In adhering to the provisions contained within Dodd-Frank pertaining to conflict minerals -- see MetalMiner's compendium of research for analysis and commentary on the requirements -- most organizations are just now clicking into high-gear, and 2012 will be a major year of getting such programs off the ground. In fact, of all the participants in a recent ISM/CAPs survey (referenced in more detail in the previous posts in the series), "only one survey participant reported having audited suppliers to determine the source and chain of custody of conflict minerals" yet "approximately 60 percent of the survey population reported their intention to conduct supplier audits in the next 12 months to attain that information."
It seems that the ISM/CAPs study suggests that companies have not yet changed their direct sourcing strategies as a result of the legislation, but rather thus far have treated conflict minerals as a compliance/supplier management area in the planning stage. Specifically, "only 9 percent of companies reported that their sourcing strategies have changed to ensure their products and/or manufacturing processes can be certified conflict-free" although over 60% reported that their strategies "will change." A total of 29% of respondents suggested they will not change their sourcing strategies or that that the legislation "was not applicable" to their companies.
Some companies will undoubtedly find ways to skirt the legislation and reporting requirements. On MetalMiner, for example, we described a scrap loophole where we take one metal subject to the provisions, Tantalum oxide, which at the time of publication was trading in the range of $40-60 per pound coming from DRC but $120-150 per pound if it was certified "conflict free." MetalMiner suggested that organizations could possibly skirt the legislation by buying metals from the conflict region and "scrapping" them through the following steps and costs: extract metal from concentrate ($15/lb), refining metal to power ($15/lb), refining metal powder to ingot ($15/lb), and chopping to ingot ($10/lb), a non-traceable process.
But it wouldn't it just be easy to adhere to the letter of the conflict minerals law? Perhaps, but if there's enough of a spread on the "scrap" approach, we can expect some to push the ethical boundaries.