Post on 11-Mar-2018
transcript
5/8/2013
1
Conflict Free Minerals
Supply Chain Workshop 11
Hong Kong
May 8 &9, 2013
Photo by Jay Celorie
1
Conflict Free Minerals
Supply Chain Workshop 11
Welcome
Rob Lederer,
EICC Executive Director
May 8-9, 2013
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5/8/2013
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EICC® Members (As of Feb. 7, 2013)
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Agenda, Day 1
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13:15-14:00
Conflict-Free Minerals Chain of Custody: From the Great Lakes
Region to Product
14:00-14:45 Regulatory Update (North America and European Union)
14:45-15:15 Break (foyer outside Picasso)
15:15-16:45
Update on Implementation in the GLR: Current Status, Next Steps,
and Key Challenges
16:45-17:15
Compliance and Reporting Tools for Smelters and Downstream
Companies
17:15-17:50 Panel: CFS – Smelter Perspectives
17:45-18:00 Closing Remarks and Adjourn to Reception
18:00-20:00 Reception, sponsored by KPMG
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Ground Rules • Chatham House Rule: Participants are free to use the
information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed.
• No audio or video recording
• Respectful participation
• Focus on issues, not individuals or organizations
• Listen respectfully (limit side conversation)
• Speak clearly
• Introduce yourself before speaking
• Mobile phones off or silent
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Antitrust Guidelines Meetings and programs should be conducted so as to eliminate
questions regarding antitrust compliance.
Under no circumstances shall the meetings of this group be used
as a means for competing companies to reach any understanding,
expressed or implied, which tends to restrict competition, or in any
way to impair the ability of members to exercise independent
business judgment regarding matters effecting competition.
These guidelines apply not only to discussions during a formal
meeting, but to all informal discussions as well.
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Antitrust Guidelines
Meeting participants should not discuss (or
exchange information regarding) any of the
following topics with their competitors:
• Prices
• Quantity
• Customers
• Sales
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“No Suitcasing” Policy for Vendors
Beginning with this workshop, EICC and GeSI will not
allow solicitation from non-sponsoring companies.
All EICC and GeSI members and other attendees are
asked to report solicitation; any companies found not to
honor this policy will not be permitted to attend EICC and
GeSI workshops for one year.
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9
would like to thank our Workshop XI Sponsors:
and
Conflict Free Minerals Supply Chain Workshop 11
Welcome
Hong Kong
Jay Celorie, Hewlett-Packard, GeSI & EICC
Bob Leet, Intel, EICC
May 8-9, 2013
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Extractives WG becomes the CFSI
Conflict Free Sourcing Initiative (CFSI) (Announced April 30th)
EICC and GeSI are pleased to announce the transition of its
Extractives WG name to become the CFSI
• Includes existing efforts: Conflict Free Smelter Program,
Reporting Template, In-region Sourcing, Education,
Industry-leading Practices Development, Distinguishing
multi-industry supporters
• Non-profit tax exempt status support (via EICC & GeSI)
• Directly incorporating NGO/Civil Society participation [future]
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EICC® Members (As of Feb. 7, 2013)
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GeSI Members (as of Jan 2013)
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CFSI Partners ( As of April 20, 2013 )
Partner Industry Associations
Non-Member Partner Companies
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CFSI Commitment
The CFSI is committed to improving conditions in its supply chain and mining activities that fuel conflict are unacceptable.
In order to enable participating companies to source conflict-free minerals, we are taking action by:
• Implementing Conflict-Free Smelter and Due Diligence Programs
• Supporting in-region sourcing schemes to enable future legitimate trade from DRC and surrounding countries
• Supporting OECD due diligence guidance and pilot
• Engaging with stakeholders for collaboration and efficiency
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Upstream
Smelters /
Refiners
Downstream
Conflict Free Smelter
(CFS) Program
Raw Materials
Finished Products
CFSI Supply Chain Strategy
Why Here?
1) Conversion
2) Small Numbers
(<500)
RCOI \ Due Diligence
In-Region Sourcing
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Governance Changes for the CFSI
• The initiative is undergoing continued
improvement
• Name change to something more representative
• Definition of future structure (upstream / downstream /
NGO)
• Definition of future revenue generation (membership,
recognition-based, royalties)
• Program improvements (CFS, Due Diligence, Practices)
• Overall development and implementation will
continue in 2013 and continue into 2014
PAGE 17
Options for CFSI Participation
EICC or GeSI Membership
• Full Membership provides access to all WGs ( http://www.eicc.info/Membership_Application.shtml ) ( http://www.gesi.org/Membership/tabid/59/Default.aspx )
CFSI Partner Company Participation ( http://www.eicc.info/documents/ExternalWGMembers-Companies.pdf )
• $5K fee annually
• Voting rights
• CFSI Work Group (WG) and sub-WG activities participation and information
CFSI Partner Association Participation ( http://www.eicc.info/documents/ExternalWGMembers-Organizations.pdf )
• $20K fee annually
• Voting rights (one vote for organization)
• Up to two participants per CFSI Workgroup or sub-WG responsible for disseminating all information (staff or constituent members welcome)
White Paper on Extractives WG (CFSI WG) available (www.conflictfreesmelter.org)
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In-Region Schemes
Conflict Free Smelter Program (CFS)
Company Assurance
Finished
Product
MINE SMELTER/REFINERY OEMS
CFSI Conflict-Free Sourcing Approach
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Conflict Free Minerals
Supply Chain Workshop XI
Workshop
Sponsors:
5/8/2013
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Conflict-Free Minerals Chain of Custody: From the Great Lakes Region to Product
PAGE 21
22 www.rcsglobal.com
Conflict-Free Minerals
Chain of Custody:
From the Great Lakes
Region to Product
Harrison Mitchell
Director
www.rcsglobal.com
May 2013
5/8/2013
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23 www.rcsglobal.com
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Understanding conflict minerals due diligence
INTRODUCTION
This presentation covers:
• Background to conflict in DRCongo and conflict minerals
• Description of the conflict mineral supply chain
• The US SEC rule and how it affects the mid and upstream
• Assurance processes and schemes and how they align
• Issues and questions
www.rcsglobal.com
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THE DRC AND THE SUPPLY CHAIN
What is the issue?
• Democratic Republic of the Congo is a huge country in central Africa the size of Western Europe
• Borders with 9 other countries • Conflict for the past 20 years, one of
the worst wars since WWII • Currently most parts are at peace,
but localised conflict endures in the Eastern DRC
• US introduced a law via the Securities and Exchange Commission that affects the sourcing of 3Ts and gold material from the DRC and 9 surrounding countries
• EU rule possible
www.rcsglobal.com
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THE DRC AND THE SUPPLY CHAIN
What are Conflict Minerals?
• Tin, tantalum, tungsten and gold and corresponding ores (SEC)
• These minerals and other commodities were/are used to fund illegally armed groups
• Conflict minerals regulations in the US require SEC listed companies to conduct due diligence on their supply chains
• In reality – this means due diligence requests will be pushed down the supply chain – changes are already occurring in the supply chain and are here to stay
• A number of initiatives to assure conflict free material is currently in operation up and down the supply chain
www.rcsglobal.com
Cassiterite (tin) is weighed, guarded by soldiers
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UPSTREAM MINERS TO TRADERS TO SMELTERS
www.rcsglobal.com
The DRC + 9 Supply Chain for 3Ts • >5% of tin, 15-20% of tantalum, >5% of
wolfram. Gold? • However, the region an increasingly
important source of minerals both strategically in terms of world market sourcing and in volume
• Generally minerals move from the DRC or other producing states through neighbouring countries such as Rwanda and Uganda to the ports of Kenya and Tanzania. Sometimes material goes via land to South Africa
• International traders purchase the material from origin or transit countries
• Generally the material is sold to smelters in Asia who sell on to manufacturers
Gold follows a different supply chain
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SUPPLY CHAIN AT A GLANCE
www.rcsglobal.com
Miners
Exporters
Int. Traders
Smelters
Refiners
Manufacturers
Component
Manufacturers
Brands
Supply Chain Due
Diligence
Upstream
Midstream
Downstream
Due Diligence
Certification & Assurance schemes
CFS program
SEC Audit
Due diligence should be appropriate according to your position in the supply chain
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SUPPLY CHAIN STANDARDS
www.rcsglobal.com
Miners
Exporters
Int. Traders
Smelters
Refiners
Manufacturers
Component
Manufacturers
Brands
Upstream Certification and Assurance schemes • ITSCI • CFTI • BGR • ICGLR RCM • Solutions for Hope • World Gold Council
(gold) • Others forthcoming Midstream = few • The Conflict Free
Sourcing Program • The LBMA (gold) • The RJC (gold) Downstream SEC requirements • RJC • IPC in US • Audits standards
forthcoming
International Standard = OECD DD Guidance
Upstream
Midstream
Downstream
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SUPPLY CHAIN STANDARDS
www.rcsglobal.com
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HOW SYSTEMS ALIGN
www.rcsglobal.com
Mine Site Chain of Custody Refiner / Smelter Tier 2 and beyond Tier 1 Issuer / Manufacturer
Ensures site is secure
AUDIT Traceability
scheme AUDIT
CFS smelter DD
ensures upstream is
secure
AUDIT
Due Diligence reporting through supply chain
AUDIT SEC Audit
on suppliers
AUDIT
US Law: SEC Due Diligence (in theory)
SEC issuer requirements (in practice)
CFS Smelter requirements (in practice)
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KEY ISSUES
www.rcsglobal.com
Issues
• The integrated supply chain from mine to smelter works, but it is in the process of being set up. Downstream assurance and certification does not cover all of the material from the DRC and 9 surrounding countries
• Un-certified material from DRC is still being sold as a discount to Chinese buyers
• CFS program is very good on tantalum, tin and tungsten smelters are slow to join. Yet CFS is key to downstream due diligence approaches!
• Downstream is slow to start due diligence, not coordinated, audit process not yet defined = lots of uncoordinated requests for information in mid part of supply chain
• Lack of guidance in manufacturer segment from brand to smelter –
manufacturers tend to approach this as environmental diligence – but DD has more emphasis on both activity of DD and ensuring source of material is free from conflict and human rights abuses
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HOW DOES DUE DILIGENCE FIT IN WITH ENVIRONMENTAL REGULATIONS
LIKE ROHS2, REACH, AND WEEE?
RoHS2
Bans the use of
certain dangerous
chemicals in
electronic
appliances (see
REACh)
REACh
Identification and
labeling of
potentially armful
chemicals,
dissemination of
standardized
information
⚔ Conflict Minerals
Due Diligence
Ensures that no
minerals used found
the illegal activities
of armed groups in
the DRC
WEEE
Ensures companies
selling electronic
appliances recycle
them
• Except REACh, are all forms of due diligence BUT have different aims and different geographies of
implementation
• Conflict Minerals Due Diligence is an active process of due diligence. The emphasis is on conducting
due diligence in your area of influence (OECD)
• We advise:
• Understand your position in the supply chain, and the legal or customer pressures that will
influence you
• Devise policy and approach appropriate to your position
• Use industry tools
www.rcsglobal.com
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OUR CLIENTS
www.rcsglobal.com
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35
harrison@rcsglobal.com
www.rcsglobal.com
Conflict-Free
Minerals Chain
of Custody:
From the Great
Lakes Region
to Product
www.rcsglobal.com
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Conflict Free Minerals
Supply Chain Workshop XI
Workshop
Sponsors:
5/8/2013
19
PAGE 37
North America and European Union Regulatory Update
Conflict Minerals Regulatory Update
EICC and GeSI Conflict Free Minerals Supply Chain Workshop
May 8, 2013
Lauren Hopkins
Beveridge & Diamond, P.C.
415-262-4013 – lhopkins@bdlaw.com
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Background: Dodd-Frank Law
• Conflict minerals provision (section 1502) included in massive U.S. financial reform law: Dodd-Frank Wall Street Reform and Consumer Protection Act (enacted July 2010)
• Mandates public disclosure by certain companies if
– “conflict minerals” (or metals derived from them)
– are “necessary to the functionality or production of”
– a product that they “manufacture” or (in certain cases) that they “contract to manufacture”
• Disclosure, not restriction: transparency in supply chain will drive conflict-free sourcing initiatives, i.e., “name and shame”
• Applies directly to companies that report to SEC and indirectly to their suppliers: ripple effect through supply chain
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Background: SEC Rulemaking
• SEC issued proposed rule in December 2010
• April 2011 statutory deadline for final rule
• Significant stakeholder engagement
– Extended public comment period
– SEC Roundtable
• Finalized with a 3-2 vote on August 22, 2012
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Minerals At Issue
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Cassiterite (Tin)
Columbite-Tantalite (Tantalum)
Wolframite (Tungsten)
Gold
• Tin cans
• Solder
• High performance
paint
• Electronics
• Airbags
• Jet Engines
• Drill bits & tools
• Electronics
• Semiconductors
• Jewelry
• Drill bits
• Metalworking tools
• Electrodes
• Welding applications
Rule does not apply
Conduct Reasonable Country of Origin Inquiry (RCOI)
File a Form SD w/ description of RCOI
Exercise due diligence (e.g., OECD, CFS)
Are minerals scrap or recycled?
Are minerals scrap/recycled or not from Covered
Countries?
Conflict Minerals Report (CMR) w/ Form SD
CMR w/ independent private sector audit
CMR w/ list of “DRC Conflict Undeterminable” products
File a Form SD w/ description of due
diligence measures
Issuer manufactures or contracts to
manufacture?
Did minerals finance or benefit militias?
<2 yrs after effectiveness of Rule?
Issuer files reports with
the SEC?
NO NO NO
NO
NO
NO
NO
NO or UNKNOWN NO
YES
YES
YES
YES
YES
YES YES YES
Conflict minerals outside supply chain before
1/31/13?
Conflict minerals “necessary to functionality or
production”?
YES
Minerals from Covered Countries?
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Rule Overview: Basic Three-Step Process
1. Determine applicability
2. Potentially: Conduct “reasonable
country of origin inquiry”
3. Potentially: Exercise due diligence on
supply chain and file an audited Conflict
Minerals Report
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Any issuer that files reports with SEC under Exchange Act sections 13(a) or 15(d)
• Includes:
• U.S. Companies that issue stock
• Foreign private issuers that file Form-20F or 40F
• Regardless of size
• Excludes:
• Foreign private issuers of unsponsored ADRs
Conflict minerals are necessary to the functionality or
production of a product the issuer manufactures
or “contracts to manufacture”
Step 1: Applicability
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AND
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1. Determine applicability
2. Conduct “reasonable country
of origin inquiry”
3. Potentially: Exercise due diligence on
supply chain and file an audited Conflict
Minerals Report
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Step 2: Reasonable Country of Origin Inquiry (RCOI)
Designed to evaluate whether minerals in a company’s supply chain originated from:
• Recycled /scrap sources; or
• Outside Covered Countries.
Determines whether Step 3 due diligence
is necessary
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Step 2: The Disclosure
File Form SD to describe RCOI
and results; and
Post Form SD disclosure on
website
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Even if the issuer is not required to move on to Step 3, the issuer still must:
1. Determine applicability
2. Conduct “reasonable
country of origin inquiry”
3. Exercise due diligence on supply
chain and file an audited Conflict Minerals Report
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Step 3: The Conflict Minerals Report
Not all companies that advance to Step 3 must file a Conflict Minerals Report
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Like RCOI, if due diligence shows conflict minerals came from recycled/scrap
materials or outside the Covered Countries, then no Conflict Minerals
Report is necessary
Company would then file Form SD with a description of due diligence and results
No CMR
No Audit
FAQ and Key Ambiguities
• Definition of product
• Contract to manufacture
• Catalysts
• Extent of due diligence required
• Applicability to non-US companies
• Timing
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Critical Tools
• Your existing supply chain management practices • Industry reporting tools
– EICC-GeSI reporting template – Conflict Free Smelter program – AIAG – IPC
• Reports on OECD guidance pilot – Practical feedback from on-the-ground
implementation – Examples of supplier engagement
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Litigation
• U.S. Chamber of Commerce, Business Roundtable, and National Association of Manufacturers petitioned the D.C. Circuit for judicial review of the final rule
• Petitioners take issue with the SEC’s: – economic analysis; – failure to include a de minimis exception; – inclusion of non-manufacturers that "contract to manufacture"; – interpretation of the statutory phrase "did originate [in a
covered country]" to mean "reason to believe . . . may have originated [in a covered country]";
– structure of the transition period; and – compelled speech in violation of the First Amendment
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Litigation, cont’d
• The SEC countered
– The economic analysis is robust
– The final rule is reasonable, given the statutory mandate from Congress
• Intervenor and amici also filed briefs
– Amnesty International
– Global Witness
– American Coatings Association
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Litigation, cont’d
• Rule is still in effect pending judicial review • Court granted Petitioners’ motion to expedite review
– Briefing is complete – Oral arguments were scheduled for May 15 – Final decision was expected as early as July 2013
• BUT on April 29, 2013, Court issued order canceling oral argument, suggesting it would dismiss for lack of jurisdiction – Petitioners filed unopposed motion 4/30 seeking transfer to U.S.
District Court for District of Columbia (lower court) to avoid delay – D.C. Circuit granted motion 5/3; case and file now transferred to
District Court
• Result: massive delays overall and near certainty of appeal • Petitioners may seek SEC or judicial stay of the rule
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Other Developments
• EU – The European Commission opened a public consultation to inform
recommendations on the nature of a potential EU due diligence initiative
• Canada – Legislation pending before the Parliament of Canada that would
impose reporting requirements similar to those in the US on Canadian companies
• US States – California and Maryland have enacted statutes that bar any company
that does not fulfill its Dodd-Frank obligations from state contracting – Similar legislation is pending in Massachusetts and Connecticut
• Private Procurement – Some universities and municipalities considering Dodd-Frank
compliance in purchasing
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Parting Thoughts
• In the U.S., most companies are invested in compliance and can be expected to continue efforts to better understand supply chain even if SEC rule is struck down or stayed
• Watch for other legal measures on conflict minerals outside the U.S.
• Differences among political goals and regulatory infrastructures will likely prevent complete alignment of regulatory schemes and reporting formats
• OECD remains an important forum for policy and technical coordination
• EICC GeSI tools will remain touchstones of due diligence
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For Additional Information: Lauren Hopkins, Beveridge & Diamond, P.C.
lhopkins@bdlaw.com Paul Hagen, Beveridge & Diamond, P.C.
phagen@bdlaw.com Rick Goss, Information Technology Industry Council
rgoss@itic.org
PAGE 58
EU Regulatory Update Petros Sourmelis DG Trade, European Commission
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Conflict Free Minerals
Supply Chain Workshop XI
Workshop
Sponsors:
PAGE 60
Update on Implementation in the Great Lakes Region: Current Status, Next Steps, and Key Challenges
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MINERAL TRANSPARENCY INITIATIVES IN RWANDA
ICGLR/RCM & iTSCi Scheme
by Dr BIRYABAREMA Michael
Deputy Director General
Rwanda Natural Resources Authority
Geology and Mines Department
RNRA/GMD
REPUBLIC OF RWANDA
5/8/2013
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Overview
1) Importance of the mining sector in Rwanda
2) Implementation Status of the International
Conference on the Great Lakes Region /Regional
Certification Mechanism for Mineral (ICGLR/RCM)
3) Transparency in ITRI Tin Supply Chain Initiative
(iTSCi Scheme)
IMPORTANCE OF THE MINING SECTOR IN
RWANDA
• Recent privatization of the mining sector from a public company
started in 2006;
• The industry is becoming vibrant and currently has more than
two hundred and fifty companies and cooperatives (mining,
exploring and prospecting). Mining is taking place at 547 mine
sites (verified by ITRI);
• Currently, the Sector employs at least 20,000 people, excluding
people working in quarries;
• Since 1999 the industry is growing at an average rate of more
than 10% per year as indicated in the graph below (in terms of
revenue and volume);
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Sector Growth
Year
Export earning
s (Million
s of US$)
Exports in Volume (Tons)
1999 6.9 943 2000 12.6 1,012 2001 42.6 2,102 2002 15.9 2,083 2003 11.1 2,599 2004 29.3 5,082 2005 37.3 6,465 2006 37.0 6,187 2007 70.6 8,283 2008 94.0 7,364 2009 54.6 7,960 2010 71.0 8,406 2011 158.0 9,697 2012 136.3 7588
0
2000
4000
6000
8000
10000
12000
1997 2002 2007 2012
EX
PO
RT
ED
VO
LU
ME
( T
ON
S)
Year
VOLUME OF EXPORTS, 1999 TO 2012
VOLUME ( TONS )
Linear (VOLUME ( TONS ))
0
50
100
150
200
1997 2002 2007 2012
EX
PO
RT
EA
RN
ING
S (
MIL
LIO
NS
OF
US
D )
YEAR
EXPORT EARNINGS FROM 1999 TO
2012
VALUE ( MILLIONS OF
USD )
Linear (VALUE (
MILLIONS OF USD ))
7 May 2013
7 YGP (2010 – 2017) targets for the Mining Sector
o Setting up an enabling legal environment for increased investments in the
Mining Sector; new policy, new mining law, a number of regulations etc;
o Knowledge of national mineral potential through continuation of exploration activities in minerals like, Gold, Nickel, Copper, Platinum, Cassiterite, Wolfram, Coltan, etc.; In 2012, public exploration cost two million Euros in addition to the work done by the private sector. At least another two million Euros is planned to be spent in 2013/2014 for mineral exploration funded by the government. The current public exploration program is contracted to BEAK Consultants from Germany.
o Mineral production levels are planned to triple to USD 400 million by 2017;
o There are planned value addition projects, like tin smelting; the sector is being
boosted become the second main foreign exchange earners for the country,
next to tourism and ahead of traditional coffee and tea;
IMPORTANCE OF THE MINING
SECTOR IN RWANDA
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• Adoption of a Ministerial Regulations
No 002//2012/MINIRENA of
28/03/2012 Implementing ICGLR/RCM;
• Recent appointment of a new Minister
in Charge of Mining (Feb 2013);
Honorable Evode Imena;
• Completion of a comprehensive mine
site Inspection Manual;
• Awareness campaign on the legislation
of ICGLR/RCM for minerals to all stake
holdres;
• Extensive mine site inspections
through out the country is being done;
IMPLEMENTATION STATUS OF
ICGLR/RCM
Newly Appointed Rwanda Minister in Charge
of Mining with ITRI delegates from London
Kigali, April 2013
Add picture here of mine
site inspections in
• The ICGLR Audit Committee is in place since December 2012;
• Final daft documents to apply for an ICGLR Mineral Export
Certificate, are available;
• A final template of the ICGLR Export Certificate is available
with necessary security features to assure smelters and their
clients of the credibility of minerals from the Great Lakes
Region;
IMPLEMENTATION STATUS OF
ICGLR/RCM
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• Finalization of a database to be used in
sharing mining information between GoR
and ICGLR Secretariat;
• An MoU has been signed between Rwanda
Bureau of Standards (RBS) and Rwanda
Natural Resources Authority to
operationalize the ICLGR Mineral Certification
Office;
• Recruitment & training of Staff for ICGLR
Certification Office is complete;
• Completion of the audit of Chain of Custody
(iTSCi Scheme) by ICGLR independent
Auditor: draft report available;
IMPLEMENTATION STATUS OF
ICGLR/RCM
TRANSPARENCY IN iTSCi SCHEME
• The iTSCi Scheme is jointly managed by GoR and
iTSCi/ITRI; the later has pamanent staff in Rwanda
currently being expanded;
• All minerals from Rwanda are traced from mine site to
smelters under iTSCi Scheme :100% of exports are
tagged;
• 95 GoR agents manage the tagging system at 547
mine sites with frequent supervision of iTSCi staff;
plans are under way to increase the number to 200;
• Incidents are reported in case of any suspected
anomalies in the supply chain; these jointly
investigated by the GoR (GMD) and the iTSCi
representatives;
• Channel Research (Independent auditors) evaluate
the chain of custody twice a year;
• The use of PDA is being tested for better accuracy and
timely delivery of data to the data bases;
Proposed PDA to be used in
mineral tagging_ April 2013
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• A Mineral Sampling Campaign to be jointly
conducted by iTSCi/ITRI and GoR will soon be
underway in mid May 2013;
• A Steering Committee to manage traceability
incidents composed of representatives of
GoR, Civil Society, industry and iTSCi/ITRI has
been inaugurated;
• Regular trainings of GoR agents and the
industry on the implementation of mineral
certification schemes; usually jointly
organized by iTSCi and the Geology and
Mines Department;
• Annual review of baseline studies of each
mine site to know the production capacity of
each mine; run by iTSCi;
TRANSPARENCY IN iTSCi SCHEME
POTENTIAL HARMONIZATION
OF DUE DILIGENCE INITIATIVES
All stakeholders (iTSCi/ITRI & ICGLR/RCM) should
• Consider exploring the potential for harmonization of audits; looking
into the feasibility of progressive alignment i.e. Possible joint audits for
Channel Research and ICGLR independent auditors;
This would reduce audit fatigue on mining operators in Rwanda
and also reduce the implementation costs of iTSCi Scheme and
ICGLR/RCM;
The upstream partners are being overwhelmed by the many requirements from downstream partners, and auditors and “regulators”; There is need to share responsibility like costs.
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MURAKOZE
Thank you
©
ITRI Tin Supply Chain Initiative (iTSCi): contributing to minerals traceability and due
diligence in Central Africa
Andrew Cooper, Materials Stewardship Manager, ITRI
5/8/2013
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©
iTSCi Objectives
Ensure continued access to central African markets
Provide information for end user audits (CFS of EICC/GeSI)
Allow companies to comply with US law (SEC)
Traceability from mine to smelter meeting international requirements (OECD,UN)
©
Elements of the iTSCi scheme
Chain of custody data
– Document collection
– Tagging system
– Data management
Risk assessment and recommendations
– On the ground information
– Community involvement
– Information from other sources such as EITI
Independent verification
– On chain of custody
– On risk assessment and mitigation
– Link with Conflict Free Smelter audit of end users
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©
Regional importance
Economic growth
Mining can support regional growth and development
Trading
Backbone for trading other goods and services
Livelihoods
400,000 miners with 2 million dependents
©
What are the challenges?
Informal mining sector
Weak traceability and transparency
Strict end user requirements
US ‘Conflict minerals’ Law
Capacity building
Complex social and political
environments
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©
Progress
>200 mine sites covered in Katanga
>500 mine sites covered in Rwanda
22,900 tonnes recorded mine
production
New start up in South Kivu
(CFTI)
New start up in Maniema (56
sites)
109 member companies in 20
countries
©
Background: Key Dates
• Q4 2008 - UN report recommending due diligence
• Q1 2009 - ITRI action plan and working group for DRC formed
• Q4 2009 - UN report is followed by company withdrawals
• Q2 2010 - iTSCi phase 2 traceability pilot in South Kivu begins
• Q3 2010 - US conflict minerals law (July) DRC mining suspension (Sept)
• Q4 2010 - OECD Guidance published, supported by UN report
• Q1 2011 - iTSCi in Rwanda (Jan 2011) then Katanga, DRC (March 2011)
• Q2 2011 - EICC/GeSI deadline for traceable purchases from Africa
• Q4 2012 – ITSCi in South Kivu (Oct 2012) Then Maniema (Dec 2012)
• Q3 2012 - SEC rules published
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©
A responsible upstream supply chain
iTSCi Programme key reference is the OECD Annex II:
• No! serious HR abuses by any actor
• No! Direct or indirect support to non-state armed groups
• Managed formal security forces
• Managed bribery and fraud
• Encouraging transparency of payments
iTSCi is not only “bag’n’tag”
iTSCi is:
• Practical application of OECD guidance
• On the ground, at local level
• Through multi-partners, with joint responsibilities
©
iTSCi and OECD upstream due
diligence
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©
iTSCi Membership Programme
Upstream
• Co-operatives & Exporters
• Traders
• Processors/Smelters
Downstream
• Electronics manufacturers
• Requiring information on their upstream supply chain
Structured management
• Governance committee
• Advisory panel
• Programme operators
• Independent evaluator and auditor
• Ombudsman and secretariat
©
Selecting conflict-free mines
BASELINE REPORTS: mine location, owners, operators, production, civil society, trade routes, taxes and security
OTHER INFORMATION: Government validation reports, UN, civil society et c. Approved to RECEIVE TAGS
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©
Recording the mineral trade
• Date
• Time
• Mine name
• Mine location
• Tag number
• Miner / cooperative
• Weight
• Price
• Transport route
• Transport method
• Security
• Staff present
• Date
• Time
• Processor name
• Mine tag n˚
• Processor tag n˚
• Weight in
• Weight out
• Price
• Transport route
• Transport method
• Security
• Staff present
• Date
• Time
• Exporter name
• Processor tag n˚
• Supplier
• Weight in
• Weight out
• Export n˚
• Price
• Transport route
• Transport method
• Security
• Staff present
MINE PROCESSOR EXPORTER
©
On the ground activities & data availability
Data availability and data quality is closely linked with:
• Capacity building & training
• Planning
• Communication
• Monitoring
• Cooperation from all stakeholders
Continual improvements in the above will minimise:
• Missing data
• Data transfer delays
• Data inaccuracies
• Analysis disruptions
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©
Online Asset tracking database
©
Data analysis
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©
Enhanced data capture
Pilot study underway to enhance data collection using handheld PDA’s.
• Real time data transfer using existing mobile networks.
• Improved data quality
• Straight forward and easy to use
• Custom built mobile software application
• Field trials running from April 2013 to July 2013 in Rwanda
©
PDA Pilot Rwanda
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©
PDA Pilot Rwanda
©
PDA Pilot Rwanda
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©
PDA Pilot Rwanda
©
PDA Pilot Rwanda (training workshop)
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©
PDA Pilot Rwanda
©
Monitoring and risk assessment
INCIDENT REPORTS: Reports from field staff, or any other source. Record of plan and actions until closed/resolved.
PROJECT COMMITTES: local stakeholders, or project Governance committee, to determine, agree and implement actions
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©
Independent auditing
COMPANY AUDITS: Pre-audit on application for iTSCi membership. Regular audit visit and recommendations every 6 months.
GOVERNANCE ASSESSMENTS: 6 month visits to evaluate general implementation and make recommendations
©
Why the system works
Simple Visible
Designed to fit in with existing
practices
Sophisticated & secure data
management
Independent risk assessment &
auditing
Widespread acceptance
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©
THANK YOU
Further information can be found on the ITRI Sustainability webpages by visiting
www.itri.co.uk
Or by contacting the staff involved:
andrew.cooper@itri.co.uk
kay.nimmo@itri.co.uk
Update CTC Project (Certified Trading Chains)
Hongkong, 08 May 2013 | Naeher, U. Barume, B, Schuette, P., BGR
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BGR Support to Mineral Certification in the GLR
Rwanda
CTC mineral certification
pilot project
2008-2011
DRC Rwanda Burundi
AFP
RCM
DR Congo
BGR module:
National certification system
for the 3T minerals and gold
2009-2013 (phase 1)
ICGLR
BGR module:
Support to the Regional
Certification System
2011-2015
Developments 2008-2013
1. CTC Pilot Project in Rwanda (2008-2010)
- Implementation in 5 Mines, 3 certified as of 2011;
2. Development of Certification System in DRC (2009-2013):
- Two Manuals produced (3T & Au), included in DRC Legislation since June 2011 per
Ministerial Decree;
3. Implementation in Pilot sites:
- First Baseline Audit completed in September 2011, two more in February 2012
4. Institutional Capacity Building:
- ongoing; Seminars on certification, traceability & legislation, Mines Safety
5. Stakeholder Dialogue:
- Harmonization WS in Kinshasa, Cooperation with EITI,
Certification - DR Congo
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The CTC Standards for Mine Sites traceability,
transparency
labor &
working
conditions
security community
development environment
mineral origin
fiscal obligations,
revenue
transparency
corruption
salary
child labor
workers
organization
protective &
production
means
health &
safety
training
risk assessment
capacity dialogue
local business
integrated
support
free, prior
informed
consent
gender
impact
waste disposal
rehabilitation
5 p
rincip
les
21 s
tandard
s
level descriptors
(compliance levels)
0 – 4 for each
standard
65% for ASM.
75% for ISM.
EITI
Legal Title
Pilot Mines (as of 04.2013)
Lulingu
Luntukulu
Bibatama
Kalimbi
Mayi Baridi
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3rd Party Auditor/ Audit Team
Mine Owners/ Cooperatives/ FEC
2 observers from COCERTI (Kinshasa)
1-2 observers Civil Society 2 observers BGR
1 ou 2 observers from MONUSCO, CAMI)
2 SAESSCAM
1 ou 2 observers from Provincial Mining Division
CTC Audit Teams, DRC
Important: Multistakeholder approach, credibility, access to information, plausibility checks of available information (whistle-blowing ICGLR-GIZ)
CTC Audits in DRC
Location Baseline Compliance
Nyabibwe, S-Kivu September 2011 February 2013
Mayi Baridi, Katanga February 2012 January 2013
Bibatama MHI, N-Kivu February 2012 Planned for November
2012, postponed due to
M23 and insecurity in N-
Kivu
Lulingu, S-Kivu Octobre 2012 ?
Luntukulu, S-Kivu Octobre 2012 ?
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Next Steps:
Location Baseline Compliance
Bibatama MHI, N-Kivu February 2012 Q3 2013
Lulingu, S-Kivu October 2012 Q3 2013
Luntukulu, S-Kivu October 2012 Q3 2013
Audits in already selected sites in South and North Kivu, plus sites in
Maniema and Katanga;
Audits to be extended to Au producing sites in P.Orientale, Maniema,
N.Kivu, S.Kivu & Katanga
Training and accreditation of Auditors, capacity building of COCERTI.
ICGLR and CEEC
Next Steps:
2nd Project Phase (07.2013 – 12.2016):
Broadening of CTC implementation to cover 80% of production based on
Pareto Analysis, scaling up;
Widening the scope to other minerals (Cu, Co, Dia, Pb, Zn…..)?;
Adressing issues beyond conflict, like CSR, Gender, Environment,
Children);
Examining and using synergies with other initiatives where possible like
SFH, PAC, IDAK/GIZ, DDI
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Challenges:
Security Situation: Dynamic in GLR;
Infrastructure and access;
Legal situation, title issues, formalisation;
Securisation of financing of CTC audits, sustainability;
Communication and dissemination;
Harmonisation of main schemes and initiatives (checklist, audits) in the
region;
Lessons learned:
Donor coordination a must to avoid duplication and share resources;
Political will has to be there;
Ownership and Partner involvement a must;
Mulitstakeholderapproach including CS, Ind and Govt;
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Mineral / Metal Supply Chain Initiatives
Thank You
5/8/2013
61
121
Conflict Free Minerals
Supply Chain Workshop XI
Workshop
Sponsors:
PAGE 122
Compliance and Reporting Tools for Smelters and Downstream Companies
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62
Conflict Free Sourcing Initiative (CFSI)
Program Update [Workshop 11, Hong Kong]
Bob Leet
Intel, EICC, CFSI Lead
John Plyler
Blackberry, EICC & GeSI, CFSI Workgroup
08 May 2013
123
Agenda
• Conflict-Free Smelter Program (CFS)
• Company Assurance
• Due Diligence Practices
• Summary
124
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125
In-Region Programs
Conflict-Free Smelter Program (CFS)
Company Assurance
Finished
Product
MINE SMELTER/REFINERY OEMS
CFSI Conflict-Free Sourcing Approach
Conflict-Free Smelter (CFS) Program
The CFSI has spearheaded the development of a multi-stakeholder assessment process to determine if smelters/refiners are sourcing conflict-free minerals.
• Why: Provide a mechanism that enables and encourages responsible sourcing of tantalum, tin, gold, tungsten
• Schedule: Addressing each metal separately, but concurrently
– Tantalum, tin and gold smelter/refiner assessments are underway; tungsten smelter assessments are expected to begin in 2013.
• Results: A list of smelters/refiners who are compliant with the CFS assessment protocol is posted on the CFS website.
– http://www.conflictfreesmelter.org
** Companies make their own sourcing decisions. **
126
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64
Upstream
Smelters /
Refiners
Downstream
Conflict-Free Smelter
(CFS) Program
Raw Materials
Finished Products
Supply Chain Focal Point –
Smelters/Refiners
127
Why Here?
Conversion of distinguishable starting material
into an indistinguishable product
Small Numbers – tantalum, tin, tungsten and
gold smelter/refiners total less than 500
companies globally
CFS Audit Focus
128
Company Mass Balance
- Includes all inventory
- Includes all facilities
Ore / Concentrate
Recycled / Scrap
Toll Customer
Finished Products
Toll Supplier
Conflict
Free
Policy
Intermediates
Unfinished Products
Company Program Validation
- Conflict Free Policy
- Conflict Free Sourcing Systems
Sourcing Processes Validation
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Audit Protocol Improvements
• 3Ts harmonized protocol released 22 Dec 2012, effective 28 Feb 2013 – Improved Level 3 Country requirements
– Separation of Audit Procedure and Protocol content
– Improvements from stakeholders
– Translation to several key smelter languages
• Further improvement underway (May 2013 release) – Addressing further tin industry concerns (definition, ASM,
secondary materials, slags)
– Improving standardization, readability and clarity
– Recognition of U.S. SEC Rule grandfathering allowances
129
CFS Online Program Indicators
130
http://www.conflictfreesmelter.org/CFSindicators.htm
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CFS Program Indicators Changing
• Plan: – Indicator reduction:
1. Number of smelter/refiner companies currently active in the CFS process (active = signed agreements, audit on track)
2. Number of companies with compliant smelters/refiners
– Qualitative program status is provided to stakeholders on a monthly basis (company names not included)
• Reasoning: – Previous indicators allow tracking in and out of corrective
action status when Compliant and Active lists compared
– Previous indicators provide no pre-audit details on specific company and thus no means for smelter engagement
131
Audit Program Improvements
• Further work being undertaken to ensure CFS
Program compliance with ISO Standards
– ISO 19011 and ISO/IEC 17021
• Auditor accreditation program being developed
– Will allow other audit firms to become qualified
– Will allow smelters/refiners to become educated to
content auditors are trained on
132
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133
In-Region Programs
Conflict-Free Smelter Program (CFS)
Company Assurance
Finished
Product
MINE SMELTER/REFINERY OEMS
CFSI Conflict-Free Sourcing Approach
Company Assurance
Development, integration and maintenance of tools
and processes which support a down-
stream company’s management
system and risk assessment activities: – Policy language included in the EICC Code of
Conduct (http://www.eicc.info/eicc_code.shtml )
– Created; maintaining a tool to collect information
about a supplier’s due diligence processes and
sourcing: Conflict Minerals Reporting Template
– Establishing resources and processes to support
data collection and analysis
134
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Conflict Minerals Reporting Template Flow
135
Smelter Smelter Smelters
Sub-
Suppliers Sub-
Suppliers Sub-
Suppliers
Template
User Direct
Suppliers Direct
Suppliers Direct
Suppliers
1. Sends request to direct suppliers
2. Sends request to sub-suppliers
3. Cascades through supply chain until smelters identified. Sub-suppliers return template to suppliers. Direct
Suppliers Direct
Suppliers Direct
Suppliers
Original
User
Customer
4. Direct suppliers return aggregated roll up template
5. User returns final aggregated roll up template
Company Assurance Program Updates
• Conflict Minerals Reporting Template & Dashboard – Revision 2.02 released March 2013
– MRPRO Dashboard (free) improved to accept all 2.xx versions as well us upgrade Rev.1 templates (available here)
– Supporting Solution Providers creating database versions
– Reporting template and dashboard tool available at http://www.conflictfreesmelter.org
– Considering a quarterly update schedule; primary purpose is revision of the Standard Smelter List; next major release contingent on IPC Standard
• Online training for Extractives WG members in process
136
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69
Release 2.02 Noteworthy
Improvements
• Addition of Italian translation (ninth language in
addition to (English, Mandarin, Japanese,
Korean, German, Spanish, Portuguese, French)
• Simplification of “terms of use” language
• Additions / edits to the “Standard Smelter List”
• Addition of “Smelter ID”
• Added more rows for reporting smelters (2500)
137
IPC1755 Standard
• EICC and GeSI collaborating with the IPC
(www.ipc.org, “Association Connecting
Electronics Industries”) with the objective to:
– Develop a standard for exchange of data related to
conflict minerals used in manufactured products to
facilitate efficient data exchange across companies,
supply chain levels, and industries
• Not an actual data collection tool – but a set of due diligence
information requirements and “instructions” to allow different
tools to communicate
• IPC facilitating an open ANSI standard process
138
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70
IPC Progress and Next Steps
• Work began in November 2012 and continues:
– Committee last met on Feb 21 to resolve comments
received on the Final draft for Industry Review; post
meeting briefings held
– Revising schema; text according to committee decisions
– Circulate Proposed Standard for Ballot in July - August
– Publish final standard in Fall 2013
• Open to engagement by Individual Companies
and Trade organizations
– Contact Fern Abrams: FernAbrams@ipc.org
139
CFSI Due Diligence Practices
• Due Diligences Practices WG kicked off in 2013
• Developing a white paper that provides practical
steps for downstream companies to:
– Interpret the OECD DDG
– Link to SEC reporting obligations (how to..)
– Incorporate use of CFSI tools and programs
• Socializing white paper across industries
(beyond CFSI) by June 2013
• Engaging with auditors by July 2013
140
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71
Summary
• The CFS Program is a voluntary initiative in which an
independent third party audits smelter and refiner
procurement and tolling activities and determines if the
smelter or refiner demonstrates that all the minerals they
processed originated from conflict-free sources.
• Company assurance activities are focused on improving
company capabilities to validate responsible sourcing of
materials by creating common tools and processes
• More details about the CFS Program or Reporting
Template:
– CFS Website: http://www.conflictfreesmelter.org
141
142
Conflict Free Minerals
Supply Chain Workshop XI
Workshop
Sponsors:
5/8/2013
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PAGE 143
Conflict Free Smelter Program: Smelter Perspectives Raveentiran Krishnan, Malaysia Smelting Corporation
Jean-Paul Meutcheho, Global Advanced Metals
Chen Wu, Ningxia
Xiang Yun Zheng, F&X
JOURNEY TO
CFS STATUS.
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73
CFS – FROM THE
PERSPECTIVE OF A
CUSTOM SMELTER. EICC-GeSI landed on our shores early 2010
Engaged EICC/ITRI during the development of tin protocol
Mining ban in DRC in Sept 2010.
iTSCi program stalled
Mining ban lifted in early 2011 and there was rush to move untagged material before 1st April.
1th April 2011- a small step for iTSCi but a giant blow for rebels/groups benefitting from tin mineral trade
CFS audit preparation
CFS audit – very exhaustive. Need to harmonize objective with Frank Dodd Act/SEC rules, pragmatic and to sight bigger picture, based on best effort
CFS compliant status – endorsement by EICC
What next?? Don’t miss the keynote address tomorrow!
ON THE
GROUND
ASSESSMEN
T
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74
WEIGHING
CASSITERITE
RECEIVED
FROM
NEGOCIANT
COLLECTING TAGS
FOR ONWARD
SHIPMENT TO SMELTER
5/8/2013
75
RESTING PLACE FOR
TAGS RECEIVED AT THE
SMELTER
AUDIT IN PROGRESS –
SIFTING THRU PILES OF
DOCUMENTS
ISO
9001
(199
4)
5/8/2013
76
THANKYOU
SEE YOU AGAIN
TOMORROW
By F&X Electro-Materials Limited
5/8/2013
77
F&X Electro-Materials Limited was
established in 1999,a private owned
small tantalum-niobium smelter
producing from minerals to K-salt and
niobium oxide, tantalum powder,
sintered bar and wire. It has been
supplying tantalum powder and bar,
wire and Nb2O5 to our customers,
such as capacitor-makers and alloy-
producers both domestically and
world-wide for a while.
As you might know that F&X has been one of “CFS” since middle of 2011. I would like to have a brief review of history.
F&X first participated in the “CFS” program by joining the “Conflict Minerals Audit” program organized by EICC/GeSi in early 2010.
In about 2009, we started to learn from our customers, newspapers, other media, a lot of reports on conflict materials from the DRC. Reports made by UN Experts, OECD , NGOs and others, made us realize we had to start to pay attention to the conflict minerals issue.
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In early 2010, EICC/GeSi
introduced to us Conflict Minerals
Audit Program then we arranged
EICC/GeSi visits to plant and met
with them. We had our team set
up to focus on minerals
purchasing. We set up time scales
to complete certain targets set up
in schedule by EICC/GeSi.
We did accomplish in short time the
following:
1. Company purchasing group set up.
2. Our personnel training course.
3. Issued company policy.(see attached
earliest copy of company policy.)
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79
4. Sent letter to our suppliers,(see attached
copy)and communicating with major suppliers on
minerals in regards to conflict minerals issue
Mainly, about followings:
4.1 Stopping purchase from DRC completely.
4.2 Modified purchase contracts terms in line
with our policy, requesting “Certificate of Origin
of mine and country”,” No Certificates ,No deal”.
4.3 Sent letters to minerals suppliers, traders,
requesting documents of Certificates of Origin for
materials bought in 2009.
5. Visiting suppliers, mines in the world particularly, I went
myself or with my people , a few times to 8 countries in
Africa and South America from 2010 through 2013. (see
attached some pictures in mine visit.)
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6. F&X Participated “SOLUTION FOR HOPE” launched by,
Motorola Solutions, AVX, both EICC and GeSI members to work
in DRC, 2011.
Working together with ITRI/ITSCI, we successfully sponsored
“Solution for Hope” and supported “Bag and Tag”.
7. F&X was audited by a third-
party auditor organized by EICC/
GeSi and passed the audit for
the first time, becoming one of
the compliant“CFS” tantalum
smelters.(see attached picture
of Certificate of “CFS”) in year
2011,2012,2013.
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8.We have modified our company policy
timely to be in line with UN,OECD due
diligence guidance, latest one as shown
here.(see attached latest copy of company
policy)
We will continue to work closely with
EICC/GeSi and TIC on the conflict minerals
issue, try our best to maintain our “CFS”
status, and try to be a contributive,
responsible, member of tantalum industry
and reliable supplier to our customers.
THANKS!
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Agenda, Day 2: Academy Ballroom
163
8:00-
9:00 Registration, Coffee, Sponsor Open House (foyer outside Academy)
9:15-9:45 Keynote Address
9:45-10:30 Gold Update and Conflict Free Gold Standard
10:30-11:15 Other Activities to Support Responsible Sourcing
11:15-11:30 Introduction to Breakout Sessions
11:30-13:00 Lunch, sponsored by F&X (foyer outside Picasso)
13:00-16:00
Concurrent Breakout Sessions: In-region, Smelter, and Downstream
Systems and Tools 16:00-16:30 Break
16:30-17:15 Breakout Session Themes and Report-back
17:15-
17:30 Summary and Concluding Remarks, and Adjourn
164
would like to thank our Workshop XI Sponsors:
and