I would like to share some highlights from the Conflict-Free Smelter Initiative’s (CFSI’s) workshop, which took place on September 24, 2015. As many of you know, my team and I conduct smelter audits under the CFSI. It is always a pleasure to hear from other dedicated individuals working on various aspects of the CFSI and related efforts to help end the violence in the Democratic Republic of the Congo (DRC). The conference started out strong with a presentation from Mr. Tyler Gillard of the Organization for Economic Co-Operation and Development (OECD). Mr. Gillard highlighted the importance of the OECD’s Five-Step Risk-Based Due Diligence Framework (Five-Step Framework), which is increasingly becoming central to all conflict minerals initiatives aimed at keeping conflict minerals out of supply chains. The framework includes the following steps:
1. Establish strong company management systems.
2. Identify and assess risk in the supply chain.
3. Design and implement a strategy to respond to identified risks.
4. Carry out an independent third-party audit of supply chain due diligence at identified points in the supply chain.
5. Report on supply chain due diligence.
Mr. Gillard emphasized the importance of having a good process over results. This recommendation was echoed by Ms. Carly Oboth of Global Witness, who reminded us that when risks are identified by organizations they haven’t necessarily been handed a “scarlet letter.” In fact, such a discovery can be a good thing because it shows that a company’s due diligence process works. How a company reacts and takes measures to address identified risks is equally important. Both Mr. Gillard and Ms. Oboth stressed the importance of demonstrating—not simply stating the elements of—a due diligence process and compliance with applicable standards.
Next, Mr. Jannick Saegert represented the China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters (CCCMC), a chamber of commerce with 6,000 company members, including many members of the extractive industry. Mr. Saegert provided an overview of, and update on, the CCCMC’s Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains, which was introduced in October 2014.
The CCCMC has a Memorandum of Understanding with the OECD that we hope will help align the CCCMC’s program with the OECD and other nations’ laws. The CCCMC will take a risk-based due diligence approach that springs from the OECD’s Five-Step Framework, use guidelines and protocols, and include an Independent Oversight Body. I was pleased also to hear that its scope will include all companies in the supply chain and will not have a geographic focus (i.e. it will not be limited to the DRC) as far as the source of minerals. Although the CCCMC’s guidelines are voluntary, if implemented successfully and in alignment with the OCED and CFSI, this development could help to expand conflict minerals due diligence further into one of the world’s vastest minerals supply chains (if not the largest of all).
Additional highlights from sessions I attended focused on CFSI’s Conflict-Free Smelter Program (CFSP).[1] Ms. Holly Dranginis from the Enough Project provided an encouraging update from the DRC, including:
I also learned more about the Better Sourcing Program (BSP), a soon-to-be-launched minerals supply chain due diligence assurance system that targets the mine-to-smelter segment of the supply chain. In a nutshell, the BSP is an alternative to the ITRI Tin Supply Chain Initiative (iTSCi), a “bag and tag” program that is currently the only mine-to-smelter chain of custody program operating today.
The CFSI views the BSP as a program based on sound frameworks (such as the OECD guidance). According to their Conflict-Free Sourcing Initiative (CFSI) Support Statement Regarding the Better Sourcing Program (BSP), the CFSI feels that the BSP will, “in principle, meet the requirements set out in the CFSP FSP)ict- not been validated as conflict-free ting guidelines to suppliers along with its due diligence program is sufficient toaudit protocols.” The existence of an alternative program will provide greater opportunities for artisanal small-scale miners to sell their products and earn income while allowing for healthy competition between the two programs.
Many other speakers shared progress updates from their area of expertise in the vast and multi-pronged conflict minerals arena, including those who are active in the region, provide leadership among the smelter community, work with downstream segments of the supply chain (e.g. Conflict Minerals Reporting Template users) and engage in policy and legislation (e.g. EU legislation).
The big take away from the CFSI Conference is that while legislation and existing initiatives are helping to improve the situation in the DRC, they are not silver bullets. In fact, there is no one silver bullet. So much more is needed. Coordinated and collective efforts from governments, industries, non-governmental organizations and local communities are all necessary if we are going to bring about the lasting positive change we envision.
[1]The CFSP centers on auditing smelters of tantalum, tin, tungsten and gold to ensure that they are not sourcing conflict minerals from mines that finance Armed Groups in the DRC and surrounding countries.
1. Establish strong company management systems.
2. Identify and assess risk in the supply chain.
3. Design and implement a strategy to respond to identified risks.
4. Carry out an independent third-party audit of supply chain due diligence at identified points in the supply chain.
5. Report on supply chain due diligence.
Mr. Gillard emphasized the importance of having a good process over results. This recommendation was echoed by Ms. Carly Oboth of Global Witness, who reminded us that when risks are identified by organizations they haven’t necessarily been handed a “scarlet letter.” In fact, such a discovery can be a good thing because it shows that a company’s due diligence process works. How a company reacts and takes measures to address identified risks is equally important. Both Mr. Gillard and Ms. Oboth stressed the importance of demonstrating—not simply stating the elements of—a due diligence process and compliance with applicable standards.
Next, Mr. Jannick Saegert represented the China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters (CCCMC), a chamber of commerce with 6,000 company members, including many members of the extractive industry. Mr. Saegert provided an overview of, and update on, the CCCMC’s Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains, which was introduced in October 2014.
The CCCMC has a Memorandum of Understanding with the OECD that we hope will help align the CCCMC’s program with the OECD and other nations’ laws. The CCCMC will take a risk-based due diligence approach that springs from the OECD’s Five-Step Framework, use guidelines and protocols, and include an Independent Oversight Body. I was pleased also to hear that its scope will include all companies in the supply chain and will not have a geographic focus (i.e. it will not be limited to the DRC) as far as the source of minerals. Although the CCCMC’s guidelines are voluntary, if implemented successfully and in alignment with the OCED and CFSI, this development could help to expand conflict minerals due diligence further into one of the world’s vastest minerals supply chains (if not the largest of all).
Additional highlights from sessions I attended focused on CFSI’s Conflict-Free Smelter Program (CFSP).[1] Ms. Holly Dranginis from the Enough Project provided an encouraging update from the DRC, including:
- 74 percent of miners in the region report that they are mining without armed groups. The Enough Project claims that nearly all miners were under the control of armed groups in 2010.
- 141 mines are validated conflict free.
- Minerals that have not been validated as conflict-free are sold at a discount.
- Communities feel safer than they did ten years ago.
- Additional benefits observed by the Enough Project in the region include:
- Empowered activists are seeking a regulated mining industry in the DRC.
- The miners are better organized, with miners forming cooperatives among themselves to better negotiate agreements.
- Financial literacy trainings are now provided.
- USAID invested $5 million to help formalize artisanal mining.
I also learned more about the Better Sourcing Program (BSP), a soon-to-be-launched minerals supply chain due diligence assurance system that targets the mine-to-smelter segment of the supply chain. In a nutshell, the BSP is an alternative to the ITRI Tin Supply Chain Initiative (iTSCi), a “bag and tag” program that is currently the only mine-to-smelter chain of custody program operating today.
The CFSI views the BSP as a program based on sound frameworks (such as the OECD guidance). According to their Conflict-Free Sourcing Initiative (CFSI) Support Statement Regarding the Better Sourcing Program (BSP), the CFSI feels that the BSP will, “in principle, meet the requirements set out in the CFSP FSP)ict- not been validated as conflict-free ting guidelines to suppliers along with its due diligence program is sufficient toaudit protocols.” The existence of an alternative program will provide greater opportunities for artisanal small-scale miners to sell their products and earn income while allowing for healthy competition between the two programs.
Many other speakers shared progress updates from their area of expertise in the vast and multi-pronged conflict minerals arena, including those who are active in the region, provide leadership among the smelter community, work with downstream segments of the supply chain (e.g. Conflict Minerals Reporting Template users) and engage in policy and legislation (e.g. EU legislation).
The big take away from the CFSI Conference is that while legislation and existing initiatives are helping to improve the situation in the DRC, they are not silver bullets. In fact, there is no one silver bullet. So much more is needed. Coordinated and collective efforts from governments, industries, non-governmental organizations and local communities are all necessary if we are going to bring about the lasting positive change we envision.
[1]The CFSP centers on auditing smelters of tantalum, tin, tungsten and gold to ensure that they are not sourcing conflict minerals from mines that finance Armed Groups in the DRC and surrounding countries.