Conflict Minerals Regulations

Baselworld 19 March 2015 Session Structure

• Welcome & Introduction (Charles)

• RJC Update (Ashish)

• Conflict Minerals Regulation • Presentation by OECD (Louis Marechal) • Presentation by EU DG Trade (Rein Nieland via Video recording) • Presentation by CEO of PAMP (Mehdi Barkhordar)

• Q & A session with speakers (moderated by Charles)

• Thanks & Close (Ashish) 2 RJC – Building Responsible Supply Chains

Baselworld 19 March 2015

Ashish Deo Chief Executive Officer - RJC RJC – A Quick Reminder of Who We Are

1. The international standards setting and certification body for fine jewellery & watch industry – ‘Mine to Retail’

2. Scope = Gold, Diamonds and Platinum group metals

3. Founded in 2005

4. Initial launch of Standards – Code Of Practices (COP) - in 2009

5. Chain Of Custody standard (COC) for Gold and Platinum Group Metals launched in March 2012

6. Revised COP Standard launched - November 2013, including new requirements for sourcing from Conflict-Affected Areas, and new, voluntary, Provenance Claims provision

4 Strong growth in membership

571

470

404

387 300

306 205 242

120

5 2010 2011 2012 2013 2014 Total Members by Year-End Certified Members RJC membership is diverse and covers the entire chain from mine to retail

1. Large, medium and small businesses

2. Spread over 60 countries

3. Certified facilities cover over 270,000 people

6 Providing better support to our members

1. Increased and improved Training – members and auditors

2. Translations into several languages

3. Harmonisation – to reduce duplication of efforts / costs

4. Impact report – tracking tangible benefits

7 Benefits of RJC Membership

• Builds confidence in your company as a responsible supplier and customer.

• Ensures you operate to international best practices and achieve: 1. Higher employee retention and motivation

2. Better customer & supplier relationships

3. Effective management of supply chain risks

• Enables you to trade internationally and comply with international rules for responsible supply chains : • RJC certification and audit can be used to show compliance with many different rules / protocols

• Provides a shared and cost-effective way to contribute to long term 8 future of the industry Responsible Sourcing is more than ‘conflict free’

Drivers: Reactive • Regulatory pressures

• Need to identify and manage risks

• Better control over supply chains

• Changing consumer expectations

Proactive • Voluntary efforts to enhance business reputation

9 RJC CoC Certification and Provenance Claim provision support responsible sourcing

• Voluntary, and in addition to COP

• CoC certification supports implementation of OECD Due Diligence Guidance and has cross-recognition agreements with LBMA Responsible Gold Guidance, DMCC Good Delivery and provisions of US Dodd-Frank Act for Gold & Platinum group metals

• 21 Refiners already CoC certified. Some miners and retailers in progress

• Provenance Claim allows members to align certification and audit with several industry standards and protocols – cost & time efficient

• Provenance Claim provision available for Gold, Diamonds, and Platinum group metals

10 • RJC Support: training, help desk, webinars and fact sheets Vision, Mission, and Values Remain Relevant

• RJC Vision Our vision is a responsible world-wide supply chain that promotes trust in the global fine jewellery and watch industry.

• RJC Mission We strive to be the recognized standards and certification organization for supply chain integrity and sustainability in the global fine jewellery and watch industry.

• RJC Values We are respectful and fair. We practice honesty, integrity and accountability. We engage in open collaboration. 11 Join a community of confidence

• RJC - the recognised standard for jewellery industry

• Supported by over 600 Members

www.responsiblejewellery.com

12 LOUIS MARECHAL POLICY ADVISOR - EXTRACTIVES 13 Conflict financing

Non-state armed groups or public security forces, associated with serious abuses:

• Illegally control mine sites, transportation routes, or dealers in minerals

• Illegally “tax” or extort money or minerals from artisanal miners, mineral traders and Gold from the Democratic exporters Republic of the Congo • Alluvial, artisanal gold & • Illegally “tax” or extort money informally, illegally mined or minerals at mine sites, • Estimated conflict area annual transportation routes, or ASGM output: ~10 tonnes points where minerals are traded • Market value: $380 million Source: WGC & IPIS (2014)

14 OECD Due Diligence Guidance for Responsible Mineral Supply Chains

Objective  To provide clear, practical guidance for companies to ensure they do not contribute to conflict or abuses of human rights through their mineral and metal procurement practices

Method and scope  5-step risk-based due diligence process, applies to all companies throughout the entire mineral supply chain that potentially use minerals conflict or high-risk areas

15 Key features of the OECD Due Diligence Guidance - summary

 One set of expectations A common framework for due diligence expectations throughout the entire mineral supply chain from mines until end users  Progressive approach The promotion of constructive engagement with suppliers in order to gradually affect change  Reasonable and good faith efforts Not 100 % compliance overnight  Government and industry programmes can help accomplish due diligence tasks  Companies should use and build upon existing systems!  Risk-based Intensity of due diligence proportional to risk 16 Applies to all types of gold

• Gold from artisanal sources Mined (ASM Gold) Gold • Gold from large- scale mines (LSM Gold)

Recyclable Applies to Gold

• Gold held in Grand- vaults with fathered verifiable date stocks before 1 January • 2012 17 Involves actors all along the supply chain

Upstream Downstream Companies companies

Mining Local gold Jewellers, companies, traders & Refiners Bullion Banks manufacturers ASM exporters

Refiners are the “choke Recyclers point” in the supply chain! 18 Structure of the Guidance

Supplement on 3Ts

Annex I: description of 5- step approach

Annex II: model supply chain policy Supplement on gold Annex III: principles for risk mitigation Appendix on artisanal and small scale mining for gold

19 Structure of the OECD Guidance Focus on annex II and III

• A model supply chain policy (Annex II):

 NO! Sourcing from parties linked to serious abuses  NO! Direct or indirect support to non-state armed groups  MITIGATE! Direct or indirect support to public or private security forces  MITIGATE! Bribery in the supply chain, fraud or misrepresentation of chain of custody or traceability information  MITIGATE! Money-laundering through the mineral supply chain  MITIGATE! Non-payment by suppliers of taxes, fees and royalties related to mineral extraction, transport and export, or non-disclosure of payments by suppliers in accordance with EITI

• Measures for Risk Mitigation and Indicators for Measuring Improvement (Annex III)

20 5-step risk-based framework

Step 1: company management systems

Step 5: Step 2: risk assessment report on all Information steps Step 3: risk mitigation & monitoring

Step 4: audits of refiners’ due diligence practices

21 Risk identification for downstream companies

 Identify the refiners in your supply chain • Collect information directly from suppliers • Use risk-based approach to verify supplier information  Assess whether refiners are sourcing minerals responsibly • Do smelters and refiners undertake OECD Due Diligence?

• Have the refiners been audited (e.g. LBMA, RJC, DMCC) ? Preliminary indicators of due diligence may include:  A public policy on minerals from conflict-affected and high-risk areas, consistent with Annex II of the Guidance  A public report on refiner‘s due diligence  Participation in international or industry collaboration on responsible sourcing, e.g. OECD Forum and implementation programme, industry or other multi-stakeholder initiatives

22 Was does it mean for SMEs?

• The Guidance recognizes that flexibility is needed in its application depending on individual circumstances and factors such as – the size of the enterprise – the location of the activities – the situation in a particular country, the sector and nature of the products or services involved

• However, it expects all companies to adopt a responsible business conduct that will have them – ask the right questions to their customers or suppliers – respond to inquiries on responsible mineral supply chains – collect all relevant documentation – and, in general, be aware of the potential negative impacts of their activities

• Expectations on small and mediums enterprises in the downstream segment of the global industry are less demanding than expectations set on companies on the ground, in producing countries; or on large companies with proportionate financial means and human resources

• A study is currently underway to understand the practical challenges of due diligence implementation for SMEs: Take the survey! 23 Industry initiatives can help companies implement the OECD Guidance but don’t take away individual companies’ own responsibility

3T Programmes Gold Programmes

Miners (artisanal and industrial)

Refiners & Smelters

Bullion Banks

Global Mineral Supply Chain Supply Mineral Global Downstream manufacturers (electronics, jewellers & others) 24 EU Regulation EU initiative on responsible mineral supply chains

► March 2014 – Draft EU initiative and legislation released: . Voluntary self-certification scheme for importers of 3T and gold into EU common market . Based on OECD Due Diligence Guidance . Accompanying measures include public procurement benefits, SME financing for due diligence, global responsible smelter lists and funds for OECD implementation programme ► Main differences (as the draft currently stands): . EU regulation focuses on the importer only . EU system to develop an audit of the importer – OECD only recommends audit at the smelter / refiner stage

25 Why get involved in responsible mineral sourcing?

 Gain more information on your supply chain for better commercial decision-making  EU and US market access – meet customer demands  Ethical responsibility & avoid reputational damage for your company and industry  Avoid risk of UN sanctions if sourcing from the DRC or neighbouring countries  Supply chain security – avoid unnecessary disruptions in your supply chain

26 9th ICGLR-OECD-UN GoE Forum on Responsible Supply Chains of minerals

• Forum: from May 4 to 6, at the OECD Conference Center, Paris

• Focus of the Forum: – Presentation of the first draft of the CCCMC Guidance on responsible supply chains of minerals from conflict-affected and high-risk areas. Discussions on the setting up of an audit mechanism. – Gold production and trade in Colombia and in Central Africa – Discussions on advancing harmonization of audit protocols – Financing models for responsible artisanal and small-scale mining – Assessing & enhancing the contribution of SMEs to supply chain due diligence and responsible supply chain of minerals 27 Thank you

For further information on the OECD’s work on Responsible Business Conduct http://mneguidelines.oecd.org/ http://www.oecd.org/corporate/mne/mining.htm [email protected]; [email protected]; [email protected]

28 TRADE

REIN NIELAND POLICY OFFICER – DG TRADE 29 VIDEO PRESENTATION

Please click here to view

30 MEHDI BARKHORDAR CEO – PAMP 31 RJC - Chain of Custody RJC Baselworld

Basel, 19 March 2014

An MKS PAMP GROUP Company Table of content

1. Who we are

2. Corporate Responsibility

3. RJC Chain of Custody

4. Our Value Proposition : BEYOND PRECIOUSTM

RJC - Chain of Custody – Confidential – © PAMP MKS PAMP GROUP

The MKS PAMP Group is an industrial and financial services group specialising in all aspects of the precious metals business, drawing on more than 60-years of experience.

The Group employs over 600-people and has a local presence in key precious metal markets. MKS PAMP Group provides high quality products and efficient services through 2 refineries and mints, 14 offices, in 11 countries on 5 continents.

35 RJC - Chain of Custody – Confidential – © PAMP MKS PAMP GROUP worldwide

Castel San Pietro New York Geneva Istanbul Haryana Dubai New Delhi Shanghai

Bangkok Kuala Lumpur Singapore

Sydney

MKS PAMP Group has a diverse client base, spanning the full spectrum of precious metals markets:

• Central Banks • Retail & Commercial Banks • Government Mints • Government Postal Authorities • Mining Companies • Jewellery & Watch Manufacturers • Jewellery Wholesalers • Asset Managers • Bullion Retailers • Direct Marketers

LBMA/OECD Responsible Supply Chain

SAI Swiss AML- Social CFT Accountability

ISO/OHSAS RJC Quality, CoP Environment, Safety CoC

PAMP Beyond Precious

Name Nature Conflict AML Human Health Social, Full Applies free CTF Rights Safety environ Track to full criteria criteria ment and Metal criteria Trace Input/ Output

LBMA Mandatory     

SA8000 Voluntary  

RJC CoP Voluntary      

RJC CoC Voluntary      

1. Growing awareness of conflict gold implementation issues remain issue 8. Conflict/High risk area: Inconsistency 2. Determination of gold origin more of application of conflict/high risk accepted area criteria by different supply chain actors remains a competitive issue 3. Better cooperation of other market participants of the supply chain during due diligence process

4. Slowly rising markets and consumer expectations

5. Increasing number of companies with responsible sourcing certification

6. Extraction : Acute issues remain in certain regions

7. ASM Responsible Sourcing: Acute

1. Increased diligence of all market 7. Include Business Ethics, Health & players as to responsible sourcing Safety and Environment

2. Incentivize and support resolution of acute issues at extracting level

3. Increase the current scope of materials (gold and 3T) to other precious metals

4. Compulsory due diligence beyond conflict/high risk area determination

5. All supply chain actors should obtain a responsible sourcing certification – not only refiners

6. To clarify and adjust due diligence requirements on ASM supply chain

1. Management Systems and Responsibilities 

2. Internal Material Controls  3. Outsourcing Contractors and Service Companies : n/a

4. Systems to Confirm Eligible Material 

5. Eligible Materials

6. Issuing Chain-of-Custody Documentation

Full traceability through segregation in :

Melting Handling of Lots for from Pre- Cell for sponge minting Finished source refining refining resulting or product to melt from casting refinery refining

• Implementation : none

• Upstream : very limited supply of mined CoC material

• Downstream : limited demand so far

Conflict free

Full AML-CFT Traceability

Limited Community Environme supported ntal impact

Certified Safety mine assurance No Human right abuse and work of children

48 RJC - Chain of Custody – Confidential – © PAMP Thank you This presentation is confidential and should not be replicated or distributed without the permission of MKS PAMP GROUP.

An MKS PAMP GROUP Company Q & A

PLEASE RAISE YOUR HAND TO ASK YOUR QUESTION.

50 Thank you! 52