From phones and computers to smart home devices, electronics are an integral part of our everyday lives. The statistics speak for themselves – by 2025, users of consumer electronics are expected to amount to over 2.9 billion, with a projected market volume of $930 billion US dollars.
Production of consumer electronics requires the sourcing of 3TG, otherwise known as conflict minerals. The following minerals are considered 3TG:
3TG minerals are subject to two main sourcing regulations: US Dodd-Frank 1502 and EU Conflict Minerals. Both regulations require various levels of conflict mineral tracing throughout the supply chain, as well as gathering smelter data and compiling reports.
While the regulations are similar, the EU Conflict Minerals regulation applies to all Conflict-Affected and High-Risk Areas (CAHRAs). Alternately, the U.S. Dodd-Frank Act applies to publicly traded companies that sell products that may contain 3TG sourced from the Democratic Republic of Congo (DRC) or adjoining countries which include Angola, Burundi, Central African Republic, Congo Republic, Rwanda, Sudan, Tanzania, Uganda, and Zambia.
For supply chains, the challenge of conflict minerals compliance mainly resides in 3TG tracing, which requires extensive inquiries to ascertain the origin of the materials for reporting purposes.
This guide to 3TG tracing provides a step-by-step process to efficiently obtain supplier data and offers instruction on building a complete and accurate report.
Product filtering determines which products are in scope based on manufacturing influence over materials, parts, components, etc. It’s an efficient way to quickly eliminate out-of-scope products and identify suppliers of concern.
A product’s Bill of Materials (BOM) is a helpful resource for detecting the presence of any 3TG. If the BOM is not available, any indicative product characteristic can help make the determination, such as a product description or categorization.
Products that are known to contain 3TG can move to the RCOI and Due Diligence step.
Suppliers of products that may contain 3TG are further investigated and requested to provide a declaration as to whether their product contains any of the conflict minerals.
The Reasonable Country of Origin Inquiry (RCOI) clarifies product origin. This step requires back-and-forth inquiries, data sharing, and file requests. Response rates from suppliers will vary, so it is crucial to allocate enough time to this phase.
Accuracy can become a challenge at this step. Missing data, typographic errors, discrepancies in part numbers, discontinued parts, etc., may impact the information.
Additionally, engaging suppliers may pose another hurdle in the RCOI process. Some may be too unfamiliar with the regulation to understand why they should respond. Others may have difficulties with the language of the inquiry. Suppliers may also be reluctant to share information due to confidentiality concerns.
Providing thorough background information and sufficient educational support will increase supplier engagement. Non-disclosure agreements, anonymity protection Utilizing native languages in supplier communications also help increase response rates.
The Responsible Minerals Initiative’s Conflict Minerals Reporting Template (CMRT) is the current industry standard for collecting supply chain conflict minerals information.
The CMRT data collection includes:
This process should continue until the smelters or refiners of recycled or scrap materials have been identified.
Data quality and control require a significant time investment for fact-checking purposes. Smelters may be queried for a specific component, such as semiconductor fabricators, solder manufacturers, or metal traders.
Name spelling variations are common, as are aliases. Redundancies frequently occur, especially with suppliers that play a role in several areas of your supply chain. A robust database of known and certified conflict-free smelters and non-smelters will expedite the process.
Strong data management is also essential for auditable evidence to move onto the due diligence process.
Due diligence must be conducted for conflict minerals that did not originate from scrap or recycled sources and may have been sourced in the DRC (U.S. regulation) or CAHRAs (EU regulation). The report will include a description of measures taken to establish the chain of custody of the minerals.
Differing sources of information can create confusion. It is important to understand and map smelter facility locations and review information for risk indicators.
Smelter verification programs match recognized smelter names with the frequently updated lists on the London Bullion Market Association (LBMA), Responsible Jewelry Council (RJC), and the Conflict-free Sourcing Initiative (CFSI). These programs will also pinpoint smelters that require additional research and engagement.
Research and engagement teams can conduct outreach to verify the information and gather additional details about the mines and the smelters.
It is essential to track and organize communications and data produced during 3TG tracing, as they must account for an auditable record of a company’s due diligence effort.
Source Intelligence helps companies simplify the 3TG tracing process. Some of the benefits of our Conflict Minerals program include the following:
Take the manual work out of conflict minerals compliance and ensure your electronics are compliant with Source Intelligence. Select the button below to learn more about our program.