Options for sustainability - strategic gold chain assessment Report prepared for the Dutch Ministry of Foreign Affairs Options for sustainability - strategic gold chain assessment Report prepared for the Dutch Ministry of Foreign Affairs Jan Willem van Gelder Ron Smit Final version: 14 July 2015 Naritaweg 10 1043 BX Amsterdam The Netherlands Tel: +31-20-8208320 E-mail: [email protected] Website: www.profundo.nl Contents Summary ..................................................................................................................... i Introduction ................................................................................................................ 1 Chapter 1 Objectives and approach ................................................................. 3 1.1 Background ............................................................................................... 3 1.2 Objectives .................................................................................................. 3 1.3 Approach ................................................................................................... 3 1.3.1 Literature research ...................................................................................... 4 1.3.2 Interviews with key informants .................................................................... 4 1.3.3 Roundtable discussions .............................................................................. 5 Chapter 2 Overview of the global gold chain .................................................. 6 2.1 Gold deposit types .................................................................................... 6 2.2 Gold production ........................................................................................ 7 2.2.1 Types of mining ........................................................................................... 7 2.2.2 Processing .................................................................................................. 7 2.2.3 Recycling .................................................................................................... 8 2.3 Global gold production statistics ............................................................ 9 2.3.1 Development of gold supply ........................................................................ 9 2.3.2 Contribution of gold mining to national economies .................................... 11 2.4 Leading industry players worldwide ...................................................... 13 2.4.1 Top gold producers from industrial mining ................................................. 13 2.4.2 Largest gold deposits and their owners ..................................................... 14 2.4.3 Leading gold refiners ................................................................................. 15 2.5 Gold trade ................................................................................................ 16 2.5.1 Global gold trade ....................................................................................... 16 2.5.2 Illicit gold trading ....................................................................................... 19 2.5.3 Dubai / United Arab Emirates .................................................................... 19 2.5.4 Miami / United States ................................................................................ 20 2.5.5 Shanghai / China ...................................................................................... 20 2.5.6 Singapore ................................................................................................. 20 2.5.7 Switzerland ............................................................................................... 21 2.6 Key applications of gold ......................................................................... 22 2.6.1 Jewellery demand ..................................................................................... 23 2.6.2 Investment demand ................................................................................... 23 2.6.3 Central bank purchases ............................................................................ 23 2.6.4 Industrial applications ................................................................................ 24 2.6.5 Dental gold and medical applications ........................................................ 25 Chapter 3 The Netherlands and the global gold chain ................................. 26 3.1 Gold trade and consumption.................................................................. 26 3.1.1 Gold imports and exports .......................................................................... 26 3.1.2 Gold fabrication use .................................................................................. 28 3.1.3 Dutch central bank gold reserves .............................................................. 28 3.1.4 Gold inspection ......................................................................................... 29 3.1.5 Key gold traders and wholesale buyers ..................................................... 29 3.2 Gold from electronics recycling ............................................................. 31 3.3 Gold consuming sectors ........................................................................ 33 3.3.1 Electronics products .................................................................................. 33 3.3.2 Jewellery sector ........................................................................................ 36 3.4 Investors in gold, gold stocks and gold commodity contracts ........... 37 3.5 Financing of gold mining companies .................................................... 38 3.6 Shell companies and tax planning ......................................................... 39 3.7 Conclusions ............................................................................................ 40 Chapter 4 Sustainability issues in the gold sector ....................................... 42 4.1 Sustainability issues in industrial scale gold mining ........................... 42 4.1.1 Environmental issues ................................................................................ 42 4.1.2 Social issues ............................................................................................. 45 4.1.3 Supply chain issues .................................................................................. 47 4.2 Sustainability issues in artisanal gold mining ...................................... 49 4.2.1 Environmental issues ................................................................................ 49 4.2.2 Social issues ............................................................................................. 51 4.2.3 Supply chain issues .................................................................................. 54 4.3 Comparison of LSM and ASM impacts .................................................. 54 4.4 Sustainability issues in gold trade and recycling ................................. 55 4.4.1 Traceability ............................................................................................... 56 4.4.2 Money laundering and gold laundering...................................................... 57 4.4.3 Recycling .................................................................................................. 58 4.5 Summary and analysis of issues ........................................................... 58 4.5.1 Governance .............................................................................................. 58 4.5.2 Water related impacts ............................................................................... 59 4.5.3 Socio-economic impacts ........................................................................... 59 Chapter 5 Policy context and current initiatives ........................................... 61 5.1 Sustainability initiatives, guidelines, regulations, and standards ....... 61 5.1.1 Regulations ............................................................................................... 61 5.1.2 General international voluntary guidelines ................................................. 62 5.1.3 Sector specific voluntary initiatives ............................................................ 63 5.1.4 Traceability initiatives ................................................................................ 66 5.1.5 Artisanal mining development initiatives .................................................... 68 5.1.6 International gold sustainability standards ................................................. 69 5.2 Relevant EU policy context .................................................................... 70 5.2.1 Raw Materials Initiative ............................................................................. 71 5.2.2 Directive 2013/34/EU ................................................................................ 71 5.2.3 Directive on disclosure of non-financial information ................................... 72 5.2.4 Directive 2012/19/EU ................................................................................ 72 5.3 Relevant Dutch policy context ............................................................... 72 5.3.1 Dutch agenda for aid, trade and investment .............................................. 73 5.3.2 MVO Loont ................................................................................................ 74 5.3.3 Sector agreements on international corporate