Applying OECD Due Diligence Guidance to Southern African Mineral Transactions

What the OECD Guidance is

The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas is the reference framework for responsible sourcing in the global mineral trade. It sets out a five-step, risk-based process that companies at every point in the supply chain — from upstream producers to downstream refiners, traders and end-buyers — are expected to follow in order to identify, prevent and mitigate adverse impacts linked to mineral sourcing.

It is commodity-neutral and jurisdiction-agnostic. It is referenced by regulators, institutional investors, lenders and offtakers globally, and increasingly cited in contractual and financing terms even where local law does not mandate it directly.

Why it matters in Southern Africa

Southern Africa hosts a large share of globally significant copper, cobalt, gold, PGM and critical-mineral supply. Transactions are executed across multiple regulators, corporate structures and intermediary chains, and origin questions are rarely trivial. For buyers, financiers and offtakers operating in this environment, OECD alignment is no longer a policy statement — it is a condition of access to institutional capital, to bank finance and to compliant downstream markets.

The gap most transactions fall into is not disagreement with the framework — it is the absence of an evidence trail that would let a regulator, lender or auditor test whether the framework was actually applied on a specific deal.

The five-step framework

The Guidance sets out a five-step risk-based due-diligence framework. The steps are sequential in design but iterative in practice — findings at later steps routinely re-open earlier ones.

1. 1
   01

   Establish strong company management systems

   Adopt and communicate a supply-chain policy consistent with the OECD Guidance, structure internal responsibilities, maintain records, and put grievance mechanisms in place. Foundational work that has to exist before any transaction-level diligence can be relied on.

2. 2
   02

   Identify and assess risks in the supply chain

   Determine the origin of minerals and the chain-of-custody up to the point of ingestion into the buyer's operations, and assess risks against the Guidance's Model Supply Chain Policy — including licence legitimacy, beneficial ownership, and links to conflict-financing or serious abuses.

3. 3
   03

   Design and implement a strategy to respond to identified risks

   Report findings to senior management, adopt a risk-management plan, and either continue trade while pursuing measurable risk mitigation, suspend trade while mitigation is pursued, or disengage where risks cannot be mitigated.

4. 4
   04

   Carry out independent third-party audit

   Where the framework applies, arrange for independent third-party audit of upstream due diligence practices at identified points in the supply chain to verify that Steps 1–3 have been implemented as claimed.

5. 5
   05

   Report annually on supply-chain due diligence

   Publicly report on supply-chain due diligence policies and practices — the record that regulators, institutional investors and lenders rely on to assess whether the framework is being applied in substance, not just in name.

Mapping OECD steps to verification

The framework is a governance and reporting standard. To rely on it in practice, buyers and financiers need transaction-level verification whose scope, methodology and evidence base a regulator or lender could inspect. The table below shows how our verification workflow maps to each step.

The full sequence is described on our verification methodology page, and the underlying discipline is set out in our mining due-diligence guide.

Who relies on it

Institutional investors and DFIs cite the OECD Guidance in ESG and responsible-investment mandates. Commercial and trade-finance banks reference it in compliance frameworks that govern mineral-related lending. Downstream buyers — refiners, smelters, manufacturers and traders — increasingly require OECD-aligned sourcing evidence as a condition of purchase. And regulators in several jurisdictions incorporate the framework by reference in supply-chain law.

In each case, the reliance is not on the policy itself but on the evidence that the policy was applied to the specific transaction.

Practical implications for buyers

• Sourcing policies referenced to the OECD Guidance should be applied at transaction level, not only at group level — every deal needs its own evidence trail.
• Data-room documents alone do not satisfy Step 2. Origin and chain-of-custody must be verified against sources outside the counterparty.
• Risk response under Step 3 has to be documented in writing at the point of decision — retrospective reconstruction rarely satisfies a regulator or a lender.
• Independent third-party work carries weight only where its scope, methodology and evidence base can be inspected. Anonymous or scope-less certifications do not.
• Public reporting under Step 5 exposes the earlier steps to scrutiny. Deals that were diligenced casually tend to surface at this stage, not before.

Frequently asked

Further answers are available in our FAQ.