Tyler Gillard, the head of project and legal adviser at the Organisation for Economic Cooperation and Development (OECD), the intergovernmental agency advising governments, regulators and refineries, on how to guard against conflict gold.
How easy is it for a major gold centre such as Dubai to ensure that the gold it trades is sourced ethically and sustainably?
It depends on how many suppliers you have, where you're sourcing from and how much gold you're sourcing annually. Due diligence is an ongoing process. It's your responsibility to identify risks in your supply chain, make those improvements and be transparent about that and report on that. It's about making gradual constant improvements in the supply chain. It's not about 100 per cent compliance or 100 per cent guarantee of conflict-free status. Undertaking due diligence means problems will be identified. That's OK. As long as you fix those problems and remediate those issues that is important.
How much gold flows from the DRC to Dubai?
The UN group of experts on the DRC estimated last year that 98 per cent of the gold produced in the conflict areas of the DRC was smuggled out of the country. If it's smuggled out of the country, it's very hard to know where it goes. There's no comprehensive data on where that gold is going. Some of it may be going to neighbouring countries, some of it may be going to Dubai, some of it elsewhere. It is very difficult to estimate the grey economy with full facts and figures.
What are the reasons for the increased focus on responsible sourcing?
There is a political demand for responsible sourcing. This is being driven both by OECD governments and also the governments of Africa's Great Lakes region as well. Twelve countries in Africa have worked closely with the OECD since the beginning to develop the OECD Due Diligence Guidance for Responsible Mineral Supply Chains. They recognise that gold is being smuggled out of the DRC, fuelling conflict and depriving them of significant revenues and benefits and undermining the stability of their countries. You have consumer demand and regulatory demand on the part of the consuming countries. There are consumer campaigns like Blood in the Mobile, of course. Much of the consumer awareness is following on from the legacy of conflict diamonds and the Kimberley Process. If you talk to jewellers in the United States and Europe, they say customers are asking about responsible sourcing. Even when they're not asking about it, they expect their jewellers to be looking into this. There's also legal demands, of course, both from the US – section 1502 of the Dodd Frank Act – but also draft regulation in the EU.
How much of the gold from Africa is so-called conflict gold?
In the DRC they estimate that anything from 20 to 40 tonnes is produced annually. Now a lot of that is being produced by new large-scale mines that are said to be involved in due diligence efforts, or have had to assure their refiners of their conflict-free production. The OECD guidance applies globally to any minerals affected by conflict. There are conflicts around the world, which are natural resource-dependent. The Heidelberg Institute for International Conflict Research, which has a conflict barometer estimates that 20 per cent of the 396 conflicts identified last year have a natural resource component to them – either financed by resources or centred around natural resource issues.
tarnold@thenational.ae
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