The following post is based on material contained in the MetalMiner report (available for free download): Conflict Minerals: Building Responsible Manufacturing Supply Chains. Join MetalMiner and Spend Matters for the Conflict Minerals Edge event taking place on May 6th in Chicago.
Upstream Risk Mitigation
Following the clarification on information needs from upstream actors, OECD also acknowledged “that upstream suppliers are those who can most effectively and most directly mitigate the risks of adverse impacts. Downstream companies are not expected to directly mitigate risks upstream in the supply chain” and that “industry initiatives provide one-way information on upstream activities and add that there is limited opportunity for companies without smelter relationships to understand and mitigate risks in the upstream supply chain” (Page 44 of OECD Cycle 3 Final Report).
For downstream companies, the smelters are still considered the pinch point in the supply chain. They are where the participants looked for upstream risk mitigation: “Participants are also reliant on the CFS Program to detect ‘red flag countries, suppliers or smelters’” (Page 38).
Key Point: Downstream companies are not expected to directly influence risks that are specific to the upstream supply chain, and they may rely on smelter due diligence processes to address upstream risk mitigation.
Identification of Ore/Material Transit Routes
“Some companies have been able to obtain country of origin information, though none have confirmed their ability to obtain information on transit and transportation routes. Over the course of the pilot period, companies’ thoughts on approaches have converged to rely primarily on the CFS Program, particularly those without direct smelter relationships” (Page 37).
The report went on to state that “although the CFS Program does not provide information on transit and transportation routes used between the mine and the smelter, it does review this type of information covered by the in-region sourcing scheme, including country of origin information, as part of the Step 4 third-party audit of smelters due diligence practices for in-region sourcing” (Pages 14, 17, 38).
However, the CFS does not publish audit results or direct linkages between smelters and ore/material transit routes (for Level 3 countries identified). To date, the impact of this potential gap may be somewhat insignificant as it appears that only two of the CFS-audited tantalum smelters actually source from the Great Lakes Region, where tracking the transit route is most relevant (Page 40 of Cycle 3 Upstream Report).
Key Point: There are still gaps in identifying material transit routes. Whereas this information has been identified, the linkage to specific smelters in the CFS program is not publicly available.
Curious to learn from experts and exchange pragmatic practices with industry colleagues that are also tasked with Conflict Minerals compliance? Join MetalMiner and Spend Matters for the Conflict Minerals Edge event taking place on May 6th in Chicago.