The London Metals Exchange (LME) has announced that all companies trading on the exchange must comply with OECD responsible sourcing guidelines, or risk being delisted.
The move, announced earlier this month at the OECD in Paris, follows reports that LME-traded cobalt was sourced from mines in the Democratic Republic of the Congo with links to child labour. These concerns proceeded to undermine an LME cobalt contract just as demand for the metal was taking off. Cobalt use has increased significantly in recent years, driven by demand from electrical and automotive manufacturers who use the mineral as a critical component in new battery technologies.
The LME executive chairman Matthew Chamberlain said, “we now believe that responsible sourcing is a sufficiently widespread requirement among most users of our metal that it makes sense to commit to embedding those standards into brand listing requirements”. Miners and mineral producers will be obliged to disclose which responsible sourcing standards they use and their strategy to meet the requirements. Mr Chamberlain stated the LME is open to recognise any standards that “embodies the OECD principles”.
The LME will publish a white paper on responsible sourcing in the coming months with a timetable for companies to comply. Failure to do so will lead to their metals being removed from the exchange’s warehouses.
The LME’s announcement reflects the growing pressure companies are under to take responsibility for their supply chains. This move also highlights the important role existing joint industry due diligence systems have to play, such as the International Tin Association’s ITSCI program, celebrated in Paris for having standards 100% aligned with the OECD guidelines.