The London-based World Gold Council said Friday that it had drafted framework standards designed to combat gold that enables, fuels or finances armed conflict.
The draft standards which were orchestrated with WGC member companies and leading gold refiners represent what the gold industry trade group said was a significant, industry-led response to the challenge "designed to enable miners to produce a stream of newly-mined gold which is certified as 'conflict free' on a global basis."
The "conflict free gold" and "chain of custody" standards include a framework for tracking conflict-free gold from the mine to the end of the refining process. Also included is a framework for ensuring that where gold is mined in a conflict or high-risk zone the production or transportation does not finance or benefit armed groups, the WGC said.
The new draft standards come almost a year after passage of a US financial reform law containing provisions calling for new regulations and "transparency" in extractive industries including requiring manufacturers using "conflict minerals" from the Democratic Republic of Congo (DRC) and neighboring countries to report on their due diligence on sourcing and chain of custody.
Officials said that while the current focus is on minerals as a factor in fuelling armed conflict is on the DRC and adjoining countries, the WGC standards address the situation for large-scale gold producers.
They said the council is also working with the Organization for Economic Co-operation and Development (OECD) and others on global guidelines for the responsible sourcing of gold, adding that the WGC is committed to working with sector specific groups in the electronics and jewelry sector to seek an integrated solution for market participants.
WGC officials said the draft standards are currently being "stress-tested" by leading gold mining companies and refineries, as part of the development process. "The World Gold Council recognizes the multi-faceted nature of this initiative and is seeking input that will foster a collaborative and comprehensive solution and is, therefore, undertaking consultations with stakeholders," the group said in a statement.
"The gold market is uniquely complex," Aram Shishmanian, WGC chief executive, said. " It is difficult to track specific consignments from the mine to the end user because gold is easily melted down and co-mingled with gold from other sources. So the success of any certification system will depend upon the co-operation and commitment of many parties in the gold supply chain.
Officials said interested parties including governments, NGOs, the investment community, artisanal miners, end-users and other participants in the gold supply chain are being invited to review the draft standards and to provide their feedback to firstname.lastname@example.org by Sept. 1. They said continuing work and dialogue on related issues such as recycled gold, audit and assurance is also planned.
"Responsible gold mining contributes positively to economic and social development in producing countries both at a national and community level," Shishmanian said. "The misuse of gold to fund conflict is wholly contrary to this mission and is a threat to the reputation of gold."
He added: "The work on the standards is well advanced, but we want all those committed to addressing conflict issues to contribute their ideas. We are aiming for a comprehensive framework which commands confidence, credibility and broad support. We look forward to working with organizations that use gold in developing an integrated certification process that avoids duplication and meets the needs of all stakeholders."
Phil Burgert is managing editor of ResourceInvestor.com. He can be contacted at email@example.com.