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Signet Details Chain-of-Custody Efforts, Obstacles to SEC

Signet describes its compliance measures and industry challenges on conflict minerals legislation.
Oct 19, 2011 1:32 PM   By Signet Jewelers
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RAPAPORT... The following oral statement from Signet Jewelers was given to the Securities and Exchange Commission's (SEC) panel on conflict minerals yesterday.

SEC Roundtable on Conflict Minerals
SEC File Number S7-40-10
October 18, 2011

Good afternoon. My name is David Bouffard, vice president of public relations with Sterling Jewelers Inc., headquartered in Akron, Ohio, the U.S. operations of the world’s largestspecialty retail jeweler, Signet Jewelers Limited.

We appreciate the invitation to appear at today’s roundtable facilitated through the National Retail Federation, and commend the Commission for bringing together a wide array of divergent viewpoints to discuss this important topic. Today, I am speaking on behalf of Signet in describing our on-going efforts to comply with the applicable requirements ofSection 1502.

Importantly, we are committed to the goals of this legislation, and we sincerely hope sharing our efforts today in preparing for compliance will be helpful to the Commission. I want to make clear from the outset, that we at Signet, and the jewelry and retail industries as a whole, abhor the horrific human rights abuses in the Democratic Republic of the Congo (DRC). And while Signet has no reason to believe that any of our products contain gold sourced from DRC conflict-riddenareas, we nevertheless take our responsibilities under this legislation very seriously.

To that end, we have decided not to await the Commission’s adoption of the final rules. As leaders in our industry and in the area of responsible gold sourcing, we have already begun developing -despite the absence of an existing global infrastructure- a responsible supplier chain of custody program.

Our goal is to ensure -to the maximum extent possible- that the products sold in our stores do not contain any gold originating from conflict mines in the DRC.

Therefore, Signet has already instituted the following compliance measures:

1. We have already informed our supplier partners, over 300 companies world-wide, that Signet is implementing a program to identify our suppliers’ gold supply chain, with a view, over time, toward establishing a traceable source of conflict-free gold and other metals included in products sold through our retail stores in the U.S., as well as the U.K.

2. We are working from the ground up -essentially starting from scratch- to create an auditable supply chain mechanism to confirm that the gold we sell at retail originates through banks defined as “good delivery” by the LBMA, and refineries which will follow the GeSI-EICC refinery validation program, currently in development. Also, very importantly, we intend to follow OECD Guidelines on gold, that are only now being developed. It’s worth noting that the OECD established a separate working group for gold, and has made gold the last in developing mineral-specific diligence guidelines,recognizing the unique complexities of the gold supply chain.

3. We have been working with the Responsible Jewellery Council (RJC), the world’s leading jewelry trade association dedicated to a responsible supply chain, in establishing robust chain-of-custody standards, and implementation guidance, applicable throughout the gold supply chain, and one that non-RJC members can adopt, as well.  The RJC chain-of-custody work also aims to support implementation of the OECD Guidance.

While the OECD, GeSI-EICC and RJC initiatives were all underway well before the legislation was enacted in 2010, it’s important to emphasize that final standards and other guidance from the OECD and the various private-sector initiatives will not be in place until next year at the earliest, and we cannot reach our goal until the standards are finalized. Supply chain testing and implementation would then follow over the years to come.

And although we are committed to complying with section 1502, we face some significant obstacles:

First, there is no reliable infrastructure within the DRC and neighboring countries to track the origin of minerals from any potentially conflict-tainted mine, and we understand that such an infrastructure may be years away from implementation.

Second, we have no direct relationship with refineries closest to the source of the raw material that are many points removed down the supply chain from the final product sold at retail.

Third, even after we obtain information from our suppliers, we are dependent on them for the accuracy of that information, there is currently no viable certification and validation system at the mine, refinery or intermediate-supplier level. And, it will take time after development to ultimately implement a refinery validation, or any other supplychain traceability protocol, which can provide a reasonable basis for disclosure. This is why a phased-in approach to reporting and disclosure is so important.

I want to be clear on that point. We are not advocating loopholes that would absolve companies from any responsibility to comply with the law. Nor are we seeking any delay in the effective date of the final Commission rules. Again, we believe a reasonable phased-in approach to reporting recognizes the complexities of the global gold supply chain.

In closing, I want to emphasize that we are committed to the goals of the legislation and that we have a process currently underway to try to meet those goals. While it will take time to fully implement the process, we believe it can be done -- and done effectively. We are pleased to offer our direct assistance to the Commission and its Staff to share our detailed work plan and progress. We offer that assistance beginning today, and for as long as it takes the SEC to adopt its final rules.

Thank you, and I would be happy to answer any questions.


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Tags: commission, conflict, exchange, hearing, minerals, panel, SEC, securities, Signet, Signet Jewelers, sterling
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Demonize Criminals, Not Minerals
Oct 25, 2011 10:33PM    By Chuck Blakeman
Our Congo-based company works with Congolese tribes to help them export without a dime going to conflict groups. Dodd-Frank has been disastrous for them. I challenge the supporters to take a poll of those they are supposedly trying to protect. The response would tell them that, while Dodd-Frank was well-meaning, it is an unmitigated disaster in practice. COCABI, COMIMPA and COMIDER represent 20,000 miners in the conflict area. They all say they’ve never even been contacted. While all the NGOs and politicians are quoting each other’s support of this, we are quoting chiefs and tribes who are actually being affected by it, all of whom say it has been disastrous for them and their livelihood. Doesn’t this say something very powerful to us? Also, there are six regions from which Dodd-Frank minerals are mined, and only one of them has ever had anything to do with conflict. Dodd-Frank has put them all out of business before it is even enacted. The World Bank says it has negatively affected 10 million Congolese. If all Congo minerals came from criminals, then Dodd-Frank would make sense. But the fact is that probably 1-3% of the affected minerals come from criminals, the rest are from honest, hard-working chiefs and their tribes, all of whom have lost their only source of income in the second poorest country on earth. I was in Tanzania a few weeks ago to help a chief export his coltan using a visible, well-documented process that ensures not a dime goes to conflict. His people will go hungry because the smelters, citing Dodd-Frank, have vanished. The chief is devastated, as are the millions who find their meager livelihoods destroyed by this over-reaching act. The issue with Dodd-Frank is that it is a nuclear option that demonizes minerals instead of criminals. It’s no different than burning down every house in town to stop a burglar from stealing, who will simply steal from somewhere else. Ludicrous. Dodd-Frank has burned down the entire mining industry in the Congo in hopes that their scorched earth policy will catch a militia group in its path. They are willing to take down every innocent man, woman, and child who live off mining. Such massive collateral damage is not acceptable under any circumstance. Remove mining from the equation and the militia will exact its pound of flesh from the locals by other means. They already are. This should be handled by targeting militias, not mining. Dodd-Frank takes the route of universal collateral damage, which, before the bill is enacted, has already destroyed the livelihoods of the innocents who depend on it. As Eric Kajemba, the leader of a Congolese civil-society group has said, “If the advocacy groups aren’t speaking for the people of eastern Congo, whom are they speaking for?” Dodd-Frank not only does not advocate for the Congolese people, it has devastated them - the very opposite intention of the legislation. It must be stopped for the sake of those it claims to protect.
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