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Front End I News Focus – Conflict Minerals


Conflict minerals: good intentions under pressure


mines in countries like the DRC. For example, the country’s tin mines account for roughly four percent of the global market for tin and it’s estimated that half comes


from conflict mines. The rest comes from artisanal mines, the wages from which go to support tens of thousands of people. Any boycott would shut down these artisan mines as well and, consequently, tens of thousands of miners in the DRC would lose their jobs and most likely their only source of income. Moreover, there’s a real chance


that other countries in the region, apart


from the DRC, will see a flight from African minerals by the global business community. And then, these African countries — like Rwanda — will also suffer serious economic hardship too.


How can companies respond to the Dodd-Frank Wall Street Reform Act and the need to report on how they source ‘conflict minerals’? Neil Tyler finds out


T


he Dodd-Frank Wall Street Reform Act signed by President Obama back in August of last year has


implications way beyond the US and the financial community at which it was primarily targeted. The law, which came into effect in April 2011 forces manufacturers subject to US regulation to report on how they source what are called ‘conflict minerals’. Conflict minerals include minerals such as cassiserite, coltan and wolfranite, which are mined in a number of African states including, in particular, the Democratic Republic of Congo (DRC) and are widely used in mobile phones and laptops. How prepared are those countries in which this mining takes place to comply with the US ruling, and how easy will it be for companies to trace the ultimate source of the minerals they buy, especially when these rare minerals have been used to fund conflicts in the region which have cost in excess of 7m lives? The profits generated by mining minerals end up with the foreign


4 July/August 2011


companies that buy them; some will go to national export houses but a significant amount will end up with violent rebel groups who press gang local populations into mining for them. Research has found that some rebel groups meet 75 per cent of their funding needs through doing this. While it seems logical to just not buy the minerals (metals) from the rebel ‘conflict’ mines, social responsibility issues tend to be complex and there are no simple solutions. However, those companies that are able to label their products ‘conflict free’ are likely to enjoy a strong competitive edge over their rivals. As a result companies need to conduct internal procurement reviews, talk to their distributors and suppliers and identify conflict minerals within their supply chains. IPC, an international trade association based in the US, has been working on this issue of conflict mineral for the last two years. According to the association while there is certainly a significant financial hit for the electronics industry, there’s a human toll to pay in ‘boycotting’ the


Components in Electronics


Supply chain review The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires publicly traded companies to report to the U.S. Security and Exchange Commission (SEC) on their sources of tantalum, tin, tungsten and gold. The SEC is still working on the rules, even now requirements are flowing down through the entire supply chain and across all U.S. industry segments, from automotive manufacturers to electronics. According to Tony Hilvers, IPC’s Vice


President of Industry Programs, “The enormity of the supply chain review and audit is breathtaking, probably larger and more costly in scope than the lead-free requirements of the Restriction of Hazardous Substances (RoHS) Directive. While the SEC last year estimated the cost of implementation at $16.5 million, IPC, in a survey of its members, estimated the cost to the electronic interconnection industry alone could be as much as $280million in the first year of implementation.”


In a move designed to address the legislation over the last three years, electronics industry groups and global metals associations have been working to ‘bag and tag’ minerals from artisan mines in the DRC. The ‘bag and tag’ scheme initiated by the ITRI (formerly known as the International Tin Research Institute), is a comprehensive due diligence plan for tin minerals sourced from the DRC, and has been widely welcomed with input from the United Nations, the Organisation for Economic Co-operation and Development (OECD) and a number of NGOs. The bag and tag system starts at the mine where minerals are placed in a bag with a seal and security tagged so the mineral can be traced from the mine site to the smelter


and then to the exporter. The DRC government also supports this action as does other countries in the Great Lakes Region of Africa. “It’s not a perfect system, but it can work, if it’s given time to be


implemented,“ said Hilvers. “The rush to source ‘conflict free’ metals immediately can only serve to worsen the situation in the DRC. Right now, the only smelters that can be certified as ‘conflict free’ are those that are not sourcing in the DRC or adjacent countries. We need to give certification systems time to work.” The DRC, according to the country’s Ministry of Mines, is also working to address the problem. Agreements have been struck with the German Bureau of Geoscience on certification and transparency mechanisms as well as with other organisations in the European Union to ensure better traceability of materials leaving the country, however, according to some as much as 80 per cent of the country’s minerals are still being smuggled. In response the DRC is also creating a data base with all the statistics for production and exports, to enable any anomalies to be tracked. However, it has been accepted that the mining industry in the DRC will suffer, because companies cannot say with total assurance that what they are receiving is legitimate.


Hi-tech lead


Speaking to the BBC earlier this year Rick Goss, of the Information Technology Industry Council (ITIC), whose members include Apple, Dell, Hewlett Packard, Nokia and Sony, said that the hi-tech industry had sought to take a lead on this issue.


However, he warned that it was not an issue that the private sector could resolve on its own, instead it would require the concerted effort and attention of international governments, and organisations such as the United Nations. There are doubts whether it will be possible to register every location where minerals are mined and the minerals could go elsewhere, Chinese and Asian smelters are sourcing from any number of countries.


One option in terms of traceability is the use of laser-induced breakdown spectroscopy (LIBS), a low-cost means for rapidly determining a mineral's geographic origin and which provides a "chemical fingerprint" of any material in real-time. Gary Nevison, Head of Legislation & Compliance at Premier Farnell, believes that similar legislation will be adopted in the European Union. “While the US legislation wont have an immediate


Continued on page 6 www.cieonline.co.uk


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