CONFLICT MINERALS

June 14, 2014


Several days ago one of my clients asked me to investigate the possible presence of conflict minerals used in the fabrication and assembly of products provided by them.  I had heard the phrase but quite frankly had to school myself on the full meaning and possible ramifications if I found their presence to be incorporated in product or process on.  Here is what I found.

Let us first define conflict minerals and conflict resources.    Conflict resources are natural resources extracted in conflict zones and sold to perpetuate fighting.  The proceeds of the sale are used for the purchase of weapons, providing salary for members of the conflict groups and supplies needed to continue fighting.    The most prominent contemporary example is the eastern provinces of the Democratic Republic of the Congo, where various armies, rebel groups, and outside actors have profited while contributing to violence and exploitation during wars within the region.

The most commonly mined conflict minerals are cassiterite (for tin), wolframite (for tungsten), coltan (for tantalite), and gold ore, which are extracted from the Eastern Congo, and passed through a variety of intermediaries before being purchased by multinational electronics companies. These minerals are essential in the manufacture of a variety of devices, including consumer electronics such as mobile phones, laptops, and MP3 players,filaments for electric lamps, electron and television tubes, electrical contact points for automobile distributors, heating elements for electrical furnaces, and space, missile, and high-temperature applications.   I’m sure we are all familiar with gold but the other three (3) minerals need some explanation.

CASSITERITE: 

Cassiterite, is a heavy, brown-to-black mineral, tin oxide, SnO2, crystallizing in the tetragonal system.   It is found as short prismatic crystals and as irregular masses, usually in veins and replacement deposits associated with granites. Since it is hard, heavy, and resistant to weathering, it often concentrates in alluvial deposits derived from cassiterite-bearing rocks. It is the principal ore of tin and is mined in many countries; the most important sources are Malaysia, Thailand, China, Indonesia, Bolivia, and Russia. Except for Bolivia, nearly all of this production is from alluvial deposits.

WOLFRAMITE:

The mineral, Wolframite, is a principal ore of tungsten. It is an iron and manganese tungstate mineral.  Tungsten carbide is an important compound in the metalworking, mining, and petroleum industries. Alloys such as high-speed steel, cristite, and stellite, used in high-speed tools, contain tungsten. Other important tungsten compounds are calcium and magnesium tungstates, which are used in fluorescent lighting, and tungsten disulfide, which is used as a high-temperature lubricant at temperatures up to 500 deg C. Tungsten compounds also find uses in the chemical, paint, and tanning industries.

COLTRAN OR TANTALITE:

The industry term columbo-tantalite has been shortened to “coltan” in central Africa.  Tantalite is a black, heavy mineral not prized by collectors and little known outside high-technology circles.  But since 2000, short-lived spikes in the price of this “black gold” have sparked environmentally damaging mining rushes in central Africa. These disruptive events have caused concern around the world.  Tantalite yields the metal tantalum, whose strength, chemistry and electronic properties make it valuable in many high-tech and medical applications. Tantalum makes great capacitors for premium electronics, including cellular telephones and laptop computers. So the enormous worldwide demand for consumer electronics has put a strain on the supply of tantalite ore.  Prices have occasionally soared to hundreds of dollars per kilogram.   Central Africa is so desperately poor that thousands of men have rushed to the jungle to mine coltan this way.   Prostitution, price-gouging and other disruptions went with them; moreover, the various armies in this war-torn region, both official and amateur, have moved in to take over the trade. Miners invade pristine forests, including the national parks.   Besides destroying the land, they shoot the local wildlife—gorillas, okapis and other rare species—for food.

GOLD:

Gold is the biggest source of conflict mineral trade in Congo and is most responsible for the ongoing bloody conflicts. Gold has soared in price on the commodity markets in recent years, and Congo is literally sitting on a gold-mine worth tens if not hundreds of billions of dollars. Despite promises by President Kabila to clean up the mining industry, corruption remains rife and thousands of small-scale unofficial mines scatter the country.

We might add another mineral to the list:  diamonds or “blood diamonds”.   Some diamonds have helped fund devastating civil wars in Africa, destroying the lives of millions.   Profits from the trade in conflict diamonds, worth billions of dollars, were used by warlords and rebels to buy arms during the devastating wars in Angola, the Democratic Republic of Congo (DRC) and Sierra Leone.  Wars that have cost an estimated 3.7 million lives.

You can now see why these minerals have been designated “conflict minerals”.  Our federal government has entered the fray with the Dodd-Frank Act.

SECTION 1502 OF THE DODD-FRANK ACT:

On August 22, 2012, the SEC issued a final rule on conflict minerals pursuant to Dodd-Frank Section 1502. The rule describes the assessment and reporting requirements, by US companies, for issuers whose products contain conflict minerals. These minerals – tin, tantalum, tungsten and gold – are used in a wide range of products across numerous industries.  Section 1502 of the Dodd-Frank Act addresses the problem of conflict by setting requirements for due diligence, reporting, and public disclosure, and is designed to ensure accountability and discourage companies from doing business in ways that ultimately support exploitation and conflict.   Dodd-Frank requires the following from all companies:

  • Assess: Evaluate the design, implementation or operation of an organization’s conflict minerals program against the requirements of Dodd-Frank 1502, OECD frameworks and leading practices.
  • Program planning: Jump-start conflict minerals compliance by scoping program requirements and defining a roadmap with details such as key steps, resource requirements, and timing.
  • Design & build: Perform detailed design and development of a company’s conflict minerals program. A pilot program may be used as part of this stage to refine approach.
  • Implement & operate:  Implement and operate the conflict minerals program, including management and administration of the supplier reasonable country of origin inquiry (RCOI) and due diligence processes (with appropriate management oversight).
  • Audit: Provide an independent performance audit or attestation audit over the design and execution of the conflict minerals due diligence, either for an SEC registrant or for other organizations to provide to their customers.

To aid manufacturers and suppliers in this effort, a template has been structured to list and categorize any use and percentage of use for conflict minerals.   The Electronic Industry Citizenship Coalition & the Global e-Sustainability Initiative have produced an Excel-based Reporting Template that helps companies collect information related to conflict minerals.  Revision two of the template allows for more detail reporting on the product level and contains a list of known smelters around the world. These templates are the most common way to share information, but may require extra effort to gather the information from your suppliers about the origin of the conflict minerals used in your products. You may find copies of this template on line.  Its use is very straightforward and fairly simple to use.  This is one issue I am having right now with fulfilling the request from my client.  Where do you get the information?

I welcome your comments and certainly hope this information is helpful to you.

 

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2 Responses to “CONFLICT MINERALS”


  1. Can you tell us more about this? I’d like to find out some additional information.

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    • cielotech Says:

      Hello Fujifilm. I try to follow “conflict minerals” closely. It is a fascinating subject and one in which I will continue posting about. The US requirement arises from requirements by our Federal Government which are written to preclude purchases from countries and individuals using slave labor. Many thanks for the very kind comments. Conflict is one of the most-read posts I have written. Really happy you enjoyed it. Take care and please do come back. Bob

      Like


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