Conflict Minerals
A General Awareness Webinar
presented by AIAG and BSR
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Agenda
Conflict Minerals - Background
Relevance to the Automotive Industry
Conflict Minerals Regulation
Collective Action & Engagement
Recommendations
Q&A
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Conflict Minerals - Background
July 2010, President Obama signed into law H.R. 4173,
the Wall Street Reform and Consumer Protection Act.
Imposes requirements relating to Conflict Minerals
Conflict Minerals include columbite-tantalite (coltan, niobium, tantalum),
cassiterite (tin), gold, and wolframite (tungsten) and their derivatives.
Requires reporting on materials mined in DRC
(Democratic Republic of Congo) and bordering
countries
Automotive Industry will not support human rights abuses
and conflict anywhere in the world
From the OEMs letter to suppliers: Conflict Minerals VP Letter wSig 4-18-11 v2.pdf
Conflict Minerals - Background
What are Conflict Minerals:
Tin, tantalum, tungsten and gold
and their derivatives
Sourced from the Democratic
Republic of Congo or the
surrounding countries (Angola,
Burundi, Congo, Central African
Republic, Republic of Tanzania,
Rwanda, Sudan, Uganda, Zambia)
US Secretary of State may expand
definition of conflict minerals
The Issue:
Mining and trade illegally funds
armed groups (Congolese military
units, Congolese rebels, Rwandan
rebels, local militias)
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The Core Dilemma
Minerals trade deep into
company supply chains
supports armed groups and
human rights violations
While it also supports local
livelihoods and economies
Photos: Pact, www.pactworld.org
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Conflict is One of
Many Issues in DRC
Additional Issues in the Democratic Republic of
the Congo (DRC):
Weak government
Need for military reform
Land disputes
Labor, human rights & environmental concerns
Child labor
Gender-based violence
Mine safety
Environmental contamination & degradation
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Conflict Minerals is Only One
of Many Supply Chain Issues
Demands for supply chain environmental transparency &
accountability - hazardous materials, toxics, carbon
footprinting, water use, biodiversity, etc.
Demands for supply chain labor/social transparency &
accountability - working conditions, child labor, human
rights, etc.
Conclusion: Government, Non-Governmental
Organizations (NGOs) and customer demands for
supply chain transparency and accountability
continue to grow even if DRC issues are addressed.
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Tungsten Statistics
World Tungsten Reserves 2010 Tungsten Production
http://minerals.usgs.gov/minerals/pubs/commodity/tungsten/mcs-2011-tungs.pdf
No information available on central African reserves
Other countries includes Kazakhstan, United States, Peru, Spain and Rwanda
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Tin Statistics
World Tin Reserves 2010 Tin Production
http://minerals.usgs.gov/minerals/pubs/commodity/tin/mcs-2011-tin.pdf
Central Africa Reserves not available
Other Countries includes: Vietnam, United States, Western Africa
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Tantalum Statistics
World Tantalum Reserves 2010 Tantalum Production
http://minerals.usgs.gov/minerals/pubs/commodity/niobium/mcs-2011-tanta.pdf
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Tantalum Background
Tantalum is sourced from tantalite which is associated
with pegmatites.
All of the worlds main tantalite mines are hosted in
pegmatite ore bodies, including Wodgina, Greenbushes,
Marropino and Bernic Lake in Canada.
Tantalum also comes from coltan which is essentially
mixed tantalite and columbite. The principle sources are
found in pegmatite ore bodies in countries such as the
Democratic Republic of Congo, Rwanda, Burundi and
other central African countries. The worlds main
tantalum and niobium users have embargoed its use
since the turn of the century, with most sales apparently
being made into China.
http://www.mining-technology.com/features/feature74139/
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Gold Statistics
World Gold Reserves 2010 Gold Production
http://minerals.usgs.gov/minerals/pubs/commodity/gold/mcs-2011-gold.pdf
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We are not dealing with big mines!
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This is one of the larger operations
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Smelters are a Key Leverage Point
in the Supply Chain
1Reuse material (some is closed loop recycling)
Other
Sources1
Component
Mines Traders Smelters Suppliers OEMs
Suppliers
Sn
Smelters
Simplified Tantalum Supply Chain
K Salt Toll
Manufacturing
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Global Trend Toward International Action
Governments:
New U.S. regulations require company due diligence and reporting
Proposed legislation in California could prohibit the state government
from contracting with companies that fail to comply with federal
regulations on conflict minerals
Europe is considering legislation on "mandatory country by country
disclosure" of money flows between mining companies and
governments
Canada is considering conflict minerals legislation with due diligence
and disclosure requirements
International Institutions: the United Nations and Organisation for
Economic Co-operation and Development (OECD) offer due diligence
guidelines specifically for minerals supplied from conflict areas
Civil Society: European and U.S. NGOs continue to demand
transparency and action from companies
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Automotive Position
The Automotive Industry will not support human
rights abuses and conflict anywhere in the world!
It is our intention to do what we can to ensure that the parts and
assemblies in our vehicles and products, regardless of where they are
assembled or sold, do not contain Conflict Minerals which have
contributed to the armed conflict in the DRC.
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Why is This Important to Companies?
Regulatory Risks
Supply Chain Risks
Markets for 3Ts are tight
Verified conflict free supply
is limited
Reputational Risks
Regional conflict can disrupt
supplies
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Relevance to the Automotive Industry
Conflict Minerals content is pervasive!
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Sealants
Fuel tank Tin catalyst
Tin-zinc coating
Glass
Conductive tin coatings
Wiring
Tinned copper
Seat cushions Electronics
Solders
Tin catalyst
Fuses
Contacts
Plastics Bearings
PVC stabilisers Tin alloy addition
Coatings
Battery
Tin alloy addition
Radiator
Brass alloys
Solders
Brake pads
Tin additives
Examples of Tin Applications
Examples of Tungsten & Gold Applications
Electronics
Metallic films
Integrated circuits
Tungsten
Gear Teeth, Bearing
On Board Electronics Races, Cages & Balls
Gold Lubricity coating
Tungsten
Fuel Cells
Gold
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Examples of Tantalum Applications
Body Electronics
Boot / Trunk Opener
CAN lines (MLVs)
Door / Headlamp warning buzzers
HID Headlamps
Comfort & Convenience Inspection & maintenance tracking
Audio systems Parking sensors
Climate control Telematics
Dashboard Window lifts
Electric mirrors Wiper systems
Electric seat modules
Safety & Security
Electronic tachometer ABS
External temperature indicators Airbag system
Fuel level indicator Driver Applications Automatic headlight dimmers
GPS / Smart Traffic Systems Air Intake Temperature Mgt Car alarm
In-Car entertainment ECU / EMU Central locking
Interference and interconnect; wireless Electronic Clutch Keyless Entry / Immobilizers
Night vision Electronic fuse box Seatbelt Pretensioner
Radar driving monitoring Electronic Gearbox Traction control
RF tolling Electronic throttle links Vehicle location systems
Self-dimming mirrors Emission controls
Tire pressure sensor Fuel Pump
Trip computer Ignition systems
Video systems Power Steering (MLVs)
Power supply and battery mgt
Temperature / Pressure Sensors
Conflict Minerals Regulation
Required 2-3 years of legislative
efforts
Overall US Government and
international efforts to develop due
diligence, certification, traceability,
and other systems for mineral
regulation
Dodd-Frank passage section 1502
http://www.sec.gov/news/press/2010/2010-245.htm
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What 1502 Means to You
SEC Regulations
Draft Regulations issued in
December
Public Comment closed
Final regulations are
scheduled for August
Need to understand and
implement due diligence
measures to meet deadlines
(2012-2013)
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Decision Tree for Companies that
File Reports with the SEC
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Companies with Customers who File Reports to
the SEC and/or are Pursuing Due Diligence
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Whos Responsible
Government or Industry?
Government commitments
Industry obligations
NGO cooperation
All need to work together
to reach mutual goals
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Collective Action and Engagement
Joint learning & best practice Joint supply chain action
sharing Conflict Free Smelter
Joint engagement with Program
NGOs and government Minerals traceability
from mines
Letter from VPs
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Approach to Conflict-Free Sourcing
Finished
Mine Smelter/Refinery OEM Product
Mineral Tracing Actions
Smelter Validation Actions
Company Assurance
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The Tag It Follows Material From
Mine to Export Drum
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Copyright: Pact Africa
OEM Collaboration through AIAG:
Honda, Ford, GM, Chrysler, Toyota, Nissan
Determining Impacts of Legislation Including:
Scope of information required by legislation
Supplier data collection methods
Smelter engagement and certification
Provide Education and Direction:
Communication of expectations and requirements to the
supply base
Develop common industry reporting guidelines/formats
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April 2011 Supplier Letter
Recommendations
Understand the Issues
Review emerging regulatory requirements at home and
abroad
What do they mean for your company?
What do they mean for your customers & suppliers?
Understand stakeholder concerns
What are the risks to your company?
Are there opportunities to help stakeholders learn?
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Take Action!
Per the 4/2011 OEM Purchasing VP letter:
Determine which parts/assemblies incorporate one or
more of the identified minerals or their derivatives
Map your supply chains associated with those same
parts/assemblies
Engage with suppliers to identify the smelters used
upstream in your supply chain to process the raw
materials OR validate the origin of materials as
recycled/scrap
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Develop a Conflict Minerals
Strategy & Action Plan
1. Visioning
2. Alignment
& Ownership
6. Performance
Evaluation
3. Supply Chain Mapping
5. Implementation
4. Prioritization
Questions?
Thank you for your participation today. If you
have additional questions, email your
questions to AIAG -
[email protected] The team will create FAQs and make the
information available to all participants on the
AIAG web site
