Centuries-old London Good Delivery system for gold faces modern accountability test

By Polina Devitt

LONDON, Sept 28 (Reuters) - The London Bullion Market Association will defend itself in London's High Court from October 7 against a claim that it owed a duty of care to two Tanzanian artisanal miners allegedly killed at the North Mara gold mine in 2019.

The case marks a legal challenge to a 276-year-old system that determines which gold bars can be traded in London, the world's largest over-the-counter bullion market, testing whether it can be held responsible for alleged abuses linked to gold mining.

"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, which manages the Good Delivery List of accredited gold refiners, said in its defence documents.

SUCCESSFUL CASE COULD SPARK FURTHER CLAIMS

In the case, law firm Leigh Day, representing relatives of the two artisanal miners, claims the LBMA was negligent in re-certifying a Good Delivery refinery that processed North Mara's gold in 2019 "in circumstances where such certification cloaked ongoing serious human rights abuses" at the mine.

Leigh Day's case alleges that the two people were killed by the Tanzanian police force, private security guards or both at North Mara, which is owned by Canada's Barrick Mining ABX.TO, in 2019. It says the families face extreme difficulties bringing the allegations in Tanzania.

Barrick declined to comment. Representatives of Tanzania's government and police did not respond to requests for comment.

The LBMA, an independent body established by the Bank of England 39 years ago, said that if the case is successful it could be exposed to negligence claims from anyone allegedly harmed by gold mining worldwide, despite it not certifying mines.

The significance of the case extends beyond the LBMA to the wider London gold market, as only gold bars produced by refiners on the Good Delivery list are acceptable for settlement in Loco London trades.

GOLD FLOWS TO LONDON

The Good Delivery system's roots go back to 1750, when the BoE set up the list as London became a hub for gold flowing from Brazil and later from gold rushes in California, Australia and South Africa.

After 2010 conflict minerals legislation in the US, the LBMA expanded its requirements beyond bar standards to include the Responsible Gold Guidance, a framework built on due-diligence principles and OECD guidance.

To ensure compliance, the LBMA requires refiners to get an independent audit of their responsible sourcing controls every year.

"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 said.

The LBMA disputes that it bears legal responsibility for the deaths, LBMA CEO Ruth Crowell said at a briefing.

"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 said. "We are defending the claim so that the court can determine the issues and LBMA's role."