Meeting LBMA Gold Guidance for Responsible Sourcing from Africa
The global precious metals industry increasingly demands integrity and transparency, especially for gold sourced from regions like Africa. For businesses like Glen Supply Chain, our commitment is to not only connect African minerals to global markets but to do so responsibly. The London Bullion Market Association’s (LBMA) Responsible Gold Guidance (RGG) is the international benchmark for this commitment, and meeting its requirements is non-negotiable for ethical gold trade.
What is the LBMA Responsible Gold Guidance?
The Responsible Gold Guidance is the cornerstone of the LBMA’s Responsible Sourcing Programme. It formalises and strengthens the due diligence practices of all LBMA Good Delivery Refiners. The primary goal of the RGG is comprehensive: to combat systematic human rights abuses, avoid contributing to conflict, and ensure compliance with high standards of anti-money laundering (AML) and counter-terrorist financing (CTF) practices. It also addresses the increasing importance of environmental, social, and corporate governance (ESG) responsibilities.
The Guidance is developed in alignment with the five-step framework for risk-based due diligence laid out in the Organisation for Economic Co-operation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (CAHRAs).
The Five Steps of Responsible Due Diligence
Compliance with the RGG, and therefore for responsible sourcing from Africa, hinges on implementing the OECD’s five-step framework:
Establish Strong Company Management Systems: This begins with adopting and publicly committing to a robust supply chain policy that is consistent with the RGG and OECD Guidance. It requires setting up an internal management structure with clear authority, responsibility, and strong internal controls over the supply chain.
Identify and Assess Risks in the Supply Chain: Gold-sourcing risks must be identified from the point of origin to the refinery. For African gold, this means diligently assessing all suppliers for red flags related to conflict, money laundering, human rights abuses (like child labour), corruption, and environmental harm, such as the use of mercury.
Design and Implement a Management Strategy to Respond to Identified Risks: Once a risk is identified, a strategy must be put in place to mitigate it. This can involve continued trade with verifiable risk mitigation, temporary suspension of trade while mitigation is implemented, or disengagement from the supply chain if risks are too high or cannot be mitigated. Continuous improvement is key to this step.
Obtain Independent Third-Party Assurance: LBMA Good Delivery Refiners must undergo an annual, independent, third-party audit to assure conformance with the RGG. This external verification adds a layer of credibility and confidence to the due diligence process.
Report Annually on Supply Chain Due Diligence: Transparency is crucial. Refiners must publicly report on their supply chain due diligence efforts, including the risks identified and the measures taken to address and mitigate them.
Responsible Sourcing of Gold from Africa
Africa is a vital source of gold, but it also presents unique challenges, particularly in regions classified as CAHRAs. For Glen Supply Chain, meeting the LBMA Guidance in an African context requires an enhanced focus on specific areas:
Artisanal and Small-Scale Mining (ASM): ASM accounts for a significant portion of gold production in many African countries. The RGG encourages refiners to engage responsibly with the ASM sector. This means supporting the formalisation of legitimate ASM operations, which helps to improve working conditions, eliminate child labour, introduce responsible environmental practices (like phasing out mercury), and reduce vulnerability to illegal trade and organised crime.
Environmental, Social, and Governance (ESG): Beyond conflict and financial crimes, the Guidance also covers broader ESG concerns. This includes an explicit requirement to ensure that no gold is sourced from a World Heritage Site. For African gold producers, this translates into rigorous environmental impact assessments, responsible water and chemical management, and strong community development initiatives that benefit local stakeholders.
Traceability and Transparency: Detailed traceability is paramount. This means establishing a robust chain of custody for all gold-bearing material, especially from African mines, to confirm its legal and responsible origin. This process is essential to differentiate between legitimate trade and illicit gold flows that may finance conflict or criminal activity.
Glen Supply Chain’s Commitment
At Glen Supply Chain, we see the LBMA Responsible Gold Guidance not as a hurdle, but as a blueprint for ethical business. Our work in connecting African minerals to global markets is built on a foundation of integrity. We partner with producers who demonstrate a clear commitment to the five-step due diligence process, ensuring that the gold we procure supports sustainable economic development and responsible practices across the African continent. By adhering to the highest international standards, we protect the value of the supply chain and contribute to a more responsible global gold market.