8 th annual CASM conference — partnerships CTC

8 th annual CASM conference - partnerships CTC - Certified Trading Chains in mineral production: the present context Markus Wagner BGR – Federal Institute for Geosciences and Natural Resources Brasilia, October 9, 2008

the general problem: illegal mining and trade of mineral resources is a source of finance for violent groups and contributes to regional instability • the general concept • bilateral projects • regional partnerships 2 of 25

CTC background 2007 G 8 - 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… 3 of 25

Why ASM? German mineral consumption tantalum – 20% silver – 8% 5 g 60 g tungsten – >6% lead – 3% 1. 200 g 600 g 450 g 10 kg zinc – 1% 7, 5 kg copper – 0, 5% 5 kg iron ore – < 4% 2 kg 7 kg 5 kg tin – 25% statistical share of ASM 300 g 100 g cobalt – 30% total consumption 50 g 1. 350 kg 20 kg 350 kg 700 kg 1. 100 kg 35 t statistical consumption per capita during an average 79 years lifetime 4 of 25 Source: BGR databank gold – 10%

tantalum ore: african production statistics „coltan boom“ Ta [t metal content] 300 250 200 Burundi Rwanda (REDEMI) Mozambique 150 Zimbabwe 100 50 DR Congo Rwanda Nigeria Namibia Ethiopia 1995 1996 1997 1998 Source: USGS Minerals Yearbook, BGR databank 5 of 25 1999 2000 2001 2002 2003 2004 2005

• 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 6 of 25 panning, Kwara State, Nigeria CTC dual policy objective:

what minerals? the CTC window <1 kg 100 kg value per unit [USD / kg] 100. 000 industrial product gold 400 USD/oz 1. 000 12 USD/ct diamonds 10 - 100 t high value impedes cooperative 10, 000 t 100 Co: 35 USD/kg 10 1, 0 100, 000 t Cu: 5 USD/kg tantalite: 77, 000 USD/t coltan: 12, 000 USD/t Sn: 7, 000 USD/t cassiterite: 1, 500 USD/t heterogenite: 250 USD/t low value prohibits ASM 0, 1 0, 01 iron ore: 80 US cents/mtu Fe. O (9. 1%) Source: BGR databank 7 of 25 650 USD/oz artisanal product 10. 000 18. 5 USD/ct Cu (75), Co (29) Sn (2. 5), Ta (1) Au (0. 004) Diamonds ( 0. 0001) commodity, relative crustal abundance [ppm]

• focus on industrial commodities • directly link business partners • certification of specific mine sites • introduce minimum standards (e. g. OECD) on origin and CSR by voluntary certification adapted to the local context • implement the CTC concept on a regional / multinational level 8 of 25 hauling, Kayonza, Rwanda CTC key features

matrix for responsible use of mineral resources standards transparency certification 9 of 25 good governance • guarantees on trading volumes • administration of mining titles • verification of origin • record of production and trade • organizational structure of • documentation of state the mineral producer financial revenues • definition of standards • security of tenure for ASM • implementation of standards • adapted legal framework • third party verification, audit • regular inspection on the compliance with standards

benefits for producers and artisanal miners • improved market access • fair returns and improved working conditions • increased capital for investment available benefits for the government of the producing country • regulation of informal mining • increased state revenues • competitive image of the mineral sector • conflict prevention 10 of 25 assessing, Nemba, Rwanda benefits of CTC

benefits for mineral consumers • access to mineral production without reputational loss • enhanced supply security through diversification of sources 11 of 25 weighing, Kayonza, Rwanda benefits of CTC (II)

expert (development program etc. ) government of consumer country consults, supports producer: cooperative, small scale mine contractual agreement customer: delivers certified product engages revenues reputational protection industrial consumer support through fair price and technology transfer auditor assesses commissions government of producer country dialogue reports national certification unit places request accompanies CTC concept 12 of 25 international partnership gives feedback

CTC analytical fingerprint for coltan ores geology geochemistry trace elements Uganda DRC Rwanda Burundi „Kibaran“ 13 of 25 major elements modal mineralogy radiometric age

DRC: post-war illegal trade estimated unrecorded annual exports (2005 - 2006) rough diamonds gold cassiterite coltan total market value 14 of 25 18 Mct. 450 MUSD 9, 000 kg 250 MUSD 12, 000 t Sn metal content 35 MUSD 50 t Ta metal content 30 MUSD 765 MUSD

DRC: two modules, one programme CTC Module 1 mineral production 15 of 25 mine supervision, certification Module 2 fiscalisation sustainable development

consumers SAESSCAM supports reputational protection producer: cooperative, small scale mine revenues fair price delivers certified product Division des Mines assesses commissions revenue authorities DGI, DGRAD dialogue reports CEEC accompanies IC/GLR CTC in DRC 16 of 25 customer: processing company reports

17 of 25 ASM, Kayonza 2, Rwanda CTC in Rwanda

REDEMI: Official Mine Production Figures cassiterite [t concentrate] cassiterite coltan 800 coltan boom 200 wolframite 150 600 Rwanda crisis 400 100 50 200 1992 Source: REDEMI, BGR databank 18 of 25 250 1994 1996 1998 2000 „the Congo wars“ 2002 2004 coltan, wolframite [t concentrate] 1, 000

CTC in Rwanda • national approach, government agencies Gifurwe Rutsiro Kayonza Gatumba (OGMR, RBS, REMA) • adaptation of CTC standard to local context Nemba Sn. O 2 , Ta 2 O 5 WO 3 • participation of willing firms operating in Rwanda • technical assistance to support best practice and compliance with the standards • in accordance with the key mineral policy strategy of Rwanda 19 of 25

International Conference on the Great Lakes Egypt Sudan Ethiopia CAR Congo Nairobi Uganda Kenya DRC Rwanda Bujumbura Burundi Tanzania Angola Sambia Malawi Namibia Zimbabwe Mozambique Botswana IC/GLR member states co-opted countries involved www. icglr. org 20 of 25

IC/GLR: a house for peace-building and development / www. icglr. org regional follow-up mechamism (RFM) technical instrument: regional programmes of action peace and security legal instrument: protocols democracy and good governance financial instrument: special reconstruction and development fund economic development and regional integration humanitarian and social issues pact on security, stability and development: the Dar es Salaam Declaration 21 of 25

CTC partnership ICGLR - PROTOCOL AGAINST THE ILLEGAL EXPLOITATION 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 […]. 22 of 25

IC/GLR: regional initiative against illegal exploitation of natural resources • stocktaking exercise on ongoing initiatives and proposal for integrated initiative • meeting among member states on implementation strategy • integration within national initiatives • revised and endorsed project strategy 23 of 25

CTC road map • 06/07: G 8 summit Heiligendamm • 10/07: baseline audit “assessing corporate social responsibility against international standards” • 12/07: Berlin conference on “transparency in the mineral sector” • 07/08: TOR study “CTC in mineral production towards technical assistance” • 09/08: scoping study ”CTC & EITI: synergies and scope for collaboration” • 10/08: consultation “ 8 th 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” 24 of 25 conference, Berlin, Germany • 10/06 – 05/07: elaboration of concept

muito obrigado! for more information: Markus Wagner Bundesanstalt für Geowissenschaften und Rohstoffe (BGR) e-mail: m. wagner@bgr. de 25 of 25