BSR 2011 Preview: A Solution to the Conflict Minerals Crisis?

BSR 2011 Preview: A Solution to the Conflict Minerals Crisis?

Conflict minerals -- which have been a looming new regulatory challenge for companies for the last two years -- are about to reach critical mass.

As soon as January 1, 2012, thousands of companies in industries ranging from mining to medicine to food to electronics will be required to know, down to the mine of origin, if their products or supply chains contain tin, tantalum, tungsten or gold that is sourced from the Democratic Republic of Congo, which is embroiled in an ongoing civil war.

The implementation of the new law will likely have a big impact on companies that are still struggling with getting the level of transparency into their supply chains to comply with the law, so a panel at the upcoming BSR conference -- the third panel on the topic in the last three BSR conferences -- aims to help companies take stock of their risk, and learn how to proceed.

The panel, Conflict Minerals: Cleaning the Supply Chain AND Solving the Problem?, will feature presenters from Intel, Ford, and TE Connectivity, alongside BSR's resident experts on conflict minerals, to take stock of what the Dodd-Frank regulations require, and share best practices on conflict minerals and supply chain transparency.

To get a sneak peek at what's on the agenda for the panel, I spoke with Robert Leet, the manager for Intel's Supply Chain Code of Conduct program and the co-chair of an industry group working on conflict minerals -- and one of the panelists for the session.

Matthew Wheeland: Will you give me a quick overview of what the panel's about and what you're going to present on?

robert leetRobert Leet: My presentation will start off with an overview of the issue for those in the audience who may not be that familiar with conflict minerals and what it means, as well as the Dodd-Frank Act and the regulatory actions that are transpiring around conflict minerals.

Then, we'll go into a discussion around how the supply chain of electronics has been working to identify its supply within the smelters that are used for the four metals that go into our supply chain, as well as what we've been trying to do in terms of ensuring that conflict metals aren't in our products.

MW: This is and area that the IT industry has been working on for some time and that a lot of other industries are just now getting up to speed. Tell me a little about what's making this more of a front and center issue right now for industries, both including IT but also beyond.

RL: The electronics industry has been working on us for a while. I think what you're seeing is a transitional point for other industries, where there's a regulatory action occurring that's making them aware of obligations they and their customers may have. So you're beginning to see a lot more focus on this. We run into entities all the time who are fairly unaware of the reporting obligations that have been laid out in the Dodd-Frank Act.

MW: What has your experience been in doing this? What kind of challenges have you had or what have you learned so far, in your work, looking in your supply chain for these specific materials?

RL: Mostly, that it's not easy. You've got four metals -- tin, tantalum, tungsten and gold -- and you have to determine where are those products that are in your own manufacturing, or in your own product that you sell, depending on where you are in the supply chain.

On top of that, there are multiple tiers of supply that takes the minerals that make each of those metals over to the type of material that you're using in your factory or that you sell in your product. Those multiple layers are not simple to navigate, nor are they very transparent. It's not an easy activity to understand who are the smelters or who are the mines that contribute to my product.

MW: That's true of almost any supply chain for almost any material, too. Are there similarities across other industries that can help them learn from the IT industry's experience in this? Or from Intel's specific experience with this?

RL: Yeah, absolutely. Because of the depth of the supply chain, you can, if you're a manufacturer of something very specific, be very near to the smelter, who's supplying the metal. But if you're the creator of a multi-component device -- and it doesn't matter if that multi-component device is an airplane, an automobile or a laptop PC -- they all have many different placements where they could potentially have one of these metals. It is a cascading network of supply, underneath, that provides those materials that go into those final products.

So there is a level of difficulty that can be learned how to overcome some of that difficulty. But on the promising side, the metals actually come from a fairly narrow supply of smelters in the supply chain. You look at the supply chains, it becomes something like an hourglass, where the smelters are kind of in the center of the supply chain, so it is important to understand that that's a key and critical point in supply, where we actually have a chance of making a little better understanding of where your materials come from.

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Not wanting to steal too much thunder from the panel at the conference, I'll end the Q&A there. But to read more about BSR's work on conflict minerals -- which will be front-and-center at the event in November -- see Amaya Gorostiaga's article on Dodd-Frank here. And for more on the issues surrounding conflict minerals, see Tim Mohin's article on the "minerals curse" here, and the results of a webcast we conducted earlier this year on how and why to strip conflict minerals from your supply chain.

And for full details and to register for the BSR conference, visit BSR.org.

Image CC licensed by Flickr user Julien Harneis.