2022-12-04

BDMETER

Global Industry Technology Information

Compliance and Sustainability: Conflict Minerals

4 min read
conflict-minerals

Learn About Conflict Minerals US guidelines for vendor compliance and sustainability

Index:

  • What are Conflict Minerals? 
  • Conflict Minerals in Products
  • US Conflict Minerals Laws 
  • Auditing and Reporting Requirements 
  • Customer’s expectations
  • Continuous Tracking
  • Tracing workflow
  • Reporting – CFSI
  • Beyond USA

What are Conflict Minerals? 

Conflict Minerals refer to raw materials that come from a particular part of the world where conflict is occurring and trading of those materials, perpetuates the fighting. Conflict minerals are mined in conditions of armed conflict and human rights abuses, notably in the Democratic Republic of Congo.

The most commonly* mined conflict minerals are:  
1. Cassiterite (for Tin)
2. Wolframite (for Tungsten)
3. Coltan (for Tantalum)
4. Gold 
They are also known altogether as 3TG (Tin, Tungsten, Tantalum, Gold).

“Resource curse” countries

Resource countries of conflict minerals are accounted for 25-30% of the world’s supply of tantalum and smaller % of other three minerals:

  • Angola
  • Burundi
  • Central African Republic
  • Democratic Republic of the Congo (“DRC”)
  • Republic of Congo
  • Rwanda
  • South Sudan
  • Tanzania
  • Uganda
  • Zambia

HIRING PRACTICES

  • Gunpoint
  • Life threats
  • Physically forced
  • Mentally forced ( to protect themselves & family from militias)

WORKING CONDITIONS

  • Unhealthy and difficult locations
  • Unsafe Tools
  • May lead to death

Conflict Minerals funds wars

C:\Users\elenigeorgiopoulou\Pictures\Desktop\conflict_minerals_gun_flip_3.2e16d0ba.fill-1024x576-669x290.jpg

PEOPLE: People are forced and threatened to mine under extreme violence conditions, and the money from minerals trade are used to buy weapons that perpetuate wars.

Over 5,4 Million
Congo Civil Conflict  Deaths

CONGO WAR Status

310 Million Revenue from the conflict minerals trade
186 Million of it spent to fund the Congo War

Money:

Armed Group Revenue :
75% Mine related revenue and others

Fig: Armed group revenue in Congo war

Congo’s Total Mineral Profits:
35% Armed group profits

Fig: Congo mineral profits


Q&As

  • What is the population of your country? 
  • How does this number correspond to 5,4 million? e.g equals to one state, one province, one city?

Conflict Minerals in Products

Mineral NameMineral ImageMajor UseWorld share from covered countriesTop 2 Producers
Tinhttp://www.metalshipper.com/media/catalog/product/cache/1/image/9df78eab33525d08d6e5fb8d27136e95/t/i/tin_bar_large.jpgPlating
Solders for joining pipes and electronic circuits
Zipper, button
Jewelry
Kitchenware
PVC in soles of shoes
4%China – 44.23%
Indonesia- 21.15%
Tantalumhttp://images-of-elements.com/tantalum-3.jpgElectrical components (e.g. used in mobile phones, computers), 
aircraft and surgical components
Medical equipment
Cutting tools
Video game consoles
Camera lenses
29%Brazil – 26.87%
Mozambique- 16.86%
Tungstenhttp://www.coinandbullionpages.com/images/tungsten.jpgMetal wires, 
Electrodes
Electric lights
Garden tools
Cutting tools
Electronic, electrical, heating and welding applications
1.4%China – 83.2%
Russia – 4.07%
GoldJewelry, 
Electronic, communications
2%China – 13.06%
USA – 9.10%
Vendor Compliance & Sustainability (VCS)

Risk Level in Top Products

C:\Users\EleniGeorgiopoulou\Desktop\Capture.PNG

US Conflict Minerals Law

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. (Section 1502)
Requires companies to identify where the minerals used in their products came from.

Dodd Frank has successfully reduced revenue to militias by 65%.
But 65% of current trade involves smuggling

Auditing and Reporting Requirements

Dodd Frank Act contains 2 auditing and reporting requirements:

  1. Independent third party supply chain traceability audits
  2. Reporting of audit information to the public and  U.S. Securities and Exchange Commission (SEC)

Applicability
Companies are required to submit an annual conflict minerals report to the SEC, if:
2a.  they are required to file reports with the SEC under the Exchange Act of 1934.
2b. conflict minerals are necessary to the functionality or production of a product that they manufacture or contract to be manufactured. 

Even companies not directly regulated by SEC will be impacted by the audit requirements, because information will run through companies’ entire supply chains. 

companies’ entire supply chains

Customer’s expectations

Customer’s supplier factories should be able to prove that their raw materials used to make customer’s products are conflict free.

Conflict-Free Sourcing

  • Provide origin of 3TG with RCOI (Reasonable Country of Origin Inquiry)
  • Perform Due Diligence and report to customer 

How?
Have an established products assessment identification process, to determine which products contain 3TG minerals
Be able to conduct Reasonable Country of Origin Inquiry (RCOI), to determine whether minerals originated in the resource countries (DRC especially)
Be able to conduct due diligence & report to customer about potential risks so they can be assessed and managed appropriately

Factory should have a Conflict Minerals Compliance Program in place to be able to report back to customer, concerning its products compliance.

conflict minerals

Reporting – CFSI

The CFSI:

Conflict-Free Sourcing  Initiative.

Founded by the Electronic Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (Gesi).

2 Major activities:

  • Conflict Free Smelter Program (CFSP)
    • Certifies smelters as producing conflict-free materials
    • Publishes the list of certified smelters online
  • The Conflict Minerals Reporting Template (CMRT, also referred to as EICC template)
    • Most widely used Conflict Minerals reporting template

Companies’ disclosure:

In 2014 SEC asked , all registered companies to comply with the conflict minerals law:

  • 1,300 companies submitted conflict minerals filings to the SEC 
  • almost 1,000 of which included a Conflict Minerals Report

In 2015, more and more companies started publicly disclosing their supply chain’s conflict minerals reports.

In 2016…

Beyond USA

C:\Users\EleniGeorgiopoulou\Desktop\flag.GIF
In October 2014, China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC) requested Chinese companies to comply with a new set of due diligence guidelines

https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcTVtLGam3eSaIoQdaXSBmo4AojWBtQh0gVvWX8xQ8LB1ZRv0aFQ3a5hUg
In March 2014, EU drafted a regulation proposal on supply chain due diligence. 

https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcQBnxJnZfUAwTIM8jMLWENpQPO_g5lkQkv8fPr5jgoeDQoZDY49nF1Ar-qj
The Australian government released due diligence guidelines for the responsible supply chain of minerals to mitigate the risk of providing direct or indirect support for conflict in the DRC

https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcTzfTBRP-MqFCSLuOCQVoydb4ph0BqiqpnE0vTD92d7c5gW9uHkSKxx7A
Canada, Vancouver (BC), is considering actions to prevent city budgets funds from unwittingly providing support to conflict minerals

https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcTkFFi1WCoSnn4F1Vj5Ztr_JBfUEGYP8_hwbD5t9xg9PrPQvErhVw
Organization for Economic Cooperation and Development (OECD) has issued a Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.  There are 34 member countries of OECD at present.

Continuous tracking

Continuous tracking of your suppliers / smelters and the origin of your products will ensure compliance in your operations and easier tracking and reporting to your customers and the industry.

Building factories’ sustainable compliance operations

Offering: 

  • Capacity building (CB) programs in the form of classroom trainings & seminars
  • Remediation services
  • E-learning programs and webinars
  • Easy access to our resources from the Sustainability Resource Center (SRC) website 

Training programs offered:

Training program: Conflict Minerals

Leave a Reply