Our latest Critical Conversation podcast features an exclusive discussion with Sean Gilbertson, CEO of Gemfields, on the ethical sourcing and development of Africa’s natural resources and the mindset needed to truly move away from exploitation of the host nations.
Sean Gilbertson is CEO of Gemfields Group, a world-leading supplier of responsibly-sourced gemstones. It mines rubies in Mozambique and emeralds in Zambia. It also owns the Fabergé brand, the historic Russian family jewellery brand. Sean originally graduated as a mining engineer from Wits University in South Africa having spent time in the country’s deep- level gold and platinum mines. Prior to Gemfields, Sean worked as project financier for Deutsche Bank, co-founded globalCOAL, a company that played a central role in the commoditization of the thermal coal industry, and also co-founded Spectron eMetals, a pioneering metals trading platform.
The discussion was moderated by Daniel Litvin, Founder of Critical Resource and Senior Advisor to the Executive Committee of ERM.
Please note, as with our other podcast interviewees, the views expressed by Sean Gilbertson do not necessarily reflect the views either of Critical Resource or ERM.
Among the key points raised by Sean:
- Resources in the ground clearly belong to host countries and their citizens. The starting point should be that the true international value of resources must flow back to host nations.
- There is an enormous differential between the lowest and highest value coloured gemstones, making it difficult to accurately assess their worth at the point of export. Many companies have taken advantage of this, to the detriment of host countries. Millions of dollars of value has just evaporated from host countries.
- At Gemfields, we have tried to remedy this through two innovations. Firstly, by voluntarily inviting host government officials to attend and monitor our auctions at point of sale, and secondly, by repatriating 100% of our auction proceeds back to host countries. This has dramatically shifted coloured gemstone value back to the resource owners. It is critical for avoiding ‘transfer mispricing’!
- A combination of businessmen, politicians and other stakeholders have historically stood in the way of citizens of resource-rich countries benefitting from their own wealth. We need a shift in mindset as an industry. Instead of talking about ‘our’ copper or rubies, we need to view ourselves as professional service providers invited to the resource-hosting country. Our job is to extract the minerals, sell them fairly, and bring the value back to the resource-hosting nation. If we do that well, the host benefits and we also get compensated well. We effectively have a fiduciary duty when we are handling someone else’s commodities or mineral resources.
- Gemfields has proposed using what we call the “G factor” for natural resources – a simple metric of companies’ economic contribution to host nations. This is a simple percentage – it takes the amount of mineral royalty paid to a government and adds the amount of corporation tax paid, then divides that by the total revenue of that natural resource enterprise over the same period.
- ‘Responsible sourcing’ as a term gets thrown around a lot, but is not properly practiced by all companies. Being serious about it requires delving into a diverse and complex array of issues: training, safety equipment, fair pay, anti-corruption, environmental considerations, etc.
- There is a clear correlation between high levels of corruption or weak governance and the prevalence of artisanal or informal mining. In some cases, there are attempts to coopt or formalise these activities, but this is just treating the symptom and not the cause. Importantly, no international company would allow their own employees to work under the conditions often created in these formalisation processes.