4. 4
Who needs to be concerned?
EU Regulation on Conflict Minerals
Compliance implications cut across industries and functions.
In addition to smelters/refiners and importers, key sectors using 3TG include:
1. Sourcing/procurement 2. Legal 3. Risk management 4. Reporting
5. 5
Proposed Regulation goes beyond the US Dodd-Frank Act
EU Regulation on Conflict Minerals
…in terms of application, themes and scope…
6. 6
Likely challenges
EU Regulation on Conflict Minerals
Difficulties encountered in Dodd-Frank reporting are likely to be exacerbated.
Traceability
• Opaque supply chains
• Blending of minerals
• Illegal trading and document
falsification
Definitions
• ‘High-risk country’?
• ‘Conflict’?
• ‘Human rights abuses’?
Monitoring
• Which countries to monitor?
• How to address shifting
geographic goal posts?
7. 7
Traceability: A precursor for responsible management
EU Regulation on Conflict Minerals
Viable solutions ultimately dependent on the traceability of 3TG minerals.
67% of companies reporting under the US Dodd-Frank Act don’t know the origin of their 3TG.
This is likely to be a ‘journey’ for affected EU companies, using risk-based prioritisation
Cooperation, coordination and
sophisticated data / assurance
management required
Mine Traders
Smelters /
refiners
Traders
Component
manufacturers
Product
manufacturers
DownstreamUpstream
Primary focus on smelters / refiners
carrying out due diligence
Due diligence
required by all actors
8. 8
Definitions and monitoring: A moving target?
EU Regulation on Conflict Minerals
‘High risk’ countries not currently defined OR prioritised.
Tantalum from
DR Congo?
Tungsten from
China?
Gold from
Zimbabwe?
Tin from
Myanmar?
9. 9
What can companies do?
EU Regulation on Conflict Minerals
The OECD Guidelines as a key due diligence starting point.
Potential challenges ! Policy scope (e.g. ‘conflict’/
‘human rights’ definitions)
! Mapping of internal 3TG use –
and external sources
! Degree of ‘tainting’ of 3TG
supplies through the
amalgamation of
ores/metals/components at any
stage
! Opaque, multi-layered
ore/metal trading
! Lack of existing supplier
information
! Defining – and providing – an
acceptable level of assurance to
business partners and consumers
11. 11
1. Insight 3TG Commodity Briefings
EU Regulation on Conflict Minerals
Commodity value-chain overviews
in the context of conflict minerals compliance
► Country / 3TG risk scoring (to allow benchmarking
and monitoring across locations and commodity)
► 3TG in national context, including:
• Mining locations / forms / actors
• Trading routes / dynamics / actors
• Export locations / patterns / actors
► Commodity conflict issues, including:
• Political violence and civil unrest
• Criminality
• Security forces and human rights
► Commodity human rights issues, including
both ‘serious’ and ‘other’ abuses relating to:
• Civil / political rights
• Economic / social / cultural rights
• Labour rights
► Sub-national GIS risk-mapping
Research, analysis and scorecards
79
AuGold
73
TaTantalum
50
WTungsten
74
SnTin
12. 12
2. Risk prioritisation 3TG Source Country Reports
EU Regulation on Conflict Minerals
In-depth, sub-national reports focused on
key source country risks
► Country / 3TG risk scoring (to allow benchmarking
and monitoring across locations and commodity)
► 3TG in national context, including:
• Mining locations / forms / actors
• Trading routes / dynamics / actors
• Export locations / patterns / actors
► Commodity conflict issues, including:
• Political violence and civil unrest
• Criminality
• Security forces and human rights
► Commodity human rights issues, including
both ‘serious’ and ‘other’ abuses relating to:
• Civil / political rights
• Economic / social / cultural rights
• Labour rights
► Sub-national GIS risk-mapping
Research, analysis and scorecards
13. 13
3. Analysis Online risk management platforms
EU Regulation on Conflict Minerals
► Interactive online tools to centralise, analyse
and report on risks in the 3TG supply chain
► Pre-packaged risk indices from Verisk
Maplecroft’s well-established, proprietary portfolio
► Supplier screening based on location,
management systems, activity and other relevant
variables
► Integration of SAQ and first/third-party audit
results
► Flexible data analytics to support solutions
across different sectors and functions
► Auto-generation of compliance scorecards for
supply chain actors and/or supply chain ‘phases’
► Action Plan generation based on risk, issue
severity, reputation and other relevant variables
► Base platform tailorable to client-specific needs
Innovative, online platforms that generate insight and support OECD-aligned compliance by
analysing client, Verisk Maplecroft and supply-chain partner information
14. 14
4. Management In-depth advisory services
EU Regulation on Conflict Minerals
OECD Due Diligence Guidance
Best practice policy, guidance and tool
development (best practice)
Supply chain risk and impact assessment
(remote and on-the-ground)
Supplier engagement (SAQs, auditing)
Strategy development and Action Plan formulation
Screening and assurance methodologies
Auditing of supply chain partners
(remote and on-site)
Public reporting (media, sustainability reporting,
integrated reporting)
Client solutions
15. 15
EU Regulation on Conflict Minerals
5. Supply chain traceability Data driven solutions
Mine global trade data to identify the provenance of 3TG, and assess the likelihood that it
originates from ‘conflict-affected and high-risk areas’
► Data-driven supply chain traceability systems to
help companies assess a commodity/product’s
ethical performance
► Track 3TG minerals through the value chain
(mine -> trader -> smelter/refiner -> trader ->
component manufacturers -> manufacturers) using
global trade data
► Overlay Verisk Maplecroft ESG + Political
indices to help identify ‘red flags’ in the supply
chain, which require further due diligence
► Analysis enables businesses to better understand
potential sources of reputational/regulatory risk
Top exporters of trade Tin ores 2014
16. 16
Notice:
EU Regulation on Conflict Minerals
Strictly Private and Confidential
This discussion document has been prepared by Verisk Maplecroft and its contents and conclusions are confidential and may not be
disclosed to any other persons or companies without Verisk Maplecroft’s prior written permission. The information upon which this
discussion document is based comes from our own experience, knowledge and databases. The opinions expressed in this discussion
document are those of Verisk Maplecroft. They have been arrived at following careful consideration and enquiry but we do not
guarantee their fairness, completeness or accuracy. The opinions, as of this date, are subject to change. We do not accept any liability
for your reliance upon them.
