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Friday, June 17, 2011

World Gold Council Drafts Conflict-Free Gold Standards

Gold doré

The World Gold Council said Friday that it is developing a system similar to the Kimberley Process for diamonds to ensure that gold is coming from conflict-free sources.

The WGC, which serves as the marketing development organization for the gold industry, said it has drafted a framework of two standards designed to track gold from the mine to the end of the refining process. They are a “chain of custody” standard and a “conflict-free gold” standard. Under the proposal, both standards will be subject to independent audit. Additional standards on audit, certification and the handling of recycled gold are in development, WGC said.

The WGC said the proposed standards are being “stress tested” in practice by gold mining companies and refiners.

The Conflict-Free draft standard has a “conflict,” a “company,” and a “commodity” assessment proponent, WGC said. It contains a framework of benchmarks and prompts through which companies must assess the adequacy of their systems and analyze their impacts upon those around them. Their conclusions must be auditable. The standard contains principles that assesses a companies’ commitment to respect human rights; ensure that payments are not made, directly or indirectly, to armed groups; be transparent about their payments to governments; only accept gold from conforming sources; and to establish a credible and accessible grievance mechanism.

The chain of custody standard provides the infrastructure for identifying that a consignment of gold doré has been mined according to the conflict-free standard, has not been tampered with during its transport between the mine and the refinery—which may involve it passing through the hands of shipping agents, security, customs and airlines—or during the refining process. The process is based upon a chain of warranties which will be auditable, for example, by insurers or customers. Gold doré is bars of melted gold containing up to 90 percent gold that needs additional refining to become 999.9 parts per thousand pure gold. It's about the size of a loaf of bread and weighs about 60 pounds.

You can download the full text pdfs of the proposals on the WGC website.