1.
The OECD Due Diligence Guidance
for Responsible Supply Chains and
Programme Initiatives (DDG 101)
Shivani Kannabhiran
Policy Analyst
OECD Investment Division

2.
Why get involved in responsible
mineral sourcing?
 Ethical responsibility
 Avoid risk of UN sanctions if sourcing from the DRC
or neighbouring countries
 Legal requirement if operating in DRC, Rwanda and
Burundi
 Supply chain security – avoid unnecessary
disruptions in tantalum supply
 Avoid reputational damage for your company and
the tantalum industry
 EU and US market access – meet customer demands!
 Gain more information on your supply chain for
better commercial decision-making

3.
Conflict financing
Non-state armed groups
or public security forces,
associated with serious
abuses:
– Illegally control mine
sites, transportation routes,
or dealers in minerals
– Illegally “tax” or extort
money or minerals from
artisanal miners, mineral
traders and exporters
– Illegally “tax” or extort
money or minerals at mine
sites, transportation routes,
or points where minerals
are traded
CASE STUDY: Gold from the
Democratic Republic of the Congo
• Alluvial, artisanal gold & informally,
illegally mined
• Estimated conflict area annual output:
~20-30 tonnes
• Market value: $840m~$ 1.26 bn
Source: WGC & UN GoE DRC (2012)

4.
Demand for responsibly produced
minerals
Political Consumer Legal
• G8 (2007, 2008,
2009, 2011, 2013)
• UN Security
Council Resolutions
on DRC (2009,
2010) and Ivory
Coast (2013)
• ICGLR Heads of
States endorsement
(2010)
• OECD Council
Recommendation
• Consumer
campaigns in US
and Europe
• From brand-
name users via
industry groups
(EICC, GeSI)
• Section 1502 of
US Dodd-Frank
Act – conflict
minerals reporting
• Draft EU
legislation on
responsible
mineral supply
chains
• Legal requirement
in DRC, Rwanda
and Burundi

5.
Conflict Minerals Regulation
► July 2010 – Section 1502 of the
US Dodd-Frank Act:
 Specific reporting requirements for
public companies using 3Ts and gold
 DRC and adjoining countries focus
(reasonable country of origin inquiry)
 If from “DRC countries”, companies
need an audited “Conflict Minerals”
report
► August 2012 – Final US SEC rules
recommend companies use the
OECD Due Diligence Guidance
► Early – June 2014 – Deadline for
first filings for applicable
companies5
Section 1502 of the U.S. Dodd-Frank Act
Under Dodd-Frank, audited
“Conflict Minerals” report
should include:
 Country of mineral origin
 Due diligence procedures
 Smelters of minerals
 Mine of origin (to greatest
possible specificity)
 Description of products not
“DRC Conflict-Free”

6.
Conflict-Free Minerals Regulation
► March 2013 – European Commission
announces intention to develop a
comprehensive initiative on
responsible supply chains of minerals
from conflict-affected and high-risk
areas
► May 2013 – EU holds public
consultation at the OECD
► March 2014 – Draft EU initiative
and legislation released:
 Voluntary certification scheme for importers
of 3T and gold into EU common market
 Based on OECD Due Diligence Guidance
 Accompanying measures include public
procurement benefits, SME financing for
due diligence, funds for OECD
implementation)
EU initiative on responsible mineral supply chains

7.
OECD Due Diligence Guidance for
Responsible Mineral Supply Chains
Objective:
To provide practical guidance for
companies to ensure they do not contribute to
conflict or abuses of human rights through
their mineral and metal procurement practices
Method:
5-step risk-based due diligence process
Scope:
Applies to all companies throughout the entire supply chain that
produce or source minerals from any conflict-affected or high-risk
area –global, applicable to other minerals

8.
Key features of the OECD Due
Diligence Guidance
• One set of expectations
A common framework for due diligence
expectations throughout the entire mineral
supply chain from mines until end users
• Progressive approach
The promotion of constructive
engagement with suppliers in order to
gradually affect changes in their sourcing
practices without embargoes!
• Different treatment
Depending on mineral (e.g. Supplements on Gold, and
3Ts) and location of company in the supply chain (e.g.
upstream and downstream companies), resulting in
complementary due diligence processes

9.
Supplement on Gold
Applies to all companies in the supply chain
Mining
companies,
ASM
Local gold
traders &
exporters
Refiners Bullion Banks
Jewellers,
manufacturers
Upstream
Companies
Downstream
companies
RecyclersRefiners are the “choke point”
in the supply chain!

10.
Structure of the OECD Due Diligence
Guidance
• 5-step risk-based framework for all minerals from conflict-
affected and high-risk areas (Annex I)
• A model supply chain policy (Annex II):
– NO! Sourcing from parties linked to serious abuses
– NO! Direct or indirect support to non-state armed groups
– MITIGATE! Direct or indirect support to public or private security forces
– MITIGATE! Bribery in the supply chain, fraud or misrepresentation of chain
of custody or traceability information
– MITIGATE! Money-laundering through the mineral supply chain
– MITIGATE! Non-payment by suppliers of taxes, fees and royalties related to
mineral extraction, transport and export, or non-disclosure of payments by
suppliers in accordance with EITI
• Principles for Risk Mitigation (Annex III)
• Supplements on Tin, Tantalum and Tungsten (2011) and Gold
(2012), including special Appendix on artisanal and small-scale
mining for gold

11.
Five Step Risk-Based Due Diligence
Step 1
• Establish strong company management systems
Step 2
• Identify and assess risks in the supply chain
Step 3
• Design and implement a strategy to respond to identified
risks
Step 4
• Support independent third-party audit of the refiner’s due
diligence
Step 5
• Report annually on supply chain due diligence

12.
 Adopt a company policy on 3TG from
conflict-affected and high-risk areas,
consistent with the model policy in the
Guidance (Annex II)
 Structure internal management to
support due diligence, e.g. resources, build
capacity
 Strengthen engagement with suppliers,
communicate expectations
 Collect and maintain transaction
information and documentation with
unique internal reference numbers for all
inputs and outputs
 Request suppliers to provide names of
smelters and refiners of all 3TG
products by direct sourcing, marks
imprinted on gold, or from supplier
documentation
 Pass on smelter or refiner
information to customers
Step 1: Establish strong company
management systems
Transaction information for
Gold:
a) Information regarding the form, type
and physical description of gold and
gold-bearing materials, e.g. gold ore,
gold concentrate, gold doré, alluvial
gold, recyclable gold, gold bullion,
type of jewellery, etc.
b) Information provided by the supplier
regarding the weight and assay of
gold and gold-bearing materials of
input, and determinations of the
weight and assay of gold inputs and
outputs.
c) Supplier details, including “know
your counterparty” (“KYC”) due
diligence information
d) Unique reference numbers for each
input and output.
e) Dates of input and output, purchases
and sales.

13.
Chain of custody or traceability options
Greater risk of fraud = more monitoring!!
- Chain of custody
documentation
Greater monitoring required!
“Bag and tag” -
traceability
Radio frequency tag
(RFID) traceability
-
UPSTREAM

14.
Traceability
TRACEABILITY/CHAIN-OF-CUSTODY INFORMATION
a) the mine of origin, with the greatest possible specificity
b) locations where gold or gold-bearing material is consolidated, blended, crushed, milled, smelted
and refined
c) the method of extraction (artisanal and small-scale or medium and large-scale mining), and dates
of concentrating, smelting and refining
d) the weight and assayed quality characteristics
e) the identity of all suppliers and relevant service providers handling the gold in the upstream
supply chain from the mine of origin until the refiner; the ownership (including beneficial ownership);
the corporate structure including the names of corporate officers and directors; the business,
government, political or military affiliations of those companies and officers within conflict-affected
and high-risk areas
f) all taxes, fees or royalties paid to government related to the extraction, trade, transport and
export of gold
g) all payments or compensation made to government agencies and officials related to the
extraction, trade, transport and export of gold
h) all payments made to public or private security forces or other armed groups at all points in the
supply chain from extraction onwards, unless prohibited under applicable law
i) how gold is transported and processes in place to ensure integrity, with due regard taken of
security concerns
UPSTREAM

15.
 Identify the smelters and refiners in
your supply chain!
 Collect information directly from suppliers
 Use risk-based approach to verify supplier
information
 Assess whether smelters and refiners
are sourcing
minerals responsibly!
 Do smelters and refiners undertake OECD
Due Diligence?
 Have the smelters and refiners been
audited
under an industry programme?
Step 2: Identify and assess risk
DOWNSTREAM
Preliminary indicators of
due diligence may include:
 A public policy on minerals from
conflict-affected and high-risk
areas, consistent with Annex II of
the Guidance
 A public report on refiner‘s due
diligence
 Participation in international or
industry collaboration on
responsible sourcing, e.g. OECD
Forum and implementation
programme, industry or other
multi-stakeholder initiatives

16.
 Verify a sample of
chain of custody
or traceability
information
Increase sample
size if
inconcistencies
found!
 Map the
circumstances of
the supply
chain(s), under
way and planned
Step 2: Identify and assess risk
UPSTREAM
Risk Factors for Mined Gold
Use a risk-based approach, with more due diligence for
persons, places and transactions that present higher risk!
 Any affiliation of suppliers with military, criminal networks or
non-state armed groups.
 Militarisation of mine sites, transportation routes and
points where gold is traded and exported.
 Evidence of any serious abuses committed by any party in
mines, transportation routes and points where gold is traded
and/or processed.
 Information on any direct or indirect support to non-state
armed groups or public or private security forces through
the extraction, transport, trade, handling or export of gold.
 Instances of conflict or tensions in the relationship
between ASM and LSM.
 Any instances, reports or suspicions of fraud or
contamination in the supply chain

17.
 Report findings to designated senior
management
 Enhance engagement with suppliers and
the internal systems of transparency,
information collection and control over the gold
supply chain
 Devise, adopt and implement a risk
management plan with stakeholders, that
includes:
 continuing trade throughout the course of
measurable risk mitigation efforts
 temporarily suspending trade while pursuing
ongoing measurable risk mitigation
 disengaging with a supplier in cases where
mitigation appears not feasible or unacceptable
 Monitor supply chain with support from
stakeholder networks
Step 3: Design and implement a
strategy to respond to identified risks
Risk Mitigation
 Focus on building capabilities of
suppliers and smelters to
conduct due diligence, with
clear performance indicators
and concrete and specified
timeframes for improvement
(e.g. 6 months recommended)
 Companies should only suspend
or terminate a business
relationship with relevant
suppliers when :
 The smelter is not using
reasonable and good faith efforts
to implement the Guidance or
participate in related
programmes
 Evidence that the smelters
sources from suppliers that
provides direct or indirect
support to illegal armed groups,
or contribute to “serious abuses”
associated with the extraction
and trade of minerals in
conflict areas

18.
The scope of the audit
 All activities, processes and systems used by the refiner to
implement supply chain due diligence of gold from conflict-
affected and high-risk areas
Audit criteria
 The audit should determine the conformity of the
implementation of refiner’s due diligence practices against an
audit standard that is based on this Guidance
Audit activities
 Documentation review
 On-site investigations of smelter facilities, a sample of the
suppliers, meeting with smelters on-the-ground risk assessment,
and consultation with other experts
**Can be carried out through industry programmes**
Step 4: Carry out or support independent
third-party audits of refiners’ due diligence

19.
 Report on management practices (i.e. policy, internal systems
of control)
 Report on the company risk assessment and risk management
with due regard taken of business confidentiality and other
competitive and security concerns ( i.e. supplier relationships,
prices, security)
 Publish the summary audit reports of refiners with due regard
taken of business confidentiality and other competitive or
security concerns
Step 5: Report annually on supply
chain due diligence

20.
Summary on Due Diligence
Step 1
• Establish strong company management systems
Step
2
• Identify and assess risks in the supply chain
Step
3
• Design and implement a strategy to respond to identified risks
Step
4
• Support independent third-party audit of the smelter or
refiner’s due diligence
Step
5
• Report annually on supply chain due diligence
• Risk-based, intensity of due diligence proportional to risk!
• Reasonable and good faith efforts, not 100 % compliance
overnight!
• Government and industry programmes can help accomplish due
diligence tasks!
• Use and build upon existing systems!

21.
OECD Gold and 3T Implementation
Programme
 Information-sharing and promotion of due diligence
– Tools, workshops, webinars and training seminars
– Outreach and training: Africa’’s Great Lakes region, China, Colombia,
Middle East, Turkey, India
 Collaboration and problem-solving
– Consistency, harmonisation and mutual recognition of industry
programmes
– Develop common and coordinated solutions
 Peer-learning
– Share tools, best practice, promote discussion
 ICGLR-OECD-UN GoE Forum on Responsible Mineral
Supply Chains
– Twice a year in May and November
– 7th Forum this May

22.
Governed by the Multi-stakeholder
Steering Group – selection of members
BEDEWA
OGP

23.
Industry and Sector
Initiatives Guide

24.
Introduction
• A number of industry and sector initiatives in the gold sector seek to
operationalize the OECD Due Diligence Guidance for Responsible
Supply Chains of Minerals from Conflict-Affected and High-Risk
Areas
• The booklet/guide provides an overview of these industry and
sector initiatives and how they complement each other
24

25.
Gold sector initiatives - mutual
recognition
25
GlobalMineralSupplyChain
Mining Companies
Artisanal & Small-
scale Miner (ASM)
Organisations
Refiners & Smelters
Bullion Banks
Downstream
manufactures –
jewellers & others

26.
Sample of global industry initiatives for
3T supply chains
Initiative Organisations
involved
Purpose Participation
type
Independent
audit
required
ICGLR’s Regional
Certification
Mechanism
International
Conference on the
Great Lakes Region
(ICGLR)
Establishes a certification mechanism
for the mining and trading of conflict
minerals from the Great Lakes Region.
Based on OECD standards. Industry
programmes may be used for
traceability/chain of custody.
Mandatory for
member countries
Yes
ITRI Tin Supply Chain
Initiative (iTSCi)
ITRI; Tantalum Niobium
International Study
Center; Pact; Channel
Research
Supports responsible sourcing from
Central Africa through the development
of a physical chain-of-custody system
that tracks and monitors minerals from
mine to smelter and a due diligence
system that includes independent audits
and mine site and transportation route
assessments.
Voluntary Yes
Conflict-Free
Sourcing Initiative
(CFSI) - includes the
Conflict-Free Smelter
(CFS) program
Global e-Sustainability
Initiative (GESI);
Electronic Industry
Citizenship Coalition
(EICC)®
Verifies that the sources of conflict
minerals processed by smelters are
conflict-free. Enables downstream
companies to identify and source from
conflict-free smelters. Operationalizes
OECD Guidance for smelter/refiners.
Voluntary Yes
Solutions for Hope;
Make Africa Work;
Conflict-Free Tin
Initiative
Private companies:
AVX, Kemet, F&X,
Motorola, Intel, Philips,
and many more!
Close pipe initiatives to enable
downstream companies to source
conflict-free 3Ts from the DRC with
positive development impacts
Voluntary Yes, Through
implementing
initiatives (e.g.
iTSCi, CFS)
26

27.
3T Industry Initiatives – complementarities
Great Lakes
region
mining &
export
Smelting
Manufactur-
ing
27
Support & Mutual recognition of initiatives on-going
iTSCi assesses risk and brings
traceability from mine to smelter
Conflict-Free
Smelter
Initiative
CFSI Tools:
e.g. Reporting
Templates
1502 Dodd Frank
issuers - downstream
due diligence and
demand for conflict-free
minerals!!

28.
Remember: OECD Due Diligence
Guidance
Step
1
• Establish strong company management systems
Step
2
• Identify and assess risks in the supply chain
Step
3
• Design and implement a strategy to respond to identified
risks
Step
4
• Support independent third-party audit of the smelter or
refiner’s due diligence
Step
5
• Report annually on supply chain due diligence
• The Guidance provides an internationally recognised framework
for companies to responsibly source minerals from conflict-affected and
high-risk areas
• The Guidance enables companies to meet due diligence requirements
(Dodd-Frank Section 1502)
• Risk-based, intensity of due diligence proportional to risk!
• Reasonable and good faith efforts, not 100 % compliance
overnight!

29.
Remember: Industry programmes and
the OECD Due Diligence Guidance
• Many industry and sector initiatives have been developed
to help companies operationalise the OECD Guidance
• Work continues to further harmonise industry and company
initiatives to support outreach and implementation and reduce
unnecessary duplication of supply chain audits
• For further information on this project and to keep informed of
latest developments: www.oecd.org/daf/investment/mining
• OECD contact emails:
• Tyler.gillard@oecd.org; shivani.kannabhiran@oecd.org,
hannah.koep-andrieu@oecd.org
29