Addressing Conflict Minerals Reporting with Teamcenter
Do you know or care where the tantalum in your smartphone comes from?
When asked this question or another similar one about tungsten in your golf clubs, most folks either don’t know or care to know. As I look at the news in the context of environment and social sustainability over the past few months – the definitive UN report on Climate Change, the melting of glaciers in Antarctica and renewed atrocities in certain regions of conflict in Africa, I cannot help but wonder if regulations alone will help in turning these events around.
Let’s take the US SEC regulations on conflict minerals reporting for example. This pertains to the question in the opening paragraph. Conflict Minerals are – cassiterite, columbite, tantalite, gold and wolframite that originate in the following named countries – Democratic Republic of the Congo (DRC), Angola, Burundi, Central African Republic, the Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda,and Zambia. These countries are declared as areas of “conflict” and “human forced labor” by the United Nations and hence the name. The ores and minerals are mined in conditions of forced labor (including child labor), at gunpoint, under horrible conditions, atrocities, with little to no mining tools… you get the picture. The civil conflict in Congo itself has so far resulted in 5.4 million deaths. Key metals extracted from these ores at smelters around the world are – Tin, Tantalum, Tungsten and Gold (3Ts&G). These metals find widespread use in some of the products we are aware of or use every day – smartphones, golf clubs, jewelry, weapon and control systems, ships and navigation systems.
The U.S. Securities and Exchange Commission (SEC) is enforcing a law mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 1502 requiring companies to submit annual public reports on conflict minerals used in their products. SEC issuers needed to comply with the final rule for the calendar year beginning January 1, 2013 with the first reports due May 31, 2014. The intention of Section 1502 of the Dodd-Frank Act is to eliminate the conflict in the DRC and surrounding countries by squeezing/eliminating the flow of money funding the war.
Companies that are registered with the SEC, and that use conflict minerals in the products they manufacture, or “contract to manufacture,” must provide specific information to the public concerning the minerals. The reporting SEC customers must conduct a reasonable inquiry regarding the origin of its conflict minerals in good faith through their supply chain. A recent article from BBC News ‘Conflict minerals’ deadline looms for technology firms outlines the challenges faced by SEC reporting companies and their supply chain.
Companies need to perform a Due Diligence within their supply chain according to the OECD Due Diligence guidance for identification of their smelters. These smelters are intended to be audited and certified by the conflict free sourcing initiative (CFSI). This is a big challenge that requires traceability through multiple tiers of the supply chain. A step by step methodological approach is necessary and Siemens has worked to create a simple method for gathering material data from suppliers and identifying those products which contain materials requiring reporting around conflict minerals. These steps include:
- Identify Products and Parts: The first step is to identify whether and where these metals (3T&G) are used in your products and initiate a process to collect disclosure data from suppliers and the smelters that they use.
- Check Approved Smelters: These smelters can be checked against an approved smelter list published and available through public websites such as the Conflict Free Sourcing Initiative (CFSI). These smelters can be managed in Teamcenter and aggregated with relevant data from the BOM and the supplier material declarations.
- Generate Exception Reports: Reports are generated to help understand the supplier/smelter information collected, and to report on these findings and help companies manage by exception by automation using Teamcenter online surveys, workflows and corrective actions.
- Initiate a supply chain due diligence process with these exceptions. This last step requires companies to work with supply chain specialists and could be manually intensive for the initial analysis leading to the corrective actions outlined in step 3.
Check out this video to help understand the conflict minerals law.
Example of Conflict Minerals exception report:
Many E&S industry companies, as part of their governance initiatives around corporate and social responsibility are starting their own comprehensive measures to not only source responsibly and stay compliant, but also to ensure the safety of their employees. A recent article from BBC news states that Apple recently banned two potentially hazardous chemicals (Benzene and n-Hexane) from being used in the final assembly process at 22 of its iPhone and iPad production plants. We will cover more about managing compliance to hazardous materials in a future blog.
Back to what I was wondering in my initial paragraph – while regulations are necessary and an important step towards improving social and corporate responsibility, which should have a positive impact on society and governance, it will also take consumer awareness and caring to really eliminate this issue.
*For the official SIemens policy on Conflict Minerals, please go to:
