Conflict Minerals

Minerals originating from conflict regions can end up in electronics and many other products such as jewelry, airplanes, and automobiles. Greater awareness of the atrocities in these regions on the part of the public and end-use industries has prompted leading companies in the electronics sector to investigate their supply chains to determine steps to promote responsible sourcing of specific minerals.

Conflict Minerals

 

These metals can come from many sources around the world, including mines in the Democratic Republic of Congo (DRC), which are estimated to provide approximately 19% of the world tantalum production and less than 2% of the world production for tin, tungsten and gold. Some of the mines in the DRC are controlled by militias responsible for atrocities that have been committed in the Congolese civil war. The background to the Congolese conflict is complicated and its resolution requires action on multiple fronts. However, promoting legitimate trade in minerals in the region may help provide an escape from the conflict. Our commitment to sustainable development compels us to address this conflict, even though Philips does not directly source minerals from the DRC and the mines are typically seven or more tiers removed from our direct suppliers.

 

The supply chain for the metals of concern consists of many tiers, including mines, traders, exporters, smelters, refiners, alloy producers and component manufacturers, before reaching Philips’ direct suppliers. The combination of a lengthy, complex and regularly changing supply chain and the refining process makes it difficult to track and trace the minerals back to the mine of origin.

 

Philips believes that an industry-wide approach is necessary to address this issue and this is why we are members of the Electronic Industry Citizenship Coalition (EICC) and the Global eSustainability Initiative (GeSI) Extractives Work Group. The EICC (www.eicc.info) and GeSI (www.gesi.org) represent over 80 companies in the electronics and information and communications technology industries that have come together in the EICC-GeSI Extractives Work Group to positively influence the social and environmental conditions in the metals extractives supply chain.

 

Our Approach

We have adopted the following approach for improving the transparency and traceability of metals in our supply chain, focusing on three key stages in it:

 

  • Tracing the metal back to the smelter and mine of origin

With the EICC-GeSI Work Group, we have developed a supplier survey tool to standardize the collection of information from the suppliers in our supply chain. In August 2011 the Conflict Minerals Reporting Template tool (“Template”) was launched. Philips and the industry are now using this template to identify the smelters that process the metals used in our supply chain. The tool is available, free of charge, on the Conflict-Free Smelter website.

Based on the information we collected from suppliers we created a Philips Conflict Minerals Declaration, which includes a list of smelters that were identified in our supply chain. The Philips Conflict Mineral Declaration can be downloaded here. We encourage all identified smelters to participate in the Conflict Free Smelter program. By publishing this smelter list we create transparency at deeper levels in our supply chain of those actors that we believe hold the key towards effectively addressing the concerns around conflict minerals.

 

  • Conflict-Free Smelter program

The Conflict-Free Smelter (CFS) program makes it possible to identify smelters that can demonstrate through an independent third party assessment that the raw materials they procure did not originate from sources that contribute to conflict in the DRC. This enables suppliers to source metals from conflict-free smelters. The CFS program was developed through a multi-stakeholder process, and the first audits were completed for tantalum smelters in 2010. As DRC conflict-free smelters are validated through this program, Philips plans to direct our suppliers to use these smelters. The list of conflict-free smelters is available here.

 

  • Regional sourcing programs

Regional sourcing programs in the DRC focus on tracing legitimate minerals from the mine to the smelter by supporting a ‘bagging and tagging’ program run by the ITRI Tin Supply Chain Initiative (iTSCi).

 

Philips is also part of a multi-stakeholder working group hosted by the OECD (Organization for Economic Co-operation Development) which focuses on the implementation of supply chain due diligence. This OECD pilot is intended to test and assist with the implementation of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. In this pilot we aim to identify, discuss and find ways to overcome possible challenges to implementing due diligence, as well as to ensure that the OECD Guidance and other related due diligence initiatives are implemented effectively.

 

The Conflict Free Tin Initiative

Philips is one of the industry partners brought together by the Dutch government that initiated a conflict-free tin sourcing program in South Kivu, an eastern province of the DRC. Although this region has a rich supply of minerals, its economy has collapsed due to decades of ongoing conflict. In an effort to prevent minerals from financing war, many companies worldwide have shielded away from purchasing minerals from the DRC, creating a de facto embargo in the region. To overcome this issue and promote cooperation and economic growth in the region outside the control of the rebels, in September 2012, the Conflict Free Tin Initiative was launched, introducing a tightly controlled conflict-free supply chain of tin outside the influence of the rebels.

In October 2012 the first bags of tagged tin minerals left the mine. As it will take around seven months for the sourced material to run through the supply chain (mine, smelter, solder manufacturer, Philips factory), the first end-user products containing conflict-free tin are expected to appear on the market in the summer of 2013.

Philips and other CFTI participants travelled to Congo to visit the mine early 2013. More details from this visit can be found in this article “The road to sustainable tin leads to the Congo”.

 

More info:

Philips position paper on Conflict Minerals (PDF)

More information on the Conflict-Free Tin Initiative: http://solutions-network.org/site-cfti/

More background information on this EICC website: http://www.eicc.info/extractives.htm

Conflict-Free Smelter Tools & Resources: http://www.conflictfreesmelter.org/


[1] The Electronics Industry Citizenship Coalition (EICC), the Global e-Sustainability Initiative (GeSI) and RESOLVE jointly conducted a supply chain study in 2010, “Tracing a Path Forward: A Study of the Challenges of the Supply Chain for Target Metals Used in Electronics” (See www.eicc-gesi.resolv.wikispaces.net). The study found that tin, tungsten and tantalum make up a small percentage of the components and subcomponents in electronic products and the supply chain for these minerals generally contains seven or more layers.

[2] About EICC (Electronic Industry Citizenship Coalition)
The EICC was established in 2004 to improve social, economic, and environmental conditions in the global electronic supply chain through the use of a standardized code of conduct. The EICC was incorporated in 2007 as an association to ensure greater awareness of the Code, and to expand its adoption across the industry. The EICC includes over 50 global electronics companies. For more information or to view the EICC Code of Conduct, see www.eicc.info or the latest EICC annual report .

[3] About GeSI (Global e-Sustainability Initiative)
The Global e-Sustainability Initiative (GeSI) is dedicated solely to information and communication technologies (ICT) sustainability through innovation. GeSI brings together leading ICT companies – including telecommunications service providers and manufacturers as well as industry associations – and non-governmental organizations committed to achieving sustainability objectives through innovative technology. In June 2008, GeSI became a legal independent entity, an international non-profit association (AISBL) with an office near the EU institutions in Brussels, Belgium. For more information, see www.gesi.org.