Actions taken by the CCCMC have attracted great attention from stakeholders around the globe. These groundbreaking steps are taken by China, to regulate and provide guidance to Chinese companies, conducting mining-related business overseas.[1] They go further than what any country in the world is requiring in terms of due diligence, including those from North America or the EU.
The impact of these Guidelines could go beyond the 6,000+ member companies of CCCMC. They could serve as a reference piece and code of conduct for all Chinese state-owned and private enterprises in the mining industry, and beyond.
But what are they?
New Guidelines in Responsible Mining and Sourcing
Chinese outbound investment has been rapidly increasing to over $100 billion in 2013. The extractive sector, claiming $24.8 billion in 2013, dominates Chinese outbound investment in non-service sectors.
China has made a debut move, enacting responsible business guidelines to its enterprises engaging in global mining supply chain. This marks China’s rising participation in global resource governance. It will have a significant impact on responsible mining and sourcing. China has taken two major measures to bring desired supply chain checks to implementation.
The Social Responsibility Guidelines
In October 2014, the government-affiliated Chinese mining industry association – China Chamber of Commerce of Metals, Minerals, and Chemicals Importers and Exporters (CCCMC) - launched a piloting document.
The Guidelines for Social Responsibility in Outbound Mining Investments build on a number of existing international standards. They provide instructions to Chinese companies on responsible overseas mining-related activities. Alongside the pioneering requirements on social responsibility, CCCMC pledges to assist, evaluate, and report on companies’ performance.
Scope of Application
The Guidelines apply to ‘all mineral exploration, extraction, processing and investment cooperation projects, including related activities such as mining-related infrastructure development in foreign countries, in which Chinese companies have invested.’[2]
The Guidelines are not limited to specific mineral resources.
Issues Covered
The Guidelines provide guidance on a wide range of responsible corporate behaviours, including:
- Organisational governance
- Fair operating practice
- Value chain management
- Human rights
- Labour issues
- Occupational health and safety
- Environment
- Community involvement & engagement
Provisions on Conflict Minerals
Clause 2.4.6 of the Guidelines requires that a company ‘conduct[s] risks-based supply chain due diligence in order to prevent engagement with materials that may have funded or fuelled conflict.’ More specifically, it asks companies to carry out assessment, due diligence measures, and monitoring regarding potential involvement with conflict minerals.
The Chinese Due Diligence Guidance (under development) [3]
Building off of the provision on conflict minerals, CCCMC is in the process of developing a Chinese Due Diligence Guidance for Responsible Mineral Supply Chains (DDG), in partnership with the OECD.[4] The DDG carries great anticipation as Chinese companies play major roles in mining and sourcing from conflict-affected and high-risks areas.
Scope of Application
The DDG will apply to all Chinese mining companies that are using or are engaged at any point in the supply chain of minerals and related products. Initially, CCCMC will prioritise 3TG supply chain and gear audit protocols to these four mineral resources.
Two Types of Risks
The DDG categorizes supply chain risks into two groups. Type 1 risks are in line with those identified in the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD DDG); while Type 2 risks go further to covering companies’ serious misconducts.
Due Diligence Requirements
The DDG also sets up a 5-step due diligence framework that is aligned with the OECD DDG.[5] Its implementation will be on a voluntary basis, but CCCMC commits to assess companies’ conformity with the Chinese DDG.
Compatibility & Alignment
CCCMC places great emphasis on obtaining alignment and mutual recognition from existing legislations and initiatives, such as the OECD DDG.
[1] For example, note discussion & comments during the 9th OECD-UN GoE-ICGLR Forum on Responsible Mining, 5 May 2015
[2] CCCMC, Guidelines for Social Responsibility in Outbound Mining Investments, 2014
[3] Nb- As of publication, the CCCMC’s due diligence guidelines were still under development, so while germane to this paper’s scope, details of the guidelines are likely to change and evolve.
[4] Presentation by CCCMC at the 9th OECD-UN GoE-ICGLR Forum on Responsible Mining, 5 May 2015
[5] Presentation by CCCMC at the 9th OECD-UN GoE-ICGLR Forum on Responsible Mining, 5 May 2015
