New Fairtrade gold and precious metals standards published

On November 11, 2013, Fairtrade International announced the publication of its new standards and premiums for gold, silver and precious metals

Worldwide, 100 million artisanal and small scale miners work in harsh and dangerous conditions, caught in a vicious circle of exploitation, illegality and poverty in unfair supply chains.  Yet if managed responsibly, artisanal and small scale mining can provide a great opportunity for poverty reduction and sustainable development for millions of people.

Most mining communities lack basic sanitation and access to clean and safe drinking water. They often have poor housing, little or no access to education and healthcare, and are financially unstable. Lack of transparency in supply chains makes it virtually impossible for consumers to know where and under what conditions the gold in their jewelry was mined.

The new Fairtrade standards were developed through lengthy consultations with 150 internal and external stakeholders including representatives from artisanal and small-scale mining organizations, local support organizations, National Fairtrade Organizations, traders, jewelry companies, NGOs and mining experts.

The New Standard

Gold labeling model -- here are two models, which Fairtrade will currently be promoting:

1) Fairtrade’s current model  for fully traceable gold.

This will remain the core business model for Fairtrade gold. All operators are registered within the Fairtrade system and audited against the standards. Final products are certified and punched with the Fairtrade Mark stamp after approval.

2) Goldsmith’s Registration Scheme

The Goldsmith’s Registration Scheme model is for small micro-jewelers, using less than 500 grams of gold or 2 kg of certified silver, who would be too small to be licensees. Under the scheme, a master operator becomes the Fairtrade licensee and sells semi-finished Fairtrade certified gold or silver products to small jewelers. Sheets, wires and other semi-finished products would be stamped with the Fairtrade Gold Mark by the master operator and sold to goldsmiths, who would be registered with Fairtrade but would not be subject to an audit or be required to pay license fees. The small operators would not be allowed to stamp products themselves with the Fairtrade Gold Mark, but they could use in-store messaging to consumers. This is scheduled to come into effect in early 2014.

Fairtrade minimum price

The Fairtrade minimum price for pure gold is set at 95% of the London Bullion Market Association’s (LBMA) fix. The LBMA fix is the international agreed price for gold. ASM producers in the mainstream get anything from 50% to 85% of the LBMA fix. 
Miners can earn a premium of 15% of the LBMA fix when they recover gold through gravity only, without the use of mercury or cyanide. 

Invoicing

Fairtrade Premium, separate on invoices: New requirements in the standard separate the value of premium on invoices. This can prevent Fairtrade gold costs escalating for operators down the supply chain.

Compliance with international jewelry composition standards: The new Standard recognizes international legal definitions of composition requirements for jewelry. This includes accepted components or semi-finished products (e.g. earring hooks, necklace clasps) that are on an approved exemption list if they cannot be sourced from Fairtrade.

New Fairtrade Premium

The Fairtrade Premium is now a fixed price of $2,000 per kilogram, instead of a percentage (10 percent) of the London Bullion Market Association (LBMA) on the day of trade. This helps to keep the price differential at a reasonable level and enable small-scale miners to sell more Fairtrade gold, resulting in more tangible benefits for their communities to drive more benefits for miners. A wedding ring bearing the FAIRTRADE Gold Mark may now only cost an estimated $15 to $20 more than a non-Fairtrade ring at the retail level.

Wider geographical scope

The new standard is applicable to all of the southern hemisphere, not just Latin America, where all of Fairtrade’s currently certified mining organizations are based. The new standard opens the way for the certification of mining organizations in Africa over the next few years.

Self-defined organizational set-up

One of the biggest challenges in small-scale gold mining is the various organizational structures that are used (cooperative mine, small company, entrepreneurial activity with hired labor, etc.). Until now, the Fairtrade Standard was prescriptive in terms of what form a small-scale mining organization could take. Under the new standard, the organization is free to define itself legally. This reflects the fact that different countries have different legal frameworks (especially in Africa), and artisanal and small-scale mining organizations need a degree of choice when it comes to these stipulations.

Additional responsibilities for the mining community

The new standard includes an increased role for the mining organization in the local community. The mining community includes workers in the mine, in processing and in the geographical region. This instills a sense of responsibility for issues beyond the immediate mining processes (such as raising awareness about mercury use). The mining organizations can involve local community groups in the ''premium committee.'' This can increase local involvement in Fairtrade premium projects and will help in identifying and targeting specific needs in the community.

The increased role of the mining organization in the community will be under constant review by a technical advisory group comprised of experts in artisanal and small-scale mining, child labor and forced labor issues, environmental stewardship related to mining, among others, and a formal review will come in 2018.

Fairtrade has recently created a technical group that will be working closely with our mining partners with specific focuses on mercury eradication, the identification, remediation and elimination of child labor and the ongoing development and improvement of the Fairtrade standard.