Certification of ASM:A win-win solution

6th Meeting of the ICGLR-OECD-UN GoE Forum on Responsible Mineral Supply Chains

The Alliance for Responsible MiningKigali 13-15 Nov 2013

THE FAIRMINED INITIATIVE

Is a certification initiative that :

1- enables responsible artisanal and small-scale gold miners to reach the global markets while recognizing a development premium/incentive for miners in order to promote positive change in the sector and the community

2- offers to companies a market advantage as well as a response to higher consumers’ expectations on responsibility and positive impact on producing countries.

PILARS OF FAIRMINED CERTIFICATION

PILLAR OBJECTIVE

STANDARDSSets the supply-chain requirements and gives

the scope of the certification impact

TRACEABILITYLinks the producer and downstream supply

chain up to consumers

3rd PARTY CERTIFICATION Credibility, Integrity & Accountability

PREMIUM & DEV. FEE Feasibility & Sustainability

FAIRMINED MARK Assurance & Recognition

Beneficial to all actors in supply chain, from mine to shelf.

FAIRMINED TODAY

• 4 audited communities producing 350-400 kgs of Gold annually - 1400 miners

• 30 mines in the process of certification in 4 countries producing 1600 Kg gold

• 3 audited refiners servicing the supply chain

• 75 jewelers in 10 countries on board in 3 continents.

FAIRMINED: a solution for every business need

I. FAIRMINED LABELED • Full track and trace of gold• Clients buy gold and uses a FAIRMINED authorized

supply chain• Product claims can be made on the exact origin of the

gold• Allows for labeling on specific products or lines• It allows clients to appropriate the story and the impact

on communities• It offers customers in store materials of labeled products

FAIRMINED: a solution for every business need

II. FAIRMINED INCORPORATED• Licensees can purchase gold through a Fairmined registered operator• The gold is then integrated into the licensees supply chain, where mixing (mass balance)

is allowed• Annual audit using FM information system required to demonstrate how gold was integrated

• Reduces supply chain costs of full traceability• It allows corporate claims on volumes of FM gold purchased• It allows corporate claims on a % of gold sourced from responsible & certified ASM• It allows negotiated premiums when a certain volume threshold is reached -

18kg/y/mine

III. FAIRMINED CERTIFICATES• The licensee acquires FM certificates, which represent an equivalent volume of

production of certified FM gold• The licensee does not have to buy gold or integrate it into its supply chain• The gold is integrated by a FM registered operator and enters formal channels• Eliminates all transaction and traceability costs• It allows corporate and impact claims on equivalent volumes of FM gold produced• It allows claims on % of gold sourced from responsible ASM

The PREMIUM is essential for the miners

• Miners lack of working capital makes it difficult for them to accumulate volumes of gold to export or meet economies of scale

• Costly implementation for miners (financial and time wise)

• Increased business costs for miners (healthcare, labor, taxation)

• Need of financing for equipment, and investments in productivity and cleaner technologies

The certification system value for downstream companies

Value creation for companies:• Excellence• Responsibility• An unique product for

unique brands• Vanguard attitude• Internal incentive

Cannes 2013: Marion Cotillard wearing Fairmined

Gold made jewels

FORMALISATION OF ASM MINERS AND THE FAIRMINED STANDARD

CHALLENGES• Lack of appropriate policies and incentives for

formalization• Availability of mining titles• Financing the process and access to credit• Cultural and training challenges• Legalization is not formalization• Institutional strengthening• Generation and access to appropriate information

OPPORTUNITIES• Complementarity with other initiatives that also

promote formalization: UNEP Global Mercury Program, OECD DDG, etc.

• The FAIRMINED Standard takes a holistic approach to ASM and sees formalization as a PROCESS.

SCALING UP THE FAIRMINED INITIATIVE

INCENTIVES• Market incentives; aware and educated consumers• Public opinion and advocacy

CHALLENGES• Lack of financial mechanisms for bringing more ASM

O’s into the system (taking that first step from informality to formality)

• Sustainability of the system to bring more miners and develop standards

• Possibility of excluding most vulnerable miners while focusing on large communities

• Unit cost of full traceability is inversely proportional to volumes produced

Transforming Artisanal and Small-scale Mining (ASM)

THANK YOU