CTC - Certified Trading Chainsin mineral production: the present context

Markus Wagner

BGR – Federal Institute for Geosciences and Natural Resources

Brasilia, October 9, 2008

8th annual CASM conference - partnerships

the general problem:

illegal mining and trade of mineral resourcesis a source of finance for violent groupsand contributes to regional instability

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• the general concept

• bilateral projects

• regional partnerships

CTC background 2007

G8 - RESPONSIBILITY FOR RAW MATERIALS:TRANSPARENCY AND SUSTAINABLE GROWTH

86. the artisanal and small-scale mining sector provides important livelihoods to many people in developing countries… these activities often are conducted in an informal manner and do not meet minimum social and environmental standards.

• (therefore, we) support a pilot study, in co-operation with the World Bank and its initiatives (CASM), concerning the feasibility of a… certification system for… raw materials… (with) focus on the artisanal and small scale mining sector…

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statistical consumption per capita during an average 79 years lifetime

iron ore – < 4% 1.350 kg 35 t

copper – 0,5% 1.100 kg5 kgzinc – 1% 700 kg7,5 kglead – 3% 350 kg10 kgtin – 25% 20 kg5 kg

tungsten – >6% 7 kg450 gcobalt – 30% 2 kg600 g

silver – 8% 1.200 g100 gtantalum – 20% 300 g60 g

gold – 10% 50 g5 g total consumption

statistical share of ASM

Why ASM? German mineral consumption

Sou

rce:

BG

R d

atab

ank

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tantalum ore: african production statistics

50

100

150

200

250

300

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Ta [t

met

al c

onte

nt]

EthiopiaNigeria

NamibiaDR Congo

Zimbabwe

Mozambique Rwanda (REDEMI) Burundi

Rwanda

Source: USGS Minerals Yearbook, BGR databank

„coltan boom“

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CTC dual policy objective:

• utilize mineral potentials in developing countries for the alleviation of poverty and the strengthening of regional stability

• create open and fair access to the worldwide potential of strategic raw materials indispensable to the industrial value chain through creation of a level playing field

panning, Kw

ara State, N

igeria

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what minerals? the CTC window

Source: BGR databank

0,01

0,1

1,0

10

100

1.000

10.000

100.000

commodity, relative crustal abundance [ppm]

valu

e pe

r uni

t [U

SD

/ kg

]

FeO (9.1%) Diamonds (0.0001)Cu (75),Co (29)

Au (0.004)Sn (2.5),Ta (1)

high value impedes cooperative

low value prohibits ASM

12 USD/ct

18.5 USD/ct

650 USD/oz

400 USD/oz

iron ore: 80 US cents/mtu

Cu: 5 USD/kg

Co: 35 USD/kg

gold diamonds

Sn: 7,000 USD/t coltan: 12,000 USD/t tantalite: 77,000 USD/t

heterogenite: 250 USD/t cassiterite: 1,500 USD/t

100,000 t

10,000 t 10 - 100 t

100 kg<1 kg

industrial product

artisanal product

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CTC key features

• directly link business partners

• introduce minimum standards (e.g. OECD) on origin and CSR by voluntary certification adapted to the local context

• certification of specific mine sites

• implement the CTC concept on a regional / multinational level

• focus on industrial commodities

hauling, Kayonza, R

wanda

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matrix for responsible use of mineral resources

good governance

• administration of mining titles

• record of production and trade

• adapted legal framework

• regular inspection on the compliance with standards

• guarantees on trading volumes

• documentation of state financial revenues

• security of tenure for ASM

• verification of origin

• organizational structure of the mineral producer tra

nspa

renc

yst

anda

rds • definition of standards

• third party verification, audit

certification

• implementation of standards

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benefits for producers and artisanal miners• improved market access• fair returns and improved working conditions• increased capital for investment available

benefits of CTC

benefits for the government of the producing country• regulation of informal mining• increased state revenues• competitive image of the mineral sector• conflict prevention

assessing, Nem

ba, Rw

anda

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benefits for mineral consumers• access to mineral production without reputational loss• enhanced supply security through diversification of sources

benefits of CTC (II)w

eighing, Kayonza, R

wanda

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CTC concept

reportscommissions

places requestnationalcertification unit

assessesreports

engages

auditor

contractual agreementdelivers certified product

support through fair price and technology transfer

producer:cooperative,

small scale minecustomer:

industrial consumer

gives feedback

revenues

dialogue

accompanies

internationalpartnership

government ofproducer country

consults, supports reputational protection

expert(developmentprogram etc.)

government ofconsumer country

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geology modal mineralogy radiometric agegeochemistry

Burundi

Rwanda

Uganda

DRC

„Kibaran“

trace elements

major elements

CTC analytical fingerprint for coltan ores

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rough diamonds

gold

cassiterite

coltan

765 MUSD

450 MUSD

250 MUSD

35 MUSD

30 MUSD

9,000 kg

18 Mct.

12,000 t Sn metal content

50 t Ta metal content

DRC: post-war illegal trade

estimated unrecorded annual exports (2005 - 2006)

total market value

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minesupervision,certification

fiscalisation

Module 1 Module 2

mineralproduction

sustainabledevelopment

DRC: two modules, one programme

CTC

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CTC in DRC

reportscommissions

CEEC

assessesreportsDivision des

Mines

delivers certified productfair price

producer:cooperative,

small scale minecustomer:

processing company

revenues

dialogue

accompanies

IC/GLR

revenue authoritiesDGI, DGRAD

supports reputational protection

SAESSCAM consumers

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CTC

in R

wan

daA

SM

, Kay

onza

2, R

wan

da

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REDEMI: Official Mine Production Figures

200

400

600

800

1,000

1990 1992 1994 1996 1998 2000 2002 2004

50

100

150

200

250

Source: REDEMI, BGR databank

cass

iterit

e [t

conc

entra

te]

coltan, wolfram

ite [t concentrate]

cassiterite

coltan

wolframite

Rwanda crisis

coltanboom

„the Congo wars“

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CTC in Rwanda

• national approach, government agencies (OGMR, RBS, REMA)

• participation of willing firms operating in Rwanda

SnO2 , Ta2O5

WO3

GifurweKayonza

Gatumba

Nemba

Rutsiro

• adaptation of CTC standard to local context

• technical assistance to support best practice and compliance with the standards

• in accordance with the key mineral policy strategy of Rwanda

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International Conference on the Great Lakes

IC/GLR member states

co-opted countries involved

Sudan

DRC

CAR

Tanzania

KenyaUganda

RwandaBurundi

SambiaAngola

Ethiopia

Egypt

NamibiaBotswana

Zimbabwe

Malawi

Mozambique

www.icglr.org

CongoBujumbura

Nairobi

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IC/GLR: a house for peace-building and development / www.icglr.org

pact on security, stability and development:the Dar es Salaam Declaration

peace andsecurity

democracy andgoodgovernance

economic development andregionalintegration

humanitarianand socialissues

technical instrument:regional programmes of action

legal instrument:protocols

financial instrument:special reconstructionand development fund

regional follow-up mechamism (RFM)

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CTC partnership

ICGLR - PROTOCOL AGAINST THE ILLEGALEXPLOITATION OF NATURAL RESOURCES

11. member states undertake to establish a regional mechanism […] to serve as a tool for combating the illegal exploitation of natural resources. this mechanism shall institute accredited standards as regards natural resource exploitation and shall include provisions on certification of origin […].

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IC/GLR: regional initiative against illegal exploitation of natural resources

• stocktaking exercise on ongoing initiatives and proposal for integrated initiative

• integration within national initiatives

• meeting among member states on implementation strategy

• revised and endorsed project strategy

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CTC road map conference, Berlin, G

ermany

• 10/06 – 05/07: elaboration of concept• 06/07: G8 summit Heiligendamm

• 12/07: Berlin conference on “transparency in the mineral sector”• 07/08: TOR study “CTC in mineral production - towards technical assistance”

• 10/07: baseline audit “assessing corporate social responsibility against international standards”

• 09/08: scoping study ”CTC & EITI: synergies and scope

for collaboration”• 10/08: consultation “8th annual CASM conference”• 11/08: consultation “fatal transactions conference”• 12/08: implementation workshop / round table “pilot project Rwanda”• 03/09: start-up bilateral project “transparency and control in the mineral sector of DR Congo”

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muito obrigado!

for more information:

Markus Wagner

Bundesanstalt für Geowissenschaftenund Rohstoffe (BGR)e-mail: m.wagner@bgr.de

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