The London Bullion Market Association (LBMA) is facing renewed scrutiny over its responsible gold-sourcing system amid fresh complaints and a looming court case.
According to The Times, the LBMA received complaints last month related to gold originating from the Pueblo Viejo mine in the Dominican Republic.
Pueblo Viejo, operated by Barrick Mining (TSX:ABX), is undergoing a major life-extension program designed to keep the mine operating beyond 2040.
The project includes the development of the El Naranjo tailings storage facility, which requires the resettlement of affected households.
Barrick says its resettlement plan includes replacement housing, infrastructure, livelihood restoration, and community development programs.
However, campaigners and some local residents have raised concerns over the environmental and social impacts of the mine and its expansion.
In their complaint, they allege that the project has led to water contamination and declining agricultural production, and are now urging the LBMA to prevent gold originating from Pueblo Viejo from entering the London market.
The LBMA, which manages the Good Delivery List of accredited gold refiners, says it is now reviewing those allegations.
Barrick, meanwhile, has repeatedly rejected claims that Pueblo Viejo is responsible for alleged water contamination and other environmental harm.
North Mara case heads to court
The complaints come just days before the LBMA is due to appear in London’s High Court in another case concerning gold originating from the North Mara mine in Tanzania, which is also operated by Barrick.
The trial is scheduled to begin on 7 October, centring on the deaths of two artisanal miners at North Mara in 2019, Reuters reported on Monday.
The claim was filed in 2022 by British law firm Leigh Day on behalf of the miners’ families. It alleges the LBMA was negligent in certifying a refiner that processed gold from North Mara despite allegations of serious human rights abuses at the mine.
“LBMA is being held to account for the chasm between what it represented that a Responsible Gold Certificate signified, versus what it was actually doing to ensure that effective due diligence and risk mitigation was taking place at high-risk mines,” Leigh Day says.
The LBMA rejects the allegations and argues that it does not certify individual mines or exercise control over mine operators or local security forces.
“A finding that the LBMA owes a duty of care of the alleged nature and scope would, without exaggeration, be an existential issue for the LBMA,” the association says in its defence document cited by Reuters.
LBMA CEO Ruth Crowell also denies the association bears legal responsibility for the deaths.
“The claim misconstrues LBMA’s role in the supply chain, and we deny that LBMA owed the duty of care alleged in these proceedings,” she says in a briefing.
London gold system under spotlight
The significance of the case extends beyond the LBMA itself because its Good Delivery system underpins trading in the London bullion market.
The LBMA’s Good Delivery List sets standards for refiners whose bullion is accepted in the world’s largest gold-trading hub.
The Good Delivery system traces its roots to the Bank of England’s oversight of acceptable gold refiners as London developed into a major bullion trading centre.
Following the introduction of conflict-minerals legislation in the US in 2010, the LBMA expanded its requirements beyond the physical standards for gold bars, incorporating principles based on OECD guidance.
Under the current system, refiners must demonstrate compliance with the guidance and undergo annual independent assurance to remain on the Good Delivery List.
Write to Jackson Chen at Mining.com.au
Main Image: LBMA
