US Falls Behind Deadline on Conflict Minerals Data

This story appears in the July 7 print edition of Transport Topics.

The federal agency charged with compiling a list of African smelters and refiners that produce “conflict minerals” is nearly 18 months behind schedule in providing information that could help publicly traded companies guard against using the tainted minerals.

The Government Accountability Office said in a June 26 report that the U.S. Department of Commerce failed to meet the January 2013 mandate, which was contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

That law, signed in 2010, was the basis for a U.S. Securities and Exchange Commission rule two years later requiring public companies to conduct a “reasonable country of origin inquiry” to determine whether there is “reason to believe” that tantalum, tin, tungsten or gold (so-called 3TG) used in their products originated in the Democratic Republic of the Congo or surrounding countries.

That’s the region where smelters are processing minerals that have funded civil conflict and human rights abuses estimated to be responsible for as many as 5.4 million deaths since 1998, the GAO report said.

For publicly traded truck manufacturers and their suppliers, the task hasn’t been easy.

Some of the companies involved include Navistar International Corp., Paccar Inc., Cummins Inc., Meritor Inc., Dana Holding Corp., Wabco Holdings Inc., Caterpillar Inc., Eaton Corp. and Donaldson Co.

Commerce officials said that they also have encountered challenges associated with gathering data.

“For example, according to the officials, conflict minerals and mining operations are difficult to track; because the equipment used to process conflict minerals can be moved easily, such operations can emerge in different locations,” GAO said.

In written comments to GAO, Bruce Andrews, acting deputy secretary of the Commerce Department, said at the time the law was passed that the International Trade Administration, the department’s arm tasked with compiling the list, “did not have staff available or trained to carry out the conflict minerals reporting requirements.

“Instead, we were required to survey existing capabilities, divert resources from other initiatives, and train existing staff in order to implement those requirements,” Andrews wrote.

Although it has not yet produced the list of conflict smelters, Commerce has developed a “plan of action” to do so and estimates it will complete the list by Sept. 1, said ITA spokesman Tim Truman.

While the Commerce De-partment has lagged behind, two other government agencies, the State Department and the U.S. Agency for International Development, already have met congressional re-quirements by developing strategies to address the links among human rights abuses, armed groups, and the mining of conflict minerals, GAO said.

Commerce issued its report three weeks after the first round of company filings to  SEC detailed their good-faith efforts to locate conflict minerals in their supply chains.

Virtually all of the trucking industry-related manufacturers and suppliers reported they are not yet able to determine the source of all potential conflict minerals in their products and supply chains that in some cases number in the thousands.

“From our point of view, the challenges we’ve experienced with regards to tracking and tracing conflict minerals has to do with managing such a large and fairly complex, global supply base, where our tier-1 suppliers are sometimes five

to seven layers removed from the smelter,” said Navistar spokesman Steve Schrier.

In addition, many of Navi-star’s smaller suppliers are not fully “up to speed” on the requirements, including some who themselves may not be required to file with SEC, Schrier said.

Cummins Inc. spokeswoman Carol Lavengood said the engine maker has assembled a team to develop and implement a conflict minerals program.

“We will continue to work with our suppliers and across our supply chain to better understand sourcing of raw materials that may appear in our end products and to eliminate procurement of products containing conflict minerals obtained from sources that fund or support inhumane treatment,” Lavengood said.

Over the past few years, several nonprofit organizations have focused on initiatives for “responsible sourcing” of minerals potentially sourced from conflict areas. One of them cited in the GAO report is the Conflict-Free Smelter Program of the Electronic Industry Citizenship Coalition.

Spokeswoman Julie Schindall said her group’s research has shown that it is possible to map a company’s supply chain and that many companies even share the same suppliers.

“You can do the gathering of information necessary to identify these sources in your supply chain, and, through our validation and auditing program, there are conflict-free sources for these minerals,” she said, “but there are thousands of companies that need to go through that journey.”