Illegal mining for minerals weakens economies, shatters societies, and devastates the environment. To plunder conflict minerals, irregular armed groups violently seize land and natural resources through campaigns of shocking violence involving rape, murder, and enslavement.
However, these minerals are essential components in the electronic products we use daily, so our collective responsibility is to ensure they are obtained from legal sources. And as electronics manufacturers directly profit from minerals, the industry must be especially vigilant and ensure the supply chain is free of conflict minerals.
What are conflict minerals?
Conflict minerals are natural resources that have been mined from war-torn areas where human rights are violated. They are often sold to finance armed conflict against governments. Conflict minerals have been illegally extracted by unethical labour practices, including child labour, forced labour, and dangerous working conditions. The four most common conflict minerals in electronics manufacturing are tantalum, tin, tungsten, and gold.
How do conflict minerals impact global supply chains?
Conflict minerals pose serious ethical issues: companies using these minerals in their products are unwittingly supporting corrupt regimes, prolonging wars, and contributing to human rights abuses and poverty. They also have a significant impact on global supply chains. By entering the chain of production and consumption, they drive up costs, disrupt supply reliability, and threaten the security of the companies involved.
However, global supply chains are often very complex due to the many layers of suppliers and intermediaries, which makes it difficult for companies to trace the origin of minerals and ensure they are not supporting conflict. Conflict minerals are often smuggled across borders, which makes it hard to know where they were originally mined. The suppliers and intermediaries often do not provide detailed information about the origin of the minerals they sell, making it difficult to verify where they came from.
Many companies producing electronic products have limited resources to devote to tracing the origins of minerals. To make matters worse, globally, there are different regulations for mineral sourcing and traceability, and universal compliance is a complex process. There is also a lack of standardisation for mineral traceability, making it tough to understand the correct process to follow.
Why is it important for electronics manufacturers to create a supply chain free of conflict minerals?
While it is challenging to discover where minerals originate, any company that uses minerals as part of its production has a host of obligations to ensure they do not use minerals from conflict areas.
- They have moral obligations as the sale of conflict minerals can fund armed groups that commit human rights abuses, enslave workers, and destabilise countries.
- They have obligations to their customers and the end consumer, who do not want to be associated with violence or human rights abuses.
- They have reputational obligations to their customers and shareholders.
- They have legal and regulatory compliance obligations, as many countries have laws and regulations prohibiting the import and use of conflict minerals.
EMS (electronic manufacturing services) providers have an ethical responsibility to ensure their supply chains are free from conflict minerals. Moreover, rigorous due diligence ensures innovation and competitiveness, meaning these companies are attractive to investors, employees, and consumers.
What legislation addresses conflict minerals?
In the US, Congress passed the Dodd-Frank Act in 2010, which requires companies to disclose their use of tin, tungsten, tantalum, and gold originating from the Democratic Republic of Congo or a neighbour country. It intends to reduce the profits that armed groups in the region can make from selling these minerals.
The EU has adopted several measures to prevent the use of conflict minerals. For example, the EU Conflict Minerals Regulation became law in January 2021 and requires companies to conduct due diligence on their supply chains to identify and address any potential links to conflict minerals.
The EU Transparency Regulation was adopted in 2019 and entered into force in 2020. The regulation requires large companies to disclose due diligence information on supply chains, including any risks related to human rights and the environment. Also, the EU Responsible Mineral Sourcing Initiative of 2017 promotes the responsible sourcing of minerals from conflict-affected and high-risk areas. The initiative provides guidance and support to companies on how to carry out due diligence on their supply chains.
In Asia, several countries have implemented their own initiatives to tackle the issue of conflict minerals. Japan included provisions on the due diligence of conflict minerals in its Act on the Prevention of Transfer of Criminally Derived Proceeds. The South Korean Ministry of Trade, Industry and Energy issued guidelines on responsible mineral sourcing. And the Chinese Ministry of Industry and Information Technology also issued guidelines on responsible mineral sourcing.
Although not legally binding, the Organisation for Economic Co-operation and Development (OECD) developed its Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, which provides a framework to source minerals responsibly. It is an excellent guide that companies can use across the globe to ensure they carry out rigorous due diligence.
What does the OECD's due diligence for conflict-free supply chains involve?
The OECD's due diligence process helps support the extraction of minerals that aids countries in sustainably developing their economies. The organisation claims that there are:
“...a number of steps to put in place strong systems of control over the supply chain, pass vital information to buyers and to the governments and regional institutions that regulate the mineral trade, assess conflict conditions at mine sites, transportation routes and points where minerals are traded in order to source from areas and suppliers that do not contribute to conflict, and report on due diligence.”
Step 1 involves companies reflecting before making any sourcing decisions.
One person in the company should be in charge of conducting due diligence. And all customers, suppliers, and contractors should be informed of the process, which involves analysing either the "chain of custody" or "chain of traceability". The former is the relevant documentation detailing the owners of the minerals as they move along the supply chain. The latter involves physically tracking the minerals as they move through the supply chain.
Step 2 involves understanding which areas and suppliers are legitimate.
Companies should carry out a risk assessment, estimating the risk of specific conflict areas and risks relating to a fraudulent chain of custody or traceability. A risk assessment can be undertaken by analysing documentation relating to either chain as well as by using a team on the ground.
Risks could include:
- Being linked to a party involved with conflict minerals
- Providing direct or indirect support to non-state armed groups
- Being involved in a fraudulent chain of custody
Exporters from the Great Lakes Region of Africa must undergo a yearly audit by an accredited party—as required by the ICGLR Regional Certification Mechanism (RCM). These audits ensure the extraction meets standards and evaluates the companies involved in the supply chain to ensure responsible mineral production.
Therefore, EMS providers that buy minerals from companies in this region should ensure they are fully compliant.
Step 3 involves evaluating the risks you have identified.
You should not engage with suppliers if you identify a reasonable risk that they are related to parties that commit serious offences or provide direct or indirect support to irregular armed groups.
If you have assessed the risks and are sourcing minerals from suppliers, you should continuously monitor the chain of custody and traceability. For example, it is good practice to check that the minerals supplied match the quality and weight stated in the chain of custody or traceability. Moreover, each supplier must provide a declaration of origin and sale when they sell minerals to the customer.
Step 4 involves participating in audits (only for smelters and refiners).
EMS providers do not need to be audited to ensure they are not using conflict minerals; however, smelters and refiners of minerals should be. iTSCi audits should be carried out to ensure smelters comply with the rules. And both smelters and refiners should be audited by the Audits for the Conflict Free Smelter Programme.
As part of their due diligence, EMS providers can ensure that the smelters and refiners they are involved with have conducted these audits.
Step 5 involves writing a due diligence report.
Documenting your process and recording it in an annual report is the best way to demonstrate to customers, employees, and investors that you have a robust method to ensure there are no conflict minerals in your supply chain.
Conclusion
Responsible, legal, sustainable extraction of minerals helps strengthen economies and stabilise countries. Conversely, illegally obtaining conflict minerals involves large-scale human rights abuses. The electronics manufacturing industry must conduct robust due diligence to ensure the supply chain remains free of conflict minerals. 
