This is the second blog in a four-part series to mark the release of the Second Edition of the Regional Certification Mechanism (RCM) Manual. It describes the introduction of “Blue Status” for Mine Sites and Exporters and how this “new” element of the RCM is aligned with the OECD Due Diligence Guidance for Responsible Minerals from Conflict Affected and High-risk Areas.
In this blog we outline what “Blue Status” means and how it helps ensure the flow of responsibly sourced minerals in “start-up and low capacity situations”. By this we mean when
- new Mine sites and Exporters are established and have not yet been verified under the RCM, and
- they are already in existence but State and / or ICGLR led verification processes do not have the resources available to conduct verification within the timeframes detailed in the RCM manual.
We contend that this change is an essential ingredient to ensuring the commercial viability of formal 3TG mineral supply chains in the Great Lakes Region.
Why the need for Blue Status?
To answer this question, we need to provide a little background on the genesis of the RCM. At the time of its release in 2011 the RCM allowed for a transition period for Member States to establish processes and procedures in line with the requirements outlined in the manual. The effective mandatory date of entry into force was set at 2014, although efforts in DRC and Rwanda pre-date this. After this all Member States were required to have active programs for implementing the RCM and all Mine Sites and Exporters required verification before Designated Minerals originating from / being exported by them could receive an ICGLR Certificate.
Unfortunately, the reality doesn’t always match the theory. Presently only DRC and Rwanda could be said to implementing the RCM to any great extent, although Burundi and Tanzania just recently began implementation and developments in Uganda are encouraging. What this means is that, under the first iteration of the RCM, supply chain actors were penalized as a result of inaction or incapacity on the part of the Member States in which they operated. If there was no verification system there could be be no verification, which meant that de facto Designated Minerals could not be exported in compliance with the RCM.
To demonstrate the extent of the problem, even in DRC where the RCM had been embraced, low-capacity resulted in the slow roll-out of Mine Site Inspections. With more than 1500 mine site in scope conducting inspections at each of them on an annual basis would have been a herculean task. The reality is much closer to circa 600 sites inspected over eight years, only a few mines inspected more than once.
The situation relating to Exporter Third Party Audits is similar. Whilst there are more than 60 registered exporters in DRC and Rwanda, only 9 Exporters, 5 in DRC and 4 in Rwanda, have been audited under the RCM. Only one of these Exporters has been audited more than once.
In addition, under the First Edition of the Manual a Catch 22 existed for new market entrants. Before commencing operations verification of their compliance with the RCM was required; this was both costly and illogical since only when in operation do Criteria in the RCM become applicable.
This situation was serving as an effective barrier to entry for potentially legitimate business and could not persist. As such, the drafters of the revised RCM manual had to come up with a solution to deal with low-capacity and start-up situations. The solution: Blue Status.
What is Blue Status?
Blue status is the new “forth” status criterion under the RCM. It complements the previous three status criteria of Green (Verified), Yellow (Provisionally Verified) and Red (Not Verified), which denote the outcome of the verification process. By contrast Blue status is the default status for all legally registered Mine Sites and Exporters when no verification has taken place or where a verification has been requested but has not been carried out within the timeframe specified in the RCM.
The tables below outline the process governing Blue status (warning: those of you that are not practitioners or supply chain actors may be inclined to skip over this detail!).
Blue Mine Status Overview
Not Inspected (Blue)
A mine site that has not yet been inspected according to the ICGLR RCM Requirements and / or a Valid (Green) mine site that has not been re-inspected within the last year.
1. A mine site can retain Blue Status for a maximum of 3-years; if not inspected in 3-years it would be become Red Status
2. A previously Not Valid (Red) mine site or Provisionally Valid (Yellow) mine site cannot become Not Inspected (Blue) unless it has subsequently received a Valid (Green) Status.
Mine site can produce and sell minerals for certified export if the exporter has conducted an on-the-ground Risk Assessment, a copy of that assessment is made publicly available and shared with the Member State and ICGLR Secretariat and no Red Status Criteria risks have been identified.
If Yellow Status Criteria are identified as part of the on-the-ground risk assessment the mine site shall have 6-months to mitigate the non-conformance or demonstrate significant measurable improvements for the Yellow Status Criteria identified. If after 6-months the Yellow Status Criteria have not been mitigated or the mine site does not demonstrate significant measurable improvement the Exporter shall immediately suspend or discontinue engagement with the mine site.
Blue Exporter Status Overview
Not Audited (Blue)
An Exporter that has not yet received an ICGLR TPA and has requested an Audit prior to the end of the first year of operation or a Valid Exporter that has requested an ICLGR TPA (with a minimum of 3-months’ notice prior to the expiration of its existing TPA) but has not yet received an ICGLR TPA.
1. Exporters must have initiated the audit process within one year of the effective date of the Revised RCM Manual Second Edition.
2. An Exporter can retain Blue Status until their first ICGLR TPA is completed and thereafter for a maximum of 3-years.
The Exporter may purchase and/or produce Designated Minerals for certified export.
But doesn’t Blue Status mean that un-verified supply chain actors can get away with things they shouldn’t?
This was a question that we as reviewers encountered a lot during the revision process. This concern is based on the reasoning that by allowing Designated Minerals to flow in the absence of state-led verification mechanisms the system allows non-compliant actors to undertake certified export.
However, this is to misunderstand the role of Blue status. Blue status continues to require appropriate checks and balances in line with OECD Due Diligence Guidance, placing the responsibility for due diligence on companies. For example, if an Exporter wants to source from a mine site that is Blue status, it must conduct an on the ground risk assessment and share the assessment report with the government and ICGLR. If the risk assessment identifies any Annex II risk as identified by OECD, they must discontinue sourcing when Red Status Risks are identified) or work with the mine site operator to mitigate Yellow Status Risks within six months. This is exactly how the OECD envisioned the Guidance working.
Similarly, if a Blue status Exporter wishes to conduct a fully certified export it will continue to need to demonstrate to both the Member State issuing ICGLR certificates and mid-tier and/or downstream buyers that its can provide full chain of custody information for the associated mineral lots.
So, whilst the RCM Mine Site and Exporter verification adds additional controls beyond OECD requirements, it is perfectly feasible to ensure conformance with international market expectations in their absence. By introducing the Blue status, the revised RCM gives industry the opportunity to operate, but only if they conduct their operations in conformance with the globally accepted OECD Due Diligence Guidance.
Finally, in order to avoid a situation of perpetual Blue status, which could potentially undermine the additional checks and balances allowed for in the RCM, the revision incorporated a time-limit of 3-years after which non-verified Mine Sites / Exporters once again revert to Red status.
Blue status creates an opportunity for Member State and ICGLR programs as well as businesses operating within their territories to mature in a low capacity situation and it reaffirms the role of industry in effective due diligence. Until now the RCM relied only on Government/ICGLR systems that lack capacity. This change allows responsibly sourced minerals to enter global markets creating the opportunity for greater development in the region.