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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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• general background
• 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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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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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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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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rough diamonds
gold
cassiterite
coltan
>750 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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Sou
rce:
BG
R d
atab
ank
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: [email protected]
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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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