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Human rights group calls for major gold refiner to lose 'good delivery' status

A U.K.-based human rights watchdog is calling on The London Bullion Market Association to suspend the certification of a gold refiner used by some of the largest companies in the world, saying the refiner failed to adequately investigate allegations of human rights abuses at one of its source mines.

The London Bullion Market Association, or LBMA, is the world's largest gold exchange, and its "good delivery" standard is used globally as a de facto criteria for acceptable gold and silver bars. Adherence to the Responsible Sourcing program is required in order to maintain the accreditation, according to the association's website and guidance documents.

Nonprofit U.K. organization RAID issued a public statement July 8 saying the LBMA should suspend the "good delivery" status of India-based gold refiner MMTC-PAMP India Pvt. Ltd. on allegations that it refused to let a third-party auditor meet with victims of reported abuse and pollution at Barrick Gold Corp.'s North Mara mine in Tanzania.

While under the partial ownership of Acacia Mining PLC, North Mara faced accusations of its security detail murdering and raping civilians and of the mine itself creating significant environmental contamination. Barrick acquired Acacia's remaining shares in September 2019. A Barrick spokesperson said the company is aware of RAID's statements and the company fully complied with the LBMA processes.

MMTC-PAMP is popular among global manufacturers. RAID identified at least 14 major companies that listed the refiner as part of their supply chains as recently as 2019, including Amazon.com Inc., Apple Inc., General Electric Co., General Motors Co., Tesla Inc. and The Walt Disney Co. Some of these companies are facing pressure to ramp up oversight and disclosure of the human rights risks within their mineral supplies.

In June 2019, responding to an investigative report published by The Guardian detailing allegations of violence at North Mara and highlighting the refiner, MMTC-PAMP announced it would hire an independent assessor to conduct a site visit and additional due diligence.

MMTC-PAMP released an executive summary of the assessor's work July 3 stating it "did not identify any areas of unacceptable risk management" and recommending that the refiner continue to trade with North Mara while engaging with Barrick.

However, RAID claims that the third-party assessor's team was not permitted to meet with victims of the alleged abuses at North Mara and that in a meeting with the team, it was conveyed to advocates that "not meeting with victims was an issue and unusual in its line of work." The human rights group claims the trade association disclosed in a private meeting that it had opened a formal investigation into whether the refiner violated its Responsible Sourcing program. A LBMA spokesperson declined to comment.

"The assessment of the North Mara supply chain appears to be a whitewash and fails to meet the LBMA's Responsible Sourcing standards at multiple levels," RAID Executive Director Anneke Van Woudenberg said in a July 9 statement. Van Woudenberg told S&P Global Market Intelligence that RAID has been in touch with the trade association about the case repeatedly in recent months and that it is the first time the group asked the LBMA to suspend a refiner.

MMTC-PAMP said in a statement to Market Intelligence that it "categorically refutes" the allegations. The refiner said the third-party auditor was approved by the LBMA and its investigation involved private interviews with external stakeholders including local community representatives and interviews with RAID staff members including Van Woudenberg and considered "extensive publicly available information from civil organizations, including RAID."

"MMTC-PAMP has always operated and continues to operate under the regulatory framework established and managed by the LBMA. Consequently, any allegations will be handled appropriately by the LBMA as part of its regular oversight role," MMTC-PAMP said in its statement.

As of July 9, four refiners have been removed from the LBMA's "good delivery" list, though the association does not publicly name the sanctioned entities.

The LBMA typically keeps its formal investigations, known as incident reviews, confidential until they are resolved. In a rare turn, the association in June publicly acknowledged it had initiated an incident review of the Perth Mint's compliance with the Responsible Sourcing program following reports that it was sourcing gold from a company in Papua New Guinea owned by a convicted killer.