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On 26 March the Canadian Ombudsman, CORE, found that Canadian mining company, Dynasty, contributed to the forced labour of Uyghur ethnic minorities in the XUAR through its subsidiary’s activities at a mine site in XUAR. CORE found that Dynasty contributed to the harm due to its inaction (i.e. negligence) and has recommended Dynasty makes a significant financial donation to one or more NGOs working to combat Uyghur forced labour.
  • On 26 March,  the Canadian Ombudsperson for Responsible Enterprise (CORE) published its finding that Canadian mining company Dynasty Gold (Dynasty) contributed to forced labour of Uyghur ethnic workers through its subsidiary at a mine in the Xinjiang Uyghur Autonomous Region (XUAR).
  • CORE is a business and human rights ombudsman established by the Government of Canada. Complaints can be filed against Canadian companies working outside Canada in the garment, mining, or oil and gas sectors for possible human rights abuses in their supply chains or operations. 
  • This is the first findings report published by CORE in response to a series of complaints filed by a coalition of 28 organisations against Canadian companies for using or benefiting from the use of Uyghur forced labour in their supply chains or operations in China. Eight additional investigations are ongoing, including against Diesel, Guess, Hugo Boss, Levi Strauss, Nike, Ralph Lauren, Walmart and Zara.

About the Dynasty case 

  • The investigation into Dynasty was launched in 2023 and conducted by an independent consultancy, not named in the report. The investigation was based on publicly available data, including news articles, government and judicial databases, company websites, and information from NGOs. CORE also requested information from Dynasty, which Dynasty did not provide. 
  • According to the report 
    • Dynasty has business interests in XUAR through its joint venture, Terraxin Mineral Exploration (Terraxin) and subsidiaries.    
    • From 2004 to 2008, Terraxin explored and developed the HatuQi-2 mine in XUAR with Xinjiang Non-Ferrous Metal (XFN) and Western Region Gold (WRG), a wholly owned subsidiary of XFN. The agreement gave Dynasty a 70% interest in the mine. Dynasty allegedly lost operational control of the mine in 2008. It is unclear if Dynasty also lost its interests in the mine. 
    • HatuQ1-2 mine employed Uyghur ethnic workers through the Chinese government’s labour transfer programme in 2017, 2019 and 2020.  
  • Dynasty declined to participate in CORE’s investigation. It has claimed that it terminated its exploration operation in XUAR in 2008, and that the complaint deals with an issue that occurred after 1 May 2019, which is more than a decade after Dynasty terminated its operation in XUAR. 

Decision by CORE 

  • CORE concluded that
    • The case falls within CORE’s jurisdiction as the labour transfer scheme at the mine took place between 2017 and 2020. Dynasty held a “business relationship” with the mine through its position as majority shareholder in Terraxin and its joint venture with XFN and WRG. 
    • Dynasty contributed to the use of forced labour at the mine through its relationship with its joint venture partners XFN and WRG. Dynasty’s omission/ lack of action in responding to the risk of forced labour at the mine, and not taking any action to identify, assess, and address or mitigate the risk of Uyghur forced labour, means that the mining company contributed to the use of forced labour at the mine. 
    • Dynasty did not conduct human rights due diligence and did not take any steps to identify and assess actual or potential human rights risks and impacts in its operations or take appropriate action with respect to those risks and impacts.
    • Dynasty’s low level of engagement with CORE’s complaint process falls short of CORE’s standard of good faith participation. 

Recommendations from CORE

  • CORE does not have enforcement powers but has recommended that
    • The Canadian Department of Foreign Affairs, Trade and Development withdraw any trade advocacy and future financial support through Export Development Canada, until Dynasty has fulfilled CORE’s recommendations  
    • Dynasty makes a significant donation to one or more NGOs working to combat Uyghur forced labour 
    • Dynasty assesses its leverage to prevent or mitigate the use of forced labour at the mine and determines whether to exit responsibly from its business relationships in XUAR. CORE has requested that Dynasty shares the results of the assessment, and if relevant, a strategy for responsible exit by 13 September 2024  
    • Dynasty develops a comprehensive approach to fulfil its responsibility to respect human rights in line with the UNGPs and OECD Guidelines. CORE recommended that Dynasty share draft versions of its policies for review with the ombudsman by 13 September 2024, and post the final policies on its website by 14 March 2025.

Implications for companies in the garment sector 

  • The implications from this case are limited for garment brands currently under investigation by CORE. The Dynasty case relates to the company’s owned and controlled operations whereas garment sector cases relate to indirect sourcing relationships. 
  • However, CORE’s finding that Dynasty contributed to the forced labour of Uyghurs due to its inaction (i.e. negligence) is important. This means that companies that know about a risk and do not take action could potentially be considered to be contributing to those impacts in other cases. Companies are expected to provide remedy (i.e. compensation) when they have contributed to impacts under OECD due diligence guidance.  This also increases a company’s litigation risk. 
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