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Components in conflict

Conflict minerals need to be kept an eye on; in fact, they may soon need to be reported on. Tim Fryer looks at what they are and their implications for the supply chain.

Conflict minerals are tungsten, tin, tantalum and gold. If you dug up a lump of tin in your back garden, it would still be a conflict mineral, but it would be from a responsible source (unless you were planning on funding some form of violence), and therefore a welcome addition to the supply chain.

While only a small percentage of the world's production of these minerals comes from Democratic Republic of Congo (DRC), that is the place that has attracted most (although not all) attention as it is in the eastern provinces of that country that minerals are being mined illegally and used to finance violence.

The problem was identified by two US senators who gave their name to the Dodd-Frank legislation that was aimed at curbing the excesses of Wall Street. A specific section of the Bill -- section 1502 – dealt with conflict minerals. The US Securities Exchange Commission (SEC) then put 'meat on the bones' of how conflict minerals were to be reported.

Electronics is not alone – automotive, medical, jewellery and drilling are amongst those industries which are impacted, but it is rare to find an electronics assembly that doesn't contain some or all of these minerals. In some cases, they are enabling technologies – for example, the tantalum in tantalum capacitors that are so prevalent in consumer electronics.

Companies in the US – and this will also impact on companies that supply the US – have to submit their reports by the end of May 2014. Scott Wilson, compliance and supply strategist at IHS Technology, commented: "The SEC recognises the difficulty in trying to collect this type of information. So, for the first two reporting years, it is allowing companies to report products as 'DRC conflict free indeterminate'."

Large companies can use this for two years and small companies for four, but it is no 'easy way out'. Companies will still need to have a full reporting process in place and to show due diligence in how they arrived at that determination.

Reporting is done at a corporate level, not at an individual product or part level. However, whilst US companies have to put in place a full reporting process, it also affects the non-US supply chain. Wilson said: "If you're buying from a company, you only want to know whether an individual part has conflict minerals in it – you don't care about all the rest of that company's components."

European legislation is lagging that of the US – it is most likely to be aired this year and implemented next – and is likely to take the format of a voluntary certification process. There is a train of thought that the US approach may turn out to be punitive on the people of DRC and its legal mining activities. Wilson said of the European approach: "They think it is right to look at these for specific metals, but not to isolate the DRC. Wherever these minerals are sourced, they should be sourced in a responsible manner."

Identifying where the materials used in component construction come from sounds like a potential nightmare, but the electronics engineer does have tools at hand, particularly in the form of the big component databases, such as IHS, that perform an established role in the supply chain. For all that, this is more of a social regulation than an environmental one and there are similarities to ROHS and REACH legislation in as much as any component potentially in breach of the legislation will be flagged at the point when the designer is contemplating its use.

Getting the databases up to speed with conflict mineral data is clearly going to be a big job, but there is a focal point on which the supply chain depends that makes gathering the information both possible and reliable. This is the Certified Smelter Program.

"We really look at smelters as being a control point," said Wilson. "For the Certified Smelter Program, they must have the appropriate audits in place – all kinds of details, such as bagging and tagging the ores at the mine and tracking that until it gets to the certified smelter level."

Thereafter, the rest of the industry puts its faith in these smelters. It means if the supply chain can be traced back to the smelter and if that smelter is part of the Certified Smelter Program, then the mineral – and the products in which it is consequently used – has come from a conflict free source.

Whether these legislative methods eventually help the people of DRC or other zones of conflict remains to be seen. In a similar vein, removing lead from solder arguably caused more environmental damage in terms of the sourcing of alternatives and the increased process temperatures. However, designers looking to supply the American market need to start taking this issue into account and European legislation is not too far down the road.

iTSCi getting digital
The ITRI Tin Supply Chain Initiative (iTSCi) has launched an electronic system to enhance data collection and traceability for its minerals due diligence programme. This system, which electronically replicates current paper based systems, has been tested, approved, and will now be used by Government agents responsible for data recording for the first time.

The iTSCi programme is a tried and tested minerals traceability system capable of tracking tin, tantalum and tungsten – the three Ts – production through complex multistage and multioperator supply chains that often involve several layers of mixing and reprocessing.

The Programme, which was adopted by the governments of Rwanda and the Democratic Republic of the Congo in 2011, is now operational at more than 850 mines in the region. This generates huge amounts of data, with more than 25,000 transactions being manually entered into the Programme database each week.

To increase the efficiency of data collection, iTSCi has been working with Helveta UK, a company that specialises in providing mobile supply chain management solutions, in order to achieve a practical and effective system for minerals. Following field trials, software directly relevant to the iTSCi Programme is now available for installation on mobile devices, such as the Motorola Solutions handheld PDA MC 65 used in the trials.

Handheld PDAs can be deployed easily in the field and moved between sites without the need to install bulky, expensive equipment -- generally regarded as impractical for the vast majority of sites in Rwanda and DRC. Government agents will now start to more quickly and accurately collect data at the mine site, processor or exporter with information transmitted in real-time to the Programme database using the mobile phone network, effectively allowing data collection, verification and analysis to occur on the same day.

Similar implementation developments are also planned in the DRC and other locations.

• 'Managing Conflict Minerals in non consumer applications' is a new event being held in Elstree on Tuesday 17 June 2014. The keynote speaker will be BBC journalist Kurt Barling, who will give a social and political overview of the conflicts minerals situation. Other presentations will come from: Premier Farnell, which is engaged in ensuring compliance of the components its sells; IHS, which provides component data tools and business information; and KPMG, the professional services and governance company.

For more information or to book, go to www.cognition-am.com.

Author
Tim Fryer

Related Downloads
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