One Step at a Time on Conflict Minerals

IPC Review January/February 2011 Editorial by IPC President Denny McGuirk:

It’s fair to say that the Democratic Republic of the Congo (DRC), far away from the comfortable suburbs or sophisticated cities where IPC members live, is one of the most miserable places on the planet. Armed conflict since 1996 has resulted in the deaths of 5.4 million people and the brutal exploitation and subjugation of the local population. Little known to most of the West for many years, the conflict spilled over to neighboring countries and has been called “Africa’s World War.” Even today, with the war officially over, 1,000 people die daily and unmentionable brutalities continue.

What does this have to do with electronics? Diplomatic efforts by the world’s governments have been unsuccessful in calming the violence. Continuing conflict in the Congo is centered largely in mineral-rich regions in the east and is financed largely through illegal mining of tin, gold, and tantalum ores — minerals that are vital to electronics. In the past few years, human rights groups and non-governmental organizations (NGOs) such as the Enough Project and Make IT Fair have begun to focus media attention on the origin of the metals in consumer electronics. The NGOs hope to get consumers to reject electronics made with “conflict minerals” that can be traced to the rebel groups, forcing electronics companies to stop sourcing metals from the illegal militia-owned mines.

Motivated by the best intentions, the NGOs were successful in persuading Congress to insert Section 1502 into the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law this past summer. Section 1502 contains a provision requiring companies to disclose what steps they are taking to ensure that their products do not contain tin, tantalum, gold and tungsten refined from minerals originating in conflict mines in the DRC.

The law requires companies whose manufactured goods contain metals refined from the minerals columbite-tantalite (coltan and tantalum), cassiterite (tin), gold, wolframite (tungsten) or any other mineral or its derivatives determined by the Secretary of State to be financing conflict in the Democratic Republic of Congo or an adjoining country to: 1) report annually to the Securities and Exchange Commission (SEC) if the minerals did originate from the Congo or adjoining countries, and 2) submit a due diligence plan with the company’s annual SEC report. These activities are supposed to begin in April 2011.

As we learned with RoHS, it takes time to set up reliable systems to track materials in a complex global supply chain. If the regulations become too burdensome, companies will completely divest from purchasing minerals from the DRC or eastern Africa, plunging law-abiding miners, traders, and their dependents — most barely making a subsistence living — into dire poverty.

On behalf of the industry, IPC submitted comprehensive pre-proposal comments to the SEC in November to help shape practical regulations that can be implemented and that support legitimate mines and activities of the DRC. These recommendations include:

  • Timing: Because industry efforts are still in their infancy and because the DRC government has shut down access to some mines, it is highly unlikely that a full scale-up of these programs will be possible by the April 2011 deadline. The SEC should use its discretion to implement a phased-in approach to the regulations requiring OEMs to declare whether the minerals used in their products are conflict-free or not.
  • Phase in: The mines themselves may move from conflict-free to conflict status as conditions on the ground change. The SEC should adopt a rule stating that a mineral does not change status after it goes through the smelting process, becomes mingled with other minerals, and begins to move through the supply chain.
  • Due diligence: Requiring each company filing with the SEC to identify and audit their entire supply chain is exceedingly inefficient. Instead IPC suggests that SEC accept as due diligence activities such as participation in an industry-wide smelter validation process and reliance on government-produced information, such as mapping of conflict regions.
  • Exemption of recycled materials since these materials do not contribute financially to the militias.

On Wednesday, December 15, the SEC posted proposed regulations. These proposed rules are open for public comment until January 31, 2011. Given the tremendous potential impact of this rule on the electronics industry, I urge you to read the new rules and consider filing comments with the SEC. Learn more on IPC’s website. Members who would like to contribute to IPC’s comments or get more involved, should contact Fern Abrams.

It’s going to be a big year and this is only the first of many issues we will be called upon to address. IPC thanks you for your support and sends you best wishes for a year of prosperity and peace throughout the planet.

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