What are Conflict Minerals?
Conflict minerals are minerals mined in conditions of armed conflict and human rights abuses, particularly in regions such as the Democratic Republic of the Congo (DRC) and adjoining countries. There are four conflict minerals referred as 3TG:
- Tantalum (Ta) (coltan): Used in electronic devices, particularly capacitors in smartphones and other consumer electronics.
- Tin (Sn): Used in soldering components in electronics, such as circuit boards.
- Tungsten (W): Commonly used in various industrial applications, including electronics and aerospace.
- Gold (Au): Used in various electronic components, as well as in jewelry and other luxury items.
The mining and trade of conflict minerals often finance armed groups and contribute to human rights violations, including forced labor, child labor, and violence against local communities. These minerals are often extracted from mines controlled by armed groups, who exploit workers and engage in illicit trade to fund their activities.
Why do companies need to report Conflict Minerals?
Due to the ethical and humanitarian concerns associated with conflict minerals, regulations such as the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States and the EU Conflict Minerals Regulation require companies to disclose information about the use of conflict minerals in their supply chains. This transparency aims to reduce the financing of armed groups and promote responsible sourcing practices.
Companies are encouraged to implement due diligence measures, such as supply chain audits and certifications, to ensure that their supply chains are free from conflict minerals and comply with relevant regulations. By doing so, they contribute to efforts to promote peace, stability, and respect for human rights in conflict-affected regions.
SEC and Section 1502 of the Dodd-Frank Act requirements
The Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly referred to as the Dodd-Frank Act, is a comprehensive financial reform legislation enacted in the United States in 2010 in response to the financial crisis of 2007-2008. The Act was named after its sponsors, Senator Christopher Dodd and Representative Barney Frank.
Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly referred to as the Conflict Minerals Rule, is a regulation issued by the Securities and Exchange Commission (SEC) in the United States. This act was passed by the Obama administration in 2010 mandates that certain publicly traded companies in the United States disclose their use of 3TGs in their products. Additionally, these companies are required to conduct due diligence to determine whether these minerals are sourced in a manner that supports human rights and does not contribute to armed conflict or human rights abuses in the Democratic Republic of the Congo (DRC) and adjoining countries.
The guide on conflict Minerals from SEC below will provide more information on the rules and requirements for the companies that need to report the use of 3TGs in their products:
How do companies disclose Conflict Minerals information?
Companies typically disclose conflict mineral information through a conflict minerals report, which is a specialized disclosure document required by regulations such as the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States and the EU Conflict Minerals Regulation. Here’s how companies typically disclose conflict mineral information:
- Conduct Due Diligence: Companies conduct due diligence to identify the presence of conflict minerals in their supply chains. This process involves gathering information from suppliers, conducting surveys, and performing supply chain audits to trace the origin of minerals used in their products.
- Assess Supply Chain: Companies assess their supply chains to determine whether conflict minerals are sourced from conflict-affected or high-risk areas, such as the Democratic Republic of the Congo (DRC) and adjoining countries. They also evaluate the smelters and refiners in their supply chains to ensure compliance with responsible sourcing standards.
- Prepare Conflict Minerals Report: Based on their due diligence efforts, companies prepare a conflict minerals report, which includes the following information:
- Description of due diligence measures undertaken to identify the presence of conflict minerals.
- Determination of whether conflict minerals originated from covered countries or are from recycled or scrap sources.
- Disclosure of smelters and refiners used in the supply chain, including their certification status and participation in responsible sourcing programs.
- Assessment of the company’s products’ conflict mineral status, including any necessary remediation efforts.
- File Conflict Minerals Report: Companies file their conflict minerals report with relevant regulatory authorities, such as the Securities and Exchange Commission (SEC) in the US or the competent authority in EU member states. The report is typically included as part of the company’s annual filing or submitted separately as required by regulations.
- Communicate with Stakeholders: Companies may also communicate their conflict mineral information to stakeholders, including customers, investors, and advocacy groups. This communication may take the form of public statements, corporate social responsibility reports, or engagement with industry initiatives promoting responsible mineral sourcing.
The Conflict Minerals Reporting Template (CMRT)
The Conflict Minerals Reporting Template (CMRT) is a free, standardized reporting template developed by the RMI that facilitates the transfer of information through the supply chain regarding mineral country of origin and the smelters and refiners being utilized.
The Responsible Minerals Initiative (RMI) is one of the most utilized and respected resources for companies from a range of industries addressing responsible mineral sourcing issues in their supply chains.
You can download the latest version of the template below.
Conflict Minerals Reporting Template
What are Smelters and Refiners?
Smelters:
Smelters are facilities where raw materials, such as ores or recycled materials containing metals, are processed through high-temperature processes, typically involving melting or roasting, to extract the desired metal or metals.
During the smelting process, impurities are separated from the desired metal through chemical reactions and physical processes, resulting in a purified metal product.
Smelters play a crucial role in the metal supply chain by transforming raw materials into refined metal products that can be further processed or used in manufacturing.
Refiners:
Refiners are facilities that further purify metals obtained from smelting processes to achieve higher levels of purity and quality.
The refining process involves additional purification steps, such as electrolysis, chemical treatments, or fractional distillation, to remove remaining impurities and improve the properties of the metal.
Refiners produce high-quality metal products suitable for use in various applications, including electronics, automotive, aerospace, and jewelry manufacturing.
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