Leonardo DiCaprio’s 2006 blockbuster, “Blood Diamond,” helped raise awareness for conflict diamonds being mined and sold from African war zones. Conditions in these mines are often deplorable, with miners working under harsh conditions (and often against their will) with little to no pay while warlords spend the diamond profits on guns and ammunition to fuel the cycle. The film helped to shed light on the conflict, inspiring consumers and jewelers to rethink the source of their diamonds and in turn helping regulate the diamond trade in Sierra Leone and the surrounding countries. Additional policies and acts, such as the Clean Diamond Trade Act of 2003 and the Kimberley Process Certification Scheme, have helped support worker safety, decrease criminal activity and increase the amount of legitimate diamonds on the market. But what about the “3Ts + G” – Africa’s lesser-known conflict minerals?
Tungsten, tin, tantalum and gold are highly valuable minerals used to make various electronics and medical devices, including dental instruments and X-ray machines. Mines for these conflict minerals are predominantly in the Democratic Republic of Congo (DRC) and adjoining countries where warlords continue to reign supreme. It is estimated that the sale of the 3Ts in this area generated approximately $185 million in 2008 alone for armed groups.1 This is according to a report from the Enough Project, a project aimed at ending genocide and crimes against humanity in war-torn Africa. Other organizations and initiatives are cropping up all over the world to help bring a focus to the injustices involved with conflict minerals, including the United States’ Dodd-Frank Act. Passed in 2010, the Act requires any company that might be using conflict minerals to register with the U.S. Securities and Exchange Commission and then disclose its supply chain.
On June 2, 2014 (the regulatory deadline to meet the rule), a problem with the Dodd-Frank Act became apparent: an overwhelming amount of manufacturers claimed they could not say with full confidence that their suppliers are fully compliant with conflict-free regulations simply because they do not have complete data from all of their supply chain partners, where mine regulations are often extremely informal. Another issue manufacturers have with sourcing data and compiling conflict-mineral reports is the sheer cost. The SEC estimates that these reports would cost companies up to $4 billion the first year, dropping to at least $200 million in later years.2 Additionally, companies are projected to need about 480 hours to complete the report. Cost and time aside, the real problem lies in manufacturers not having a process in place to obtain, retain and analyze data.
While the vast majority of manufacturers claimed an inability to confirm their supply chains are “clean,” others – including medical device manufacturer Johnson & Johnson3 – have established guidelines and auditing programs to garner insights into the source of minerals used to create final products, confirming that their tungsten, tin, tantalum and/or gold is indeed conflict-free. Some electronics manufacturers are also showing progress: Apple, HP and Intel all recently filed their Supplier Responsibility Reports for conflict minerals. Apple reported that out of 205 smelters, 21 used minerals from DRC and all but four have been verified as conflict-free; for HP, 60 out of 201 smelters were accredited as conflict-free; at Intel, 71 out of 158 smelters are certified conflict-free.4
Given that the supply chains of most medical device and electronics manufacturers are severely complex and broad, the use of quality management software (QMS) to streamline, automate and track the audit process is recommended. Additionally, a QMS often provides the ability to store and analyze data, and when corrective and preventative action (CAPA) software is part of a QMS, manufacturers are able to obtain traceability insights and assign tasks related to quality processes, thus reducing the risk that conflicted mineral suppliers are part of their supply chains.
Implementing a QMS to help ensure all minerals used in a product are conflict-free does help to ensure compliance with the Dodd-Frank Act; companies that fail to comply could suffer additional consequences. For instance, the Enough Project’s research has found that minerals that do not go through conflict-free programs sell for 30 to 60 percent less, while companies that conduct responsible mineral sourcing out of the Democratic Republic of Congo earn 40 percent more from those mines.5 Companies that fail to prove their products contain conflict-free minerals also run the risk of consumer boycott, as exemplified by Cal Poly student Katie Hoselton who is working toward a ban on electronics using conflict minerals.6 Rather than wait for a lawsuit or product boycott, manufacturers in all industries should work toward adopting QMS to help prove their supply chains are free of conflicted minerals, helping reduce the risk of regulatory noncompliance while making our world a safer and more ethical place to do business.
6 http://www.sanluisobispo.com/2014/06/12/3108642/cal-poly-ban-conflict-minerals.html?sp=/99/177/183/
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