Publish on: 2011-04-22

The Global e-Sustainability Initiative (GeSI) and the Electronic Industry Citizenship Coalition® (EICC®) announce an update to the Conflict-Free Smelter (CFS) protocol relating to smelter due diligence requirements. The CFS is a voluntary program that aims to enable responsible mineral sourcing through evaluating the source and conflict-free status of minerals that are processed by smelters.

Background

In September 2010, GeSI and the EICC communicated April 1, 2011 as the date after which smelters seeking to be assessed “CFS compliant” must show documentation from a credible in-region (Democratic Republic of Congo and surrounding countries) sourcing program verifying their conflict-free sources. The reasons for establishing this date were twofold. First, the date was set to enable the electronics supply chain to be conflict-free by January 1, 2012, taking into account average nine month timeline from mineral extraction through final processing. Second, this date was selected in order to encourage the development of reliable and credible traceability and due diligence systems in the Democratic Republic of Congo (“DRC”) and adjoining countries. 
Several activities have taken place since the April 1, 2011 date was originally announced. The DRC governmental ban on mining , in place from September 2010 to March 2011, halted development of the in-region sourcing pilot, the ITRI Tin Supply Chain initiative (“iTSCi”) which had started mid-2010. In December of 2010, the Organisation for Economic Co-operation and Development (“OECD”) published their due diligence guidance (“Guidance”). The Guidance provide criteria to assess the status of minerals from conflict areas and the requirements for proper due diligence throughout the mineral supply chain.

Also in December 2010, the UN Security Council took forward due diligence guidelines for importers, processors and consumers of Congolese minerals and decided to consider these when determining whether to designate an entity as supporting illegal armed groups in the DRC through illicit trade of natural resources. During the same period, the U.S. Securities and Exchange Commission released a proposed rule to implement the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 1502 (“Dodd-Frank”) provisions on conflict minerals.

CFS Program Enhancement

GeSI and the EICC are updating the CFS protocol to incorporate reference to the OECD Guidance. By doing so, GeSI and the EICC are providing a mechanism for legitimate minerals trade originating in the DRC and adjoining countries, while aiming to assure conflict-free materials in the electronics supply chain. Those smelters who source from the region and have implemented due-diligence (either independently or via an in-region scheme such as iTSCi), and can demonstrate conformance to the OECD Guidance, will be eligible, post April 1, 2011, to be evaluated by the CFS program. Smelters meeting these criteria will be eligible to undergo a CFS assessment to determine their conflict-free status and, if compliant, will be included in the GeSI - EICC Conflict-Free Smelter List.

To summarize: to be eligible for the CFS program, smelters who source minerals from the DRC and adjoining countries must:

  • Implement the OECD Guidance for these minerals,
  • Demonstrate conformance to the OECD Guidance, including a mandatory independent third party review and verification of conformance, and
  • Assure that smelters and their suppliers provide 100 percent supporting documentation regarding the mine of origin and subsequent trading partners to the smelter through the establishment of a chain of custody and/ or traceability system

Once their due diligence process is validated by an independent third party, a smelter who sources minerals from this region would be eligible for the CFS program. GeSI and the EICC will continue to develop guidance to assist smelters in implementing their due diligence programs that support in-region sourcing. Additionally, because of the resource and time commitment required to implement the OECD Guidance, GeSI and the EICC recommend that impacted smelters start immediately to develop their due diligence processes and procedures to speed their eligibility for the CFS program.

Lahra Liberti, in charge of the OECD project on responsible supply chains of minerals has welcomed the amendments to the CFS program, noting that “The required implementation of the OECD guidance as of April 1st will enable flexibility while creating the right incentives for smelters and upstream actors on the ground to take immediate action in the DRC and its neighbouring countries to perform due diligence according to internationally recognized standards. This enhancement will guarantee market access for clean minerals from the Great Lakes Region and allow the countries in the region, with the support of the international community, to further advance on-going traceability and certification efforts”.

GeSI and the EICC continue to collaborate with stakeholders to develop programs that support economic stability in the DRC and adjoining countries by remaining focused on the removal of conflict minerals from the electronics supply chain. For example, the EICC and GeSI are working with many international and in-region stakeholders to develop reliable and sustainable certification systems for conflict-free minerals within the challenging timeframe imposed by Dodd-Frank.

Assheton Stewart Carter, senior vice president at international development nongovernmental organization (“NGO”) Pact states that “Our global mission made practical in the DRC and surrounding countries is to enable the individuals, communities and governments agencies involved in developing their mineral resources to do so in a way that unlocks the potential for the countries’ economy in a peaceful and safe environment. We support all public and private organizations in the international mineral value chain, including members of the EICC and GESI that use their influence and business relationships to these ends. Solutions to end violence in the DRC associated with mining will take the combined efforts of NGOs, companies and governments; we are happy to partner with the EICC, GESI and others to find, create and implement these solutions.”

Equally as important, regional, national and international government support is urgently needed to facilitate the infrastructure, controls and security required for conflict-free minerals trade in the Great Lakes region. Examples of this needed support have recently become more evident, such as the Rwandan Ministerial Regulation on Fighting Smuggling in Mineral Trading and the new DRC mining code of conduct. In December 2010, the International Conference on the Great Lakes Region also called on companies sourcing from the Great Lakes region to comply with the OECD Guidance. Harmonization of these programs, including those on the ground, is critical to providing focus on coordinated solutions. Likewise, GeSI and the EICC continue to look to the governments of the United States, the European Union, and the DRC and adjoining countries for political, economic and diplomatic leadership in resolving this critical situation.

Download the press release.

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