaling up 1. TITLE and availability of sites Superposition of ASM sites with mineral concessions Only 18 sites are located with ZEAs and are thus considered legal under DRC regulations (and ZEA can be revoked with 60 days notice) 2. Little motivation for large traders and exporters Selling legally costs too much (taxes) esp. when margins are small Pre-financing of ASM producers by clandestine purchasers: gold can be contraband even before it leaves the ground solution proposed: Model Trading House tested at pilot site 2 called Some (July 2015 onwards) 3. Sustainability of efforts & community beneficiation solution proposed: Model Trading House tested at pilot site 2 called Some (July 2015 onwards)

21 4. Taxation: Legal and Illegal Excessive legal taxation Excessive provincial taxes Province Export tax (central govt)* Legal taxes on gold per province: Negociant tax (sales tax) Production tax (SAESSCAM) Total Tax Load Orientale 5% 1% 5% 8% South Kivu 2% 1% 10% 13% North Kivu 2% 1% 10% 13% Maniema 2% 3.25% 11% 16.25% *1% in Burundi and 0.5% inuganda Illegal taxation Local authorities tax as high as 10% (not legally recognized) Illegal Taxation e.g. road barriers Consider also small margins & costs of operating legally in DRC

22 Pilot 1 Timeline Pilot site 1 (Mangi) finished end of Feb 2014 (PPA; HU and Apple supported) Next steps & Building on Pilot 1 Pilot site 2 (Some) 2014 research, identification and planning Pilot site 2 (Some) launched in January 2015 SUSTAINBILITY & COMMUNITY BENEFICITION First legal exports by OECD in Nov Pilot site 3 (South Kivu) UNEP/MONUSCO funded: MERCURY + focus on TAXATION

23 Pilot sites 1 (Mangi) and 2 (Some) Pilot site1 (Mangi) Pilot site2 (Some)