Con­flict Min­eral Leg­is­la­tion

Solitaire - - TRADE FAIR -

On the side­lines, a blue-rib­bon panel of ex­perts at the Vi­cen­za­oro Win­ter dis­cussed what may be a gath­er­ing storm for the gold jew­ellery in­dus­try, brought upon by leg­isla­tive pro­cesses tar­get­ing min­er­als from con­flict ar­eas in the Great Lakes re­gion of Africa. They were par­tic­i­pat­ing in a sem­i­nar at the Vi­cen­za­oro Win­ter trade fair, en­ti­tled “Con­flict min­eral leg­is­la­tion in the Europe and the United States: How it im­pacts upon both the do­mes­tic and ex­port jew­ellery busi­ness.” It was hosted by Fiera di Vi­cenza; CIBJO, the World Jew­ellery Con­fed­er­a­tion; the Re­spon­si­ble Jew­ellery Coun­cil; and Con­find­us­tria Federorafi. Pre­sented by Cor­rado Facco, man­ag­ing di­rec­tor of Fiera di Vi­cenza, and Gae­tano Cava­lieri, pres­i­dent of CIBJO, the sem­i­nar pan­el­lists in­cluded Marieke van der Mijn, stan­dards co­or­di­na­tor at the Re­spon­si­ble Jew­ellery Coun­cil; Michael Allchin, chief ex­ec­u­tive and as­say mas­ter at the Birm­ing­ham As­say Of­fice and the pres­i­dent of the CIBJO Pre­cious Metals Com­mis­sion; Philip Olden, who is re­spon­si­ble for man­ag­ing the de­vel­op­ment and im­ple­men­ta­tion of re­spon­si­ble sourc­ing pro­to­cols for gold at Signet, the world’s largest spe­cial­ity jew­ellery re­tailer; Marco Falezza, jew­ellery op­er­a­tions di­rec­tor of Gucci Group, who rep­re­sented Con­find­us­tria Federorafi; and Maria Benedetta Francescon­i of the Ital­ian Min­istry of Eco­nomic De­vel­op­ment. The mod­er­a­tor was Si­mon Brooke, a Bri­tish jour­nal­ist. The first of the two spe­cific pieces of leg­is­la­tion un­der the spot­light was Sec­tion 1502 of Dodd-Frank Act in the United States. Signed into law in 2010, it is a dis­clo­sure re­quire­ment that re­quires pub­licly traded com­pa­nies to de­ter­mine whether their prod­ucts con­tain con­flict min­er­als and con­duct in­quiries into coun­try of ori­gin of those min­er­als. Start­ing, this year, they need to make for­mal dis­clo­sures to the Se­cu­ri­ties and Ex­change Com­mis­sion (SEC). Sim­i­lar leg­is­la­tion is pend­ing in the Euro­pean Union. In Brussels, the Euro­pean Com­mis­sion’s Direc­torate-Gen­eral for Trade is cur­rently putting the fi­nal touches to a leg­isla­tive pro­posal on con­flict min­er­als that may par­al­lel Dodd-Frank, though it in­tends to build on in­ter­na­tional ini­tia­tives like the OECD Due Dili­gence Guid­ance. “What this means is that quite a sig­nif­i­cant per­cent­age of the jew­ellery traded in the United States will end up in the dis­play cases of pub­licly traded com­pa­nies, who ac­cord­ing to Dod­dFrank need to mon­i­tor their sup­ply chain. In other words, if you ex­port or are look­ing to ex­port to the United States, it is more than likely that, ul­ti­mately, Dodd-Frank will mat­ter to you,” noted Cor­rado Facco, in his open­ing ad­dress to the sem­i­nar. The per­va­sive­ness of Dodd-Frank was con­firmed by Philip Olden, who noted that as a pub­licly traded com­pany, Signet is obliged to en­sure that any com­pany from which it buys jew­ellery has it­self in­tro­duced a due dili­gence sys­tem by which it can ac­cu­rately trace the ori­gin of the gold. Signet, he noted, has de­vel­oped a de­tailed set of pro­to­cols ac­cord­ing to which its clients are obliged to op­er­ate. “If you are not able to demon­strate that you can meet our re­quire­ments, we will not be able to buy from you,” he said. The crit­i­cal junc­ture for due dili­gence in the sup­ply chain is the gold re­finer­ies, said Marieke van der Mijn. She noted that RJC has been work­ing col­lab­o­ra­tively to in­sti­tute an in­ter­na­tion­ally ac­cept­able due dili­gence sys­tem that demon­strates that the re­fined gold they pro­duce is con­flict-free. She also dis­puted the no­tion that sup­ply chain as­sur­ance was a lux­ury avail­able only to larger com­pa­nies, not­ing that 40% of RJC’s mem­bers are small and medium-sized en­ter­prises. While hav­ing been con­sulted by both the Bri­tish govern­ment and the Euro­pean Union dur­ing the process of de­vel­op­ing an EU con­flict min­er­als leg­is­la­tion, Michael Allchin still ques­tioned whether a leg­isla­tive ini­tia­tive was jus­ti­fied, and whether vol­un­tary sys­tems be­ing adopted by in­dus­try, like the OECD Due Dili­gence Guid­ance, would be more ef­fi­cient. “The truth is that eas­i­est route to com­pli­ance to­day is not to buy gold from Africa’s Great Lakes re­gion, but the dam­age that is be­ing done to lo­cal com­mu­ni­ties, many of which do not have al­ter­na­tive means of a liveli­hood, is dev­as­tat­ing and of­ten coun­ter­pro­duc­tive,” he stated. In its ef­forts to en­sure that its sup­ply chain re­mains free of con­flict min­er­als, Gucci took a some­what dif­fer­ent ap­proach to com­pa­nies like Signet, re­counted Marco Falezza. In­stead of re­quir­ing that its clients demon­strate that they had shown due dili­gence in en­sur­ing the ori­gin of the gold, Gucci ac­quired the gold it­self, af­ter ex­am­in­ing the sources of the ma­te­rial, and then pro­vided the ma­te­ri­als to those com­pa­nies that pro­duce jew­ellery for it. Speak­ing on be­half of the Ital­ian govern­ment, Maria Benedetta Francescon­i ad­dressed the dif­fi­cul­ties faced by the small and medium sized en­ter­prises that make up the bulk of the lo­cal jew­ellery sec­tor. There are real cost fac­tors in­volved, she stated, and the task of ver­i­fy­ing the move­ment of gold through the pipe­line is cer­tainly not a sim­ple one. “My con­cern, which is one that I feel strongly needs to be ad­dressed, is that by plac­ing an­other sub­stan­tial bur­den upon the in­dus­try we are again rais­ing the bar of en­try. We have to de­velop sys­tems by which all par­tic­i­pants in this in­dus­try are rea­son­ably able to meet the re­quire­ments of due dili­gence. It is al­ready dif­fi­cult enough for young en­trepreneur­s to gain a foothold in the busi­ness. We do not want to cre­ate ar­ti­fi­cial ob­sta­cles that are too high to climb, or pre­vent less es­tab­lished com­pa­nies from gain­ing en­try into cer­tain mar­kets or mar­ket sec­tors.” “Above all we need to con­sider the com­mit­ment we have as mem­bers of a re­spon­si­ble busi­ness com­mu­nity to so­ci­ety,” stated Gae­tano Cava­lieri, in an ad­dress that con­cluded the sem­i­nar. “If the end re­sult of con­flict min­er­als leg­is­la­tion is that, as a rule of thumb, com­pa­nies avoid trad­ing with the cen­tral African gold pro­duc­ers be­cause it is the eas­i­est way to achieve com­pli­ance, then we may have avoided do­ing the wrong thing, but we cer­tainly did not do the right thing.” The sem­i­nar was opened by Fiera di Vi­cenza’s new pres­i­dent Mat­teo Mar­zotto, who noted his or­gan­i­sa­tion’s com­mit­ment to serv­ing both the Ital­ian and in­ter­na­tional jew­ellery sec­tors.

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