Tag Archives: Conflict metals

IPC: Unconflicted about Scrap Material Disclosure

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As detailed in IPC’s* March 2, 2011, comments in response to the Security and Exchange Commission (SEC) proposed rule on Conflict Minerals, IPC has a clear, unconflicted stance on conflict minerals and disclosure requirements.

Recently the issue of whether scrap and recycled materials need to have Conflict Minerals Reports have resurfaced. And with some form of conflict minerals legislation likely to be approved by end of the third quarter this year, new seems a good time to profile IPC’s position on same.

IPC maintains that recycled or scrap sources should not be required to furnish a Conflict Minerals Report, including a certified independent private sector audit.  

IPC maintains that the SEC)final rule should include an alternative approach for recycled or scrap sources that is “practicable and does not overly burden recycled materials so as to discourage their use.”

Given other government efforts to encourage recycling in electronics and other industries it’s imperative that the SEC does not diminish these efforts by adding significant disclosure or regulatory burdens to the use of recycled or reclaimed conflict minerals, IPC said in supplemental comments in response to the SEC proposed rule on Conflict Minerals (S7-40-10) and the panel discussion held on October 18, 2011.

“An issuer using a recycled material containing conflict minerals will not be able to provide any of the details required in a Conflict Minerals Report. The traceability of the reclaimed metals is [challenging] to track due to the various forms of recycling and thousands of consolidators, reclaimers, and scrap dealers both foreign and domestic. Instead, issuers should have a reasonable basis for believing the material is recycled and maintain auditable records to support the determination. IPC believes that due diligence is the appropriate requirement for verifying recycled or reclaimed conflict minerals.

We believe recycled conflict minerals should have parity with conflict minerals originating from a conflict-free mine so as to encourage manufacturers to use recycled  and scrap materials, to reduce the demand for minerals that would support armed groups in the DRC and adjoining countries, and to maintain a fair market for metals and minerals.”

All this could be accomplished, IPC believes, by providing that — after a manufacturer conducts a reasonable inquiry into the source of its conflict minerals — no further action is required if either:

1.  the minerals were determined to originate not from the DRC or adjoining countries, or

2.  the minerals originated from a scrap or recycled source

> Read how the final conflict material disclosure law (Dodd-Frank) is expected this summer (2012).

> Read more about IPC’s position on conflict minerals online.

Conflicts over Conflict Metals

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A top Avnet sales executive is advocating a market-driven solution to the Conflict Metals problem; that is, that industry should go along with US legislation charging companies with oversight of their supply chains back to the mines.

Gerry Fay, senior vice president, supply chain solutions, Avnet, argues that the death of millions should be enough impetus for industry to comply with the Dodd-Frank bill that requires companies to trace the source of minerals used in their products. The law essentially bans the import of gold, columbite-tantalite, cassiterite and wolframite, and their derivatives, from the DRC by US-based publicly held companies, enacts strict reporting standards, and implements a new labeling procedure. Under the new law, any publicly traded company that makes products that use conflict minerals and buys those minerals either in the DRC or an adjoining country must exercise due diligence on the source and supply chain.

That prompted a reply from an IPC executive who rejects the notion that the electronics industry can resolve a “long-standing social [sic] conflict.”

Then there’s Cookson Electronics president Steve Corbett, who asserted last year that the US government should stay out of the matter because it simply has no hope of resolving a civil war in Africa.

I won’t begin to pretend I have the answer, but it’s interesting that three people so entrenched in the matter could have such differing opinions on how to (or how not to) address it.

EU Postpones Raw Material Sourcing Expansions

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By spring, the European Commission is expected to temporarily shelve plans empowering European companies to obtain expanded access to raw materials worldwide.  This comes amid public, governmental and industry calls for greater traceability of imported minerals from African countries to better screen supply chain conflict minerals.

Last November, EU’s Executive Commission stated it would be assertive about securing access to foreign markets and scarce natural resources and that this would be part of a plan to help the EU battle the economic crisis.  That statement came on the heals of China moving to restrict exports of rare earths. Rare earths are the raw materials used in everything from wind turbines to mobile phones.

A European Commission spokespeople told EurActiv — which by the way is an excellent news source for this sort of thing — that the issue of transparency in the extractive industry will be reflected in the EU’s new communication on raw materials.  This new communication was originally due to to be published today (Jan. 26), but publishing has since been postponed.

However, Commission representatives also said that the situation in the mining sector in some African countries was “complex” and full traces of imports would be difficult to carry out in practice.

EU Initiative

Objectives of the EU Initiative include provisions that the actions and recommendations for further EU Initiative activity should be based on the 3 major pillars identified in the Raw Materials Initiative or RMI, as follows:

1. Ensure a level playing field in access for resources in third world countries.
2. Foster a sustainable supply of raw materials from European sources.
3. Reduce consumption of primary raw materials by increasing resource efficiency and promoting recycling/reuse.

IPC Weighs in Heavy
IPC as always takes the “smart and firm” stance on the issue of conflict sourcing.

Although reporting requirements only apply to companies required to report to the SEC, it is expected that these requirements will rapidly be passed through the entire supply chain. The requirements are expected to flow down from the publicly traded companies through the entire supply chain from the OEMs to the solder manufacturers and everyone in between. Ultimately, while this is targeted to reporting, the reporting requirements will undoubtedly impact the selection of suppliers throughout the supply chain, as public companies now will be responsible for detailed knowledge about the location of source materials affected by the new regulations. Today, companies have no mechanism through which to comply with this requirement.

Scary observation but spot on.
Conflict Sourcing Regulations
Another industry compliance Blog by the Actio Communications Network weighs in with the latest regulatory news by saying that these source material regulations are to be adopted no later than April 15, 2011.  It’s all happening faster than one might think.

In the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama on July 21, 2010, are new requirements for manufacturers of products containing tin, tantalum, gold, tungsten or any other “conflict metals.”

The Act includes these provisions regarding minerals sourcing:

  • Section 1502 requires persons to disclose annually whether any conflict minerals that are necessary to the functionality or production of a product of the person, as defined in the provision, originated in the Congo or an adjoining country and if so to report on due diligence on the source and chain of custody of those minerals, which must include an independent private sector audit of that report that is certified by the person filing the report
  • Section 1504 requires reporting issuers engaged in the commercial development of oil, natural gas, or minerals to disclose in an annual report certain payments made to the United States or a foreign government

Regulations required by Sections 1502 and 1504 must be adopted no later than 270 days after the Dodd-Frank Act’s enactment, so the latest would be April 15, 2011.

For more on sourcing regulations in the US, see http://www.actio.net/default/index.cfm/actio-blog/conflict-minerals-electronics-and-the-sec/.

Your Supply Chain
Blood in the Mobile is a documentary released last September.  It’s about the cell phone manufacturing and conflict minerals.  Of course, every industry is different.  But deep inside we’re all the same:  raw materials and a supply chain made of compassion, or at least, of humanity.

So, what’s in your product?

http://supply-chain-data-mgmt.blogspot.com/

Conflict Minerals, Electronics and the SEC

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A letter has been circulating, collecting signatures.  The letter has been passed to mining, metals, electronics, and other industry corporate heads for signing, and it’s addressed to the U.S. Securities and  Exchange Commission (SEC) Chairman Shapiro.

The point of the letter is to amass signatures and put pressure on the SEC to address the conflict in the Democratic Republic of Congo (DRC or “the Congo”) by three primary avenues:

  1. Government engagement and diplomacy.
  2. Supply chain responsibility.
  3. Economic development and capacity building.

Conflict minerals are minerals mined in conflicted areas, such as the Congo, which provide revenue to militia committing human rights atrocities.  Efforts by the US Congress and other governments, human rights groups, non-governmental organizations (NGOs), as well as industry, are underway to improve transparency in the minerals supply chain so that conflict areas are not receiving subsidy that is in turn funding terrible crimes against humanity.  Here is a slide-show around conflict mineral mining; images are artfully done and recommended.

Conflict mineral ores include:

NGOs are increasingly urging consumers to reject electronics made with conflict minerals.  This forces electronics companies to pay much closer attention to the source of the metals in products.  Some suppliers are being asked to certify that the tin, for instance, used in their products is not conflict tin.

Conflict minerals pose a new twist on an old problem: supply chain visibility. This deep level of supply chain visibility is what we talk about often these days. Efforts by NGOs and human rights groups have been somewhat successful in the U.S. in getting consumers to demand sourcing from non-conflict areas. Thus — to some extent at least — there is general industry support of the conflict metals issue and bills in both the Senate and House of Representatives.

Also, see the July 2010 (version 3.0) of proposed SEC revision.

Title XV of the Dodd-Frank Wall Street Reform and Consumer Protection Act was put into place to provide for financial regulatory reform, to protect consumers and investors, to enhance federal understanding of insurance issues, to regulate the over-the-counter derivatives markets, and for other purposes. Within the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama on July 21, 2010, are new requirements for manufacturers of products containing tin, tantalum, gold, tungsten, or any other “conflict metals.” The Act contains several specialized disclosure provisions:

– Section 1502 requires persons to disclose annually whether any conflict minerals that are necessary to the functionality or production of a product of the person, as defined in the provision, originated in the Congo or an adjoining country and if so to report on due diligence on the source and chain of custody of those minerals, which must include an independent private sector audit of that report that is certified by the person filing the report.

– Section 1503 requires any reporting issuer that is a mine operator, or has a subsidiary that is an operator, to disclose in each periodic report filed with the Commission information related to health and safety violations, including the number of certain violations, orders, and citations received from the Mine Safety and Health Administration (MSHA) among other matters.

– Section 1504 requires reporting issuers engaged in the commercial development of oil, natural gas, or minerals to disclose in an annual report certain payments made to the United States or a foreign government.

Regulations required by Sections 1502 and 1504 must be adopted no later than 270 days after the Dodd-Frank Act’s enactment, so the latest would be April 15, 2011.

Signatories of the recent letter to the SEC signed that they generally agree to the following:

  1. The SEC regulation should support meaningful reporting and transparency that drives ethical behavior for the sourcing of minerals from the DRC.
  2. The SEC should coordinate with other global pr ocesses in the effort to address financing of the conflict in the DRC.
  3. The SEC should coordinate with the State Department on options to implement more robust accountability and reporting mechanisms with key stakeholders – in particular, the State Department’s progress on diplomacy under The Democratic Republic of Congo Relief, Security, and the Democracy Promotion Act (PL 109-456).
  4. Extreme violations of human rights, including slavery and sexual violence should be eliminated.
  5. The US government to proactively contribute to resolving the underlying sources of conflict in eastern DRC.
  6. That minerals would contribute to the real development of communities in the eastern Congo.

Most agree that joint action by the DRC government, influential governments like the US, industries and Congolese and international civil society is needed to end conflict-related abuses, slavery and other human rights violations.

www.actio.net/default/index.cfm/actio-blog