Responsible Sourcing of Minerals: Hurdles to a Conflict-Free Supply Chain
Via the OECD Insight series, Tyler Gillard and Roel Nieuwenkamp paradoxically write about the challenges of having only “conflict-free” minerals in supply chains and also the strong (and immediate) need for responsible mineral supply chains.
SEC Dodd Frank section 1502, enacted in 2010, requires publicly traded companies in the United States to disclose tin, tungsten, tantalum and gold (3TG) originating in the Democratic Republic of Congo (DRC) and surrounding countries. As a result, United States companies have hurried to eliminate so called “conflict minerals” or minerals originating from covered countries from their supply chains.
Gillard and Nieuwenkamp emphasize the need for continuous improvement to make mineral sourcing responsible, but bring to light the potential negative impacts, specifically around gold sourced from “conflict” countries.
“Formalising a previously informal economy will always create new compliance hurdles. At least this is an improvement over the challenges the miners had previously faced, namely escaping violence, extortion and forced labour at the end of a gun. Still there is a need for greater awareness among consumers and the gold industry that responsible gold also means sourcing responsibly from conflict areas and supporting artisanal miners in their efforts to meet the new demands of the market.”
Gillard and Nieuwenkamp stress the importance of mineral sourcing from “conflict” areas, even with current challenges, so that artisanal miners do not experience “harsh consequences.”
Knowing where minerals in a supply chain come from, however, is the first hurdle a company must face. A white paper, put out by Source Intelligence, covers this topic by explaining the Essential Elements for Tracing Conflict Minerals in a Supply Chain. Once a company knows what minerals are essential to the production of their products, and where those minerals are sourced, then the process of improving the responsibility of its mineral supply chain can begin.