On Conflict Minerals Challenges & Moving Beyond Compliance

p.3
BureauVeritas&EstelleLevinLTD.
Onconflictmineralschallenges
andmovingbeyondcompliance
CONTENTS
INTRODUCTION
ABOUT CONFLICT MINERALS
DODD-FRANK SECTION 1502
THE COMPLIANCE PROCESS
THE DELIVERABLES
ON THE OECD DUE DILIGENCE GUIDANCE
HOW BUREAU VERITAS CAN HELP
ABOUT BUREAU VERITAS
ABOUT ESTELLE LEVIN LIMITED
5
7
9
13
15
19
21
22
23
chap. 1
chap. 2
chap. 3
chap. 4
chap. 5
chap. 6
chap. 7
BUREAU VERITAS & ESTELLE LEVIN LTD.
ON CONFLICT MINERALS CHALLENGES
AND MOVING BEYOND COMPLIANCE

p.5p.4
Certain minerals originating in the Democratic Republic of Congo (DRC) and adjoining
countries have been a major source of international concern. Armed groups in the
region are accused of severe human rights abuses and of using proceeds from the
sales of these minerals to fuel regional conflicts. A broad range of public, private, and
civil society groups have been working to bring light to this issue and, in recent years,
legislation has been passed to address this problem.
In 2010, Section 1502 of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act was put forth in the US
Congress to address the problem of
conflict minerals by requiring publicly
listed companies to disclose their use of
specific minerals originating in the DRC
and adjoining countries. In 2012, the US
Securities and Exchange Commission
(SEC) issued its final rule to implement the
requirements in the Dodd-Frank Act. This
was the first legislation of its kind in the
United States. Canada and the European
Union are taking similar steps to address
conflict minerals through legislation and
it should be expected that many other
countries will follow.
The legislative aim of the current conflict
minerals regulation is to bring transparency
to the supply chain so that financial links
to armed groups can be identified. Indeed,
with requirements for due diligence,
reporting, and public disclosure, the
legislation has been designed to ensure
accountability and discourage companies
from doing business in ways that ultimately
support exploitation and conflict.
There is also potential for unintended
consequences to arise from this
legislation. In aiming first and foremost
to ensure conflict-free supply chains,
many companies are deciding to
source from outside of the DRC and its
adjoining countries altogether. A mass
disengagement from these economies
is having clear impacts on local poverty
and, as highlighted in comments to the
SEC proposed rule, this could even create
drivers for conflict. Thus, it is important
to highlight that constructive engagement
with mineral supply chains originating
in conflict areas is the most effective
solution to the difficult problem of conflict
minerals.
INTRODUCTION
chap.1
INTRODUCTION
chap.1
tin tungsten
tantalum gold

p.7p.6
WHAT ARE THE CONFLICT MINERALS?
Commonly referred to as ‘3TG’, tantalum
(columbite-tantalite), tin (cassiterite),
tungsten (wolframite), and gold make up
the class of conflict minerals for which
the legislation presently applies. The US
State Department and Section 1502 of the
Dodd-Frank define it as such, as does the
Organisation for Economic Co-operation
and Development (OECD) in their Due
Diligence Guidance for Responsible Supply
Chains of Minerals from Conflict-Affected
and High-Risk Areas. Of course, other
minerals can be included in this distinction
on a voluntary basis in accordance with
a company’s sourcing practices and
identified risks related to sourcing from
politically unstable countries. It is also
conceivable that other minerals may be
classified as ‘conflict minerals’ under US
or other legislation in the future.
chap.2
chap.2
WHERE ARE THE COVERED COUNTRIES OF ORIGIN?
Minerals mined in the DRC may pass
through numerous locations in neighboring
countries as they are shipped to processing
facilities. Thus, the Dodd-Frank Act applies
to minerals that originate in the DRC
as well as its adjoining countries. The
regulation defines the Covered Countries
as follows:

p.9p.8
chap.3
chap.3
WHO IS AFFECTED?
All US-based and foreign issuers to the
SEC under Sections 13(a) and 15(d) of
the Exchange Act that manufacture or
contract to manufacture products for
which “conflict minerals are necessary to
the functionality or production ”fall
under the scope of Section 1502 of the
Dodd-Frank Act. An issuer that only
services, maintains, or repairs a product
containing conflict minerals is not affected.
Points to consider when determining if conflict minerals are necessary
to “functionality or production” include the following:
• If it is intentionally added to the product or any component of the product
• If it is necessary to the product’s generally expected function, use, or purpose
• If it is incorporated for purposes of ornamentation, decoration or embellishment

p.10
WHAT WILL BE THE IMPACT?
This legislation will likely affect a range
of industries, including electronics,
aerospace, medical devices, jewelry,
apparel, and more. The SEC estimates
that approximately 6,000 issuers will be
directly affected and that many others will
be indirectly affected, including issuer and
non-issuer suppliers, with an estimate
of initial compliance costs between $3
billion and $4 billion, and an estimate of
subsequent annual costs in the range of
$200 million and $600 million.
chap. 3
1
See SEC final rule (17 CFR PARTS 240 and 249b), pp. 309, 313

p.13
The process for compliance can be broken down into three steps:
1. DETERMINE IF THE RULE
APPLIES TO YOUR COMPANY.
• An issuer needs to determine whether
its products contain minerals that
subject it to Dodd–Frank Section 1502.
2. DETERMINE WHETHER
CONFLICT MINERALS ARE FROM
SCRAP OR RECYCLED SOURCES
AND IF THEY ORIGINATE IN THE
COVERED COUNTRIES.
• All affected issuers are required to
conduct a ‘reasonable country of origin
inquiry’ (RCOI).
• An issuer that knows or reasonably
believes that its conflict minerals did
come from scrap or recycled sources
or did not originate in the Covered
Countries must briefly describe
their RCOI in a Form SD (Specialized
Disclosure Report) but does not need
to move on to Step 3.
3. AN ISSUER WITH CONFLICT
MINERALS THAT ARE POSSIBLY
NOT FROM SCRAP OR
RECYCLED SOURCES
AND THAT POSSIBLY DID
ORIGINATE IN THE COVERED
COUNTRIES NEEDS TO
EXERCISE DUE DILIGENCE.
• If an issuer believes that its conflict
minerals possibly did not come from
scrap or recycled sources and possibly
did originate in the Covered Countries,
it must exercise due diligence.
• If, after exercising due diligence, an
issuer can determine that its conflict
minerals did come from scrap or
recycled sources or did not originate
in the Covered Countries, it must
describe its RCOI and due diligence
measures in a Form SD, but the issuer
is not required to submit a Conflict
Minerals Report (CMR).
• If an issuer cannot determine that its
conflict minerals are not from scrap
or recycled sources or that they did
not originate in the Covered Countries,
it must submit a Conflict Minerals
Report as an exhibit to the Form SD.
chap.4
chap.4

p.15
WHAT IS THE TIMELINE FOR DELIVERABLES?
All issuers that are subject to Dodd-Frank Section 1502 are required to file a Form SD,
the Specialized Disclosure Report. It is thus important to understand what this form
entails. Below is an overview of the elements that may need to be included in a Form SD.
Reasonable Country of Origin Inquiry
(RCOI)
The RCOI must be conducted in good
faith and must be reasonably designed to
determine country of origin.
All issuers are required to describe their
RCOI and the results thereof in the Form
SD. The issuer is also required to disclose
this information on its publicly accessible
website and provide a link to that website
in the Form SD.
Due Diligence
The due diligence process must conform to
a nationally or internationally recognized
framework if available.
Some issuers will need to exercise due
diligenceonthesourceandchainofcustody
of their conflict minerals. The due diligence
process must be based on a nationally or
internationally recognized framework. One
example of such a framework is the OECD
Due Diligence Guidance for Responsible
Supply Chains of Minerals from Conflict-
Affected and High-Risk Areas (OECD Due
Diligence Guidance). This framework
has special supplements to ensure the
particularities of the different supply chains
for gold and the 3TGs are manageable.
An issuer required to exercise due
diligence must describe its initial RCOI and
subsequent due diligence process and the
results thereof in the Form SD. The issuer
is also required to disclose this information
on its publicly accessible website and
provide a link to that website in the Form SD.
Conflict Minerals Report (CMR)
If an issuer cannot determine that its
conflict minerals are not from scrap or
recycled sources or that they are not from
the Covered Countries, it must submit a
Conflict Minerals Report as an exhibit to
the Form SD. The report must describe the
measures taken to exercise due diligence
over the source and chain of custody of the
conflict minerals.
THE DELIVERABLES
chap.5
THE DELIVERABLES
chap.5

p.17p.16
The Conflict Minerals Report should
specify:
• The country of origin of the conflict
minerals
• Any efforts made to determine the
mine or location of origin with the
greatest possible specificity
• The facilities used for processing the
conflict minerals, such as the smelter
or refinery
• A description of any products that are
not “DRC conflict free”
An issuer must have an independent
private sector audit (IPSA) of its Conflict
Minerals Report. It is estimated that 6,000
issuers will be subject to Dodd-Frank
Section 1502 and that 75% will need to file
an independently audited Conflict Minerals
Report.
TRANSITION PERIOD
Issuers submitting Conflict Minerals
Reports that are unable to determine
whether their products are “DRC conflict
free” are allowed to describe their products
as “DRC conflict undeterminable” during a
transitional period.
In these cases, the Conflict Minerals
Report shall include:
• The country of origin of the minerals,
if known
• The facilities used to process the
conflict minerals, if known
• Any efforts made to determine
the mine or location of origin with
the greatest possible specificity, if
applicable
• The steps the issuer has taken, if any,
since the period covered by its last
report, or the steps that the issuer
will take to mitigate the risk that its
conflict minerals may benefit armed
groups
• The steps, if any, the issuer has taken
to improve its due diligence
If the issuer’s products are “DRC conflict
undeterminable,” an independent private
sector audit of the Conflict Minerals Report
is not mandatory.
The “undeterminable” reporting option
relates differently to smaller and larger
issuers. For larger issuers, the option will
be allowed only during the first two fiscal
years (2014-2016). For smaller issuers,
this alternative will be permitted during the
first four fiscal years (2014-2018). At the
first reporting deadlines after the transition
periods (31 May 2016 for larger issuers, 31
May 2018 for smaller issuers), an issuer
with “undeterminable” products will need
to identify them as “not been found to be
DRC conflict free” in the Conflict Minerals
Report.
chap.5
chap. 5
WHAT IS THE TIMELINE FOR DELIVERABLES?
SEC PROCESS FLOWCHART
Below is a flowchart provided in the SEC final rule that summarizes the requirements
and application for issuers.
2
See SEC final rule (17 CFR PARTS 240 and 249b), pp. 311-312
3
A “smaller reporting company” is defined in Rule 12b-2 [17 CFR 240.12b-2] under the Exchange Act: “The primary determinant for eligibility
will be that the company have less than US$75 million in public float. When a company is unable to calculate public float, however, such as
if it has no common equity outstanding or no market price for its outstanding common equity exists at the time of the determination, the
standard will be less than US$50 million in revenue in the last fiscal year.”

p.19
The OECD Due Diligence Guidance is the globally recognized foundation for conflict
minerals due diligence and the keystone document from which all conflict minerals
standards have been derived.
For a company using the OECD Due Diligence Guidance to comply with the Dodd-Frank
Act, the first two steps would be mandatory to be judged to have done risk assessment
satisfactorily wherever they are operating. Only if ‘red-flag’ issues are identified during
the risk assessment process are steps three to five then triggered.
RED FLAGS THAT TRIGGER
OECD GUIDANCE STEPS 3-5
Red flag locations of mineral origin
and transit
• Mineral is from, or has been
transported through, a conflict-
affected or high-risk area.
• Mineral from recyclable/ scrap or
mixed sources has been refined in a
country where mineral from conflict-
affected and high-risk areas transits.
Supplier red flags
• Suppliers operate in a red flag
location.
• Upstream companies have business
interests in mineral suppliers from a
red flag location.
• Suppliers / upstream companies
have sourced mineral from a red flag
location in the last 12 months.
Red flag circumstances
• Step 1 indicates anomalies or unusual
circumstances that reasonably suggest
that the mineral extraction, transport
or trade may contribute to conflict or
serious abuses.
• Sources where there are weak
enforcement of anti-money laundering
or anti-corruption laws, customs
controls, or other relevant laws;
informal banking system; and/or the
extensive use of cash (optional red-flag).
The OECD Due Diligence Guidance makes a
distinction between due diligence activities
for upstream (mine to smelter/refiner) and
downstream (smelter/refiner to retailer)
actors, with a greater onus of due diligence
activities being placed on the smelter/
refiner and upstream segment.
INITIATIVES DERIVED FROM
THE OECD DUE DILIGENCE
GUIDANCE
There are a number of responsible sourcing
initiatives which ensure conformance with
the due diligence recommendations of the
OECD Due Diligence Guidance.
These include the Responsible Jewellery
Council’s Code of Practices and Chain of
Custody Standard (RJC), the World Gold
Council’s Conflict-free Gold Standard, the
EICC’s Conflict Free Smelter Initiative,
the London Bullion Market Association’s
Responsible Gold Guidance, and the Dubai
Multi Commodities Centre’s Responsible
Sourcing Guidance. Not all will apply to
your business, and some seek to assure
more than the business practices and
human rights issues prioritized by the
OECD Due Diligence Guidance.
chap.6
chap.6
The OECD Due Diligence Guidance 5 Steps:
1. Establish strong company management systems
2. Identify and assess risks in the supply chain
3. Design and implement a strategy to respond to identified risks
4. Carry out independent third-party audit of supply chain due diligence
at identified points in the supply chain
5. Report on supply chain due diligence

p.21
TRAINING
Bureau Veritas, in partnership with
Estelle Levin Ltd. (ELL), offers public
training to issuer and non-issuer
manufacturers, suppliers, and vendors to
educate them on conflict minerals
regulations and to present the solutions
available to address their challenges and
build capacity for action.
Two levels of training are offered:
• Conflict Minerals - Executive Overview
• Conflict Minerals - Understanding &
Implementing
SYSTEMS GAP ASSESSMENTS
As regulatory deadlines approach,
organizations need to ensure that their
conflict minerals due diligence systems
are effective and meet Dodd-Frank
requirements. Bureau Veritas offers to
review due diligence systems to identify
any gaps between organizations’ existing
systems and the recommendations
outlined in the OECD Due Diligence
Guidance or a specific industry framework.
THIRD-PARTY AUDITS AND
CERTIFICATION
Once due diligence systems are in
place, Bureau Veritas provides Conflict
Minerals Chain of Custody Certification
and Third-Party Audits against industry
standards and the OECD Due Diligence
Guidance, respectively. Bureau Veritas is
an approved auditor for RJC, LBMA, and
DMCC chain of custody standards.
Impartial audits ensure accuracy, and
reliability, and demonstrate the highest
level of commitment.
Benefits of certification and third-party
audits:
• Streamlined processes and
operational efficiency
• Impartial verification of your
compliance
• Increase organizational value,
customer perception, and stakeholder
relationships
SEC REPORTING
All issuers that are subject to Dodd-Frank
Section 1502 are required to file a Form
SD, and depending on the origin of their
conflict minerals or level of determination,
issuers may need to submit a Conflict
Minerals Report (CMR). This reporting
can be a complementary output of the
third-party audit process.
The independent private sector audit
(IPSA) of Conflict Minerals Reports
mustbe conducted in accordance with the
requirements of the Generally Accepted
Government Auditing Standards (GAGAS)
as established by the U.S. Government
Accountability Office (GAO).
With core values of integrity and ethics
and an established history in impartial
counsel, Bureau Veritas meets all GAGAS
performance audit requirements and is
fully prepared to provide independent
private sector audits of Conflict Minerals
Reports.
chap.6
chap.7

Bureau Veritas is a world leader in conformity assessment and certification services.
Created in 1828, the Group has almost 59,000 employees in around 1,300 offices and
laboratories located in 140 countries. Bureau Veritas helps its clients to improve their
performances by offering services and innovative solutions in order to ensure that
their assets, products, infrastructure and processes meet standards and regulations in
terms of quality, health and safety, environmental protection and social responsibility.
With proven experience and expertise in independent third-party auditing, due diligence
systems, and chain of custody standards, and with resources around the world, Bureau
Veritas is poised to be a leader in conflict minerals solutions.
Learn more at www.bureauveritas.com.
ABOUT BUREAU VERITAS
ELL is a specialist consultancy dedicated to responsible mining and sourcing.
Working from concept to implementation, we help our clients transform their ideas,
businesses, and operations into something more sustainable not just for them, but
for their stakeholders, too. We provide world-class research, advisory, and capacity-
building services to businesses along the value chain (mining, trading, manufacture,
retail), governments, aid agencies, and NGOs. We stand amongst the world’s foremost
development consultancies with expertise in Artisanal and Small-scale Mining (ASM)
and in the development of responsible sourcing and due diligence systems for minerals,
especially from fragile economies. Conflict minerals have been a core specialism for ELL
since 2003; we investigate the issues, design the initiatives addressing them, educate
stakeholders, and support companies in supply chain due diligence and conflict minerals
management. Learn more at www.estellelevin.com and www.asm-pace.org.
ABOUT ESTELLE LEVIN LIMITED
Credits :
Contributors : François Heuzé, Estelle Levin, and Lucas Lopez-Videla
Graphic design and illustration : www.distillateurgraphik.com
Photos : cover © William Warby © Alchemist-hp / p4. © Carlos Aguilar / p5. © Alchemist-hp © Jurii
© Paulrommer - Fotolia © Vitaly Korovin - Fotolia / p6. © Alchemist-hp / p8. © Vitaly Korovin - Fotolia /
p9. © Africa Studio - fotolia © Laura Lartigue / p10. © webphotographeer - Istock / p11. © Fabio Filzi -
IStock / p12. © Paulrommer / p13. © Djgunner - Istock / p14. © Brasil2 - Istock / p15. © Hidesy - Istock /
p18. © Malajscy - Fotolia / p21. © Urbancow - Istock.

BUREAU VERITAS & ESTELLE LEVIN LTD.
ON CONFLICT MINERALS CHALLENGES
AND MOVING BEYOND COMPLIANCE

On Conflict Minerals Challenges & Moving Beyond Compliance

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