At Kazzinc, our zinc operation in Kazakhstan, gold is produced and smelted as a by-product. In recent years, there has been concern about potential links between gold and unlawful armed conflict, such as civil wars and militia activity. As around a quarter of the gold that Kazzinc smelts comes from third-party suppliers, we are keen to ensure that our gold has been extracted in a manner that does not contribute to conflict or has been produced as a result of serious human rights abuses.
To this end, we undertook a number of measures to become certified as a conflict-free gold producer, which included independent audits.
The World Gold Council’s Conflict-Free Gold Standard was introduced in 2012 to ensure that developing economies have the opportunity to share in the economic benefits of mining. The standard provides a mechanism for gold producers to provide assurance that their gold production does not cause, support or benefit unlawful armed conflict or contribute to serious human rights abuses or breaches of international humanitarian law. The standard is divided into five parts:
- Conflict assessment: determining whether the mine is located in a “conflict-affected or high‑risk” region.
- Company assessment: if the mine is in a “conflict-affected or high-risk” region, determining whether the company has systems in place to discharge its corporate responsibility to avoid causing, supporting or benefiting unlawful armed conflict, or contributing to serious human rights abuses or breaches of international humanitarian law.
- Commodity assessment: if the mine is in a “conflict-affected or high-risk” region, determining whether there are processes in place to manage the movement of gold and gold-bearing material while in the company’s custody, to mitigate against its misuse by groups associated with unlawful armed conflict.
- Externally sourced gold assessment: determining whether there is a process in place to ensure that appropriate due diligence is undertaken on any gold acquired, regarding any potential involvement in causing or supporting unlawful armed conflict.
- Management statement of conformance: where management believe that the company complies with the other relevant parts of this standard, an appropriate statement must be made to the next party in the chain of custody.
With regard to parts A, B and C, Kazakhstan is a conflict-free country, with no armed forces apart from the regular army and law-enforcement agencies (such as the police) maintained officially by the government. Kazzinc does not support any armed forces but contracts reputable third-party providers of security services.
With regard to part D and E, 77% of Kazzinc gold is produced from its own ore. The rest comes from gold/silver and poly-metallic concentrates from third-party suppliers. Most are poly-metallic suppliers rather than gold miners; Kazzinc has long-term relationships with our suppliers and customers for concentrates smelting, none of which are involved in supporting armed conflict. We are in the process of receiving formal confirmation from all of our suppliers and will post a management confirmation to this effect in due course.
In addition, Kazzinc successfully passed the London Bullion Market Association (LBMA) Responsible Gold Audit Programme in 2014. This included an independent third-party audit reviewing production over a 12-month period, and confirming it complies with the LBMA Responsible Gold Guidance. This entails high standards of due diligence to combat systematic or widespread human rights abuses, which can contribute to conflict.