Taking the Conflict Out of Conflict Minerals

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Michael Loch is Director of Supply Chain Corporate Responsibility for Motorola Solutions. He has played a major role in the development and implementation of Solutions for Hope and the Public Private Alliance for Responsible Minerals Trade where he serves on the Governance Committee. He also chairs the Conflict-Free Sourcing Initiative. 4

In 2007, the electronics industry became the target of activist groups who argued that downstream companies to artisanal mining were contributing to violence in the Democratic Republic of Congo (DRC). At the same time, many recognized that the industry could also be a positive force. Subsequent studies highlighted a significant lack of transparency in the global supply chain for tin, tantalum, tungsten, and gold, and that most companies did not know the origin of the minerals they used. In response, the industry launched two initiatives to establish systems of traceability and transparency in the supply chain while supporting legitimate sourcing of DRC minerals.

In 2010, artisanal mining activities in eastern DRC slowed to a near standstill in the wake of the DRC presidential mining suspension and the passing of Section 1502 of the US Dodd-Frank Act. Section 1502 covers assessment and reporting requirements for all US publicly-traded companies whose products contain tin, tantalum, tungsten and gold which the Act defines as conflict minerals. The suspension and Section 1502 were meant to target mafia-like groups benefiting from artisanal mining, but the effect was indiscriminate and global markets felt the effect.

Official exports of tin, tantalum, and tungsten from the Kivus and Maniema Provinces, a UN Group of Experts reported, essentially stopped. The DRC is rich, for example, in coltan, a mineral that contains tantalum, which is used in capacitors found in electronics and other devices. Prices of tantalum spiked after the ban, given that approximately 15 percent of the world’s supply originates in the DRC, creating particular uncertainty in the electronics industry, which accounts for up to 60 percent of tantalum use worldwide.

In early 2011, the mining suspension was lifted, but in its place came a de facto embargo as companies had begun to see sourcing from the region as a risk. As a result, the industry came under enormous pressure to support economic development in the region, though new systems had not been fully tested and downstream companies, most of which are removed from the mining process itself, were not even sure how to directly engage.

Taking the Conflict Out of Conflict Minerals Building Peace Forum

(Photo Credit: Michael Loch)

Under these conditions, Solutions for Hope was born. Launched in July, 2011 in the DRC’s Katanga Province, the program created its closed-pipe supply model, which uses a defined set of supply chain suppliers. The project built industry-wide confidence by showing that transparent sourcing is possible, supported the development and implementation of existing initiatives, and provided a conflict-free source of tantalum that would support the continuity of supply and minimize pricing fluctuations in the global supply chain.

Legitimizing the minerals trade in the DRC is critical to creating a peace economy in the African Great Lakes region. Solutions for Hope creates economic benefits for artisanal miners, their families, and communities.

For miners, the program demonstrates that legitimate material is sold in line with global pricing and not discounted, thus allowing more money to remain in the region and improve the livelihoods of those involved. Another critical aspect of the project is its community reinvestment component which, in this case, helped implement infrastructure and social programs such as roads, bridges, medical facilities, and schools. Proof of concept is thus demonstrated.

The notion that the concept is also scalable came when Solutions for Hope inspired the Conflict-Free Tin Initiative, funded by the Dutch Foreign Ministry in 2012 to source tin from South Kivu Province using the closed-pipe model. In a more recent effort, a multi-stakeholder meeting convened in February, 2014 by the US nonprofit RESOLVE, yielded the Cadenas de Paz (Spanish for “chains of peace”) project in Colombia, a transparency and development program to support OECD compliance with supply-chain due diligence.

The closed-pipe supply line approach has the potential to prevent natural resource conflicts when it is used as part of a broader, private-sector strategy to ensure supply chain transparency and incentives. The future of Solutions for Hope is to move from pilots to best practice and it is continuing to look for partners to replicate and innovate.

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