Interest in conflict minerals questioned
At the end of May, issues were raised regarding conflict minerals by publicly traded companies in the United States. Indeed, conflict minerals are involved in the supply chain of these companies. The problems with the minerals were alerted to in filings with the Securities and Exchange Commission (SEC).
In 2017, the SEC decided not to enforce Section 1502 of the Dodd-Frank Act and not to pursue actions against companies for failure to comply with the requirements of that section.
This has caused a lot of outrage, especially by NGOs. For example, the NGO Responsible Sourcing Network (RSN) stated that the SEC's decision has "fundamentally destroyed interest in conflict minerals”.
The due diligence program
The International Tin Supply Chain Initiative (ITSCI) is a due diligence program responsible for the reliability of chains of custody for conflict minerals
However, the NGO Global Witness has announced that reliance on the ITSCI should be reduced because the scheme would allow "laundering of contaminated minerals”. The NGO published a report "The ITSCI laundromat: How due diligence scheme looks to launder conflict minerals”. In this report, the NGO states that the scheme appeared to "minimize or ignore incidents that seriously compromise its supply chain.
What is the regulatory context?
In 2010, the Dodd-Frank Act required U.S.-listed companies sourcing conflict minerals to conduct due diligence. The objective was to avoid contributing to the financing of human rights violations or armed conflicts. Allowing the links between conflict zones and the illegal mining operations that fuel them to be cut. The goal was to provide responsible sourcing for industries.
The EU has introduced a similar regulation, effective January 2021, available in the EU Official Journal (OJ). Thus, importers, smelters and refiners of tungsten, tin, tantalum and gold (3TG) must conduct due diligence checks when annual import volumes exceed set thresholds (available in the OJ).
It is possible to find these minerals in the production of everyday objects/products (e.g.: aeronautical products, electronics, toys, etc.).
As a result, the regulation requires companies to make procurement decisions based on the risks disclosed by their suppliers.
Am I affected by this regulation?
The regulation affects you if you are:
- you are an importer of minerals or metals
- you have a supply chain management system that does not comply with the new regulations
- you smelt or refine them
- you don’t have a supply chain management system
The areas of conflict are:
- areas in armed conflict
- areas weakened by past armed conflict
- areas with weak or no government and security
- areas where violations of international law - including human rights violations - are widespread and systematic.
In 2015, the European Parliament had shared a brief communicating the definitions of conflict minerals:
- Conflict minerals are minerals that are mined in conflict zones under conditions that violate human rights and whose profits are used to fuel armed groups. The draft European regulation as well as the Dodd-Frank law aim in particular
- Tantalum: a low-corrosive, highly conductive metal used in the production of surgical instruments, implants and electronic capacitors. It is essential for the manufacture of cell phones. It comes mainly from coltan deposits, an ore of which 65 to 80% of the world's reserves are found in the DRC.
- Tin: extracted mainly from cassiterite, whose deposits are exploited in Malaysia, Indonesia, Nigeria, Myanmar, Thailand and the DRC. It is used in the manufacture of mirrors, electronic components and for soldering.
- Tungsten: extracted in particular from wolframite, it is mainly used in electrical applications (light bulb filaments). In the form of compounds or alloys, it is used in many applications.
- Gold: present in jewelry but also in the manufacture of medical instruments and in electronics.
EcoMundo's experts help you manage the traceability of hazardous substances in your supply chain by liaising with your suppliers to identify the possible presence of SVHC or other regulated substances in their references.
In particular through its SVHC Factory software, which allows you to parameterize and monitor in real time the information collection process throughout your supply chain and to store your traceability information on a single platform.
Wish to know more about conflict minerals?
For more information, do not hesitate to contact Christian Freneuil or one of our experts !
