LME will audit Congo copper at risk of delisting from the list of deliverable brands

SMM8, 17 Feb: according to a person familiar with the matter, LME (London Metals Trading) will begin to require an independent audit of copper producers of copper metals imported from the Congo to prove that the source of their materials is ethical. The London Metal Exchange is reassessing its requirements to ensure that it does not violate the rules.

LME questioned the link between copper and child labor and corruption in the Democratic Republic of the Congo, which is traded on the exchange. Producers who buy copper from the Congo will be classified as riskier suppliers along with producers of tin and cobalt, the people familiar with the matter said. These people spoke on condition of anonymity because the changes have not yet been made public.

Without third-party auditors to approve procurement standards for copper producers, it would mean that copper producers could be removed from LME's list of deliverable brands, according to the people familiar with the matter. The new rules will require producers to show that the copper they buy is "innocent" and that they are free of human rights violations, money laundering and bribery.

A spokesman for LME said LME was revising the plan based on feedback from industry associations. The exchange will issue a submission on the issue in the coming weeks and will listen to the broader market voice. Although lLME's listed copper brand does not currently have copper from the Congo, smelters in neighboring Zambia may need to import copper concentrate from the Congo. At present, there are four Zambian copper brands listed on LME. Other producers are also buying semi-refined copper products, such as blisters, from the Congolese copper belt.

LME is also said to be planning other reforms, such as the need for all metal producers to demonstrate compliance with the procurement guidelines of the Organization for Economic Cooperation and Development (Organization for Economic Cooperation and Development). Copper producers who can prove they are not buying copper from the Congo will not be required to conduct third-party audits. Producers of zinc, lead, aluminium, nickel and molybdenum will no longer be audited and will be classified as less risky suppliers. LME plans to announce the plan in late September or October and is likely to adjust its proposal after further consultation with the industry.

Despite widespread industry support for the review, the copper industry has expressed concern to LME that procurement efforts could lead to a disconnect in pricing between audited and unaudited brands, according to people familiar with the matter.

"this is a concern, especially given that many procurement standards do not really apply to copper," Mark Lovit (Mark Loveitt), president of the International forging Copper Association, said in an interview.

In its initial white paper, LME said it would require all copper producers to conduct supply chain audits. The exchange has initially softened its position to cater to most copper mining companies that have nothing to do with the country, two people familiar with the matter said.

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