Conflict Minerals

Chinese Chamber of Commerce for Metals, Minerals and Chemicals Implements OECD  Responsible Mineral

The OECD and the Chinese Chamber of Commerce of Minerals, Metals and Chemicals Exporters (CCCMC) have recently launched the Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains.  These Guidelines are of importance, as many manufacturers globally use components sourced from companies based in China. These Guidelines will now align with the OECD Due Diligence Guidance for Responsible Mineral Sourcing from Conflict Affected and High Risk Areas and were developed in collaboration between the two organizations.

The Guidelines are designed to align Chinese company due diligence with international standards and allow for mutual recognition with existing international initiatives and legislation. Companies are required to comply with all applicable laws and regulations, and the implementation of these Guidelines cannot act as a substitute for such legal or regulatory compliance.

The Guidelines provide guidance and support to companies which are extracting and/or using mineral resources and their related products and are engaged at any point in the supply chain of  minerals to identify, prevent and mitigate their risks of directly or indirectly contributing to conflict, serious human rights abuses and risks of serious misconduct.  These companies are also encouraged to use the Guidelines as a reference.

The implementation of the Guidelines will initially be voluntary.

For the full copy of the Guidelines see: http://mneguidelines.oecd.org/chinese-due-diligence-guidelines-for-responsible-mineral-supply-chains.htm

Background

The extraction and trading of natural resources can create a beneficial relationship between local communities and companies, with growth and prosperity for all.  As widely seen, however, natural resources can also be exploited to fund armed conflict, with the  recent focus being on 3TG (tin, tantalum, tungsten and gold).  The international community has focused on breaking the link between business and the violation of human rights over the past decade.  Measures range from UN Resolutions to initiatives such as the “Kimberley Process” (for the traceability of diamonds) from which global standards, laws and regulations have been implemented. In 2011, the UN Human Rights Council unanimously endorsed the “United Nations Guiding Principles on Business and Human Rights” which is the first corporate human rights responsibility framework supported globally.

The hope is that the approach taken internationally will put pressure on mineral smelters to gain certification for their output.  Once a critical mass is certified, it will help manufacturers upstream to meet their obligations.  It is estimated that there are approximately 370 smelters in the 3TG supply chain, of which round half are now certified.

Companies are advised that they will need to set up auditable processes and practices and make sure they keep track of developments.

The primary responsibility of companies that they do not intentionally or unintentionally cause, contribute to, or benefit from human rights abuses or armed conflict, and respect the human rights of all whom their business activities might impact. Responsible companies, therefore, must conduct ongoing comprehensive due diligence on all aspects of their business, including risks that may be present in the supply chains through which they source natural resources.  The recognized international framework to conduct supply chain due diligence in the natural  resource sector is the “OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas”, which serves as the basis for most industry programs on responsible mineral supply chains in many countries.