Conflict Free Sourcing Initiative (CFSI) Program Update

[SIO Conference, Vancouver]

John PlylerBlackBerry

CFSI Workgroup18 June 2013

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In-Region Programs

Conflict-Free Smelter Program (CFS)

Company Assurance

Finished Product

MINE SMELTER/REFINERY OEMS

CFSI Conflict-Free Sourcing Approach

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In-Region Programs

Conflict-Free Smelter Program (CFS)

Company Assurance

Finished Product

MINE SMELTER/REFINERY OEMS

CFSI Conflict-Free Sourcing Approach

In-Region Programs

• Public-Private Alliance (PPA)– Established by US State Department and USAID– Mission: The development of traceability, validation, and due

diligence schemes for minerals sourced in from the DRC and adjoining countries.

– $5.2 Million total expected public/private funding (~$1M already donated by industry)

http://www.resolv.org/site-ppa/

• iTSCi (Bag-Tag scheme in SE DRC/Rwanda currently)– iTSCi scheme is the first in-region mineral tracing initiative– Developed by Tin/Tantalum Industries; aligned with CFS– Three CFS compliant smelters receiving iTSCi material thus far, as

well as a few other smelters not yet CFS compliant

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In-Region Programs

• Solutions for Hope Project– 1st demo of a verifiably conflict-free, in-region sourcing model– Tantalum ore sourced from Southern DRC– Initial material segregated, once proof of concept achieved,

material has become standard part of material flow for component manufacturer’s supply chain

http://solutions-network.org/site-solutionsforhope/

• Conflict-Free Tin Initiative– Dutch Government Supported Initiative kicked-off mid-2012– 1st demo of verifiably conflict-free material from Northern DRC

http://solutions-network.org/site-cfti/

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In-Region Programs

Conflict-Free Smelter Program (CFS)

Company Assurance

Finished Product

MINE SMELTER/REFINERY OEMS

CFSI Conflict-Free Sourcing Approach

Conflict-Free Smelter (CFS) Program

CFSI has spearheaded the development of a multi-stakeholder assessment process to verify that smelters/refiners are sourcing conflict-free minerals.

Why: Provide a mechanism that enables and encourages responsible sourcing of tantalum, tin, gold, tungsten

Schedule: Addressing each metal separately, but concurrently –Tantalum, tin and gold smelter/refiner assessments are underway; tungsten smelter assessments are expected to begin in 2013. –Gold CFS assessment process has been harmonized with Responsible Jewelry Council and London Bullion Market Association audit processes

Results: A list of smelters/refiners who are compliant with the CFS assessment protocol is posted on the CFS website:

http://www.conflictfreesmelter.org

** Companies make their own sourcing decisions. **

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Upstream

Smelters / Refiners

Downstream

Conflict-Free Smelter (CFS) Program

Raw Materials

Finished Products

Supply Chain Focal Point – Smelters/Refiners

Why Here?Conversion of distinguishable starting material

into an indistinguishable productSmall Numbers – tantalum, tin, tungsten and

gold smelter/refiners total less than 500 companies globally

CFS Audit Focus

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SmelterCompany

Company Mass Balance- Includes all inventory- Includes all facilities

Ore / Concentrate

Recycled / Scrap

Toll Customer

Finished Products

Toll Supplier

ConflictFree

Policy

Intermediates

Unfinished Products

Company Program Validation- Conflict Free Policy- Conflict Free Sourcing Systems

Sourcing Processes Validation

Audit Protocol Improvements

• 3Ts harmonized protocol released 22 Dec 2012, effective 28 Feb 2013– Improved Level 3 Country requirements– Separation of Audit Procedure and Protocol content– Improvements from stakeholders– Translation to several key smelter languages

• Further improvement underway (May 2013 release)– Addressing further tin industry concerns (definition, ASM,

secondary materials, slags)– Improving standardization, readability and clarity– Recognition of U.S. SEC Rule grandfathering allowances

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CFS Online Program Indicators

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http://www.conflictfreesmelter.org/CFSindicators.htm

CFS Program Indicators Changing

• Plan:– Indicator reduction:

1. Number of smelter/refiner companies currently active in the CFS process (active = signed agreements, audit on track)

2. Number of companies with compliant smelters/refiners

– Qualitative program status is provided to stakeholders on a monthly basis (company names not included)

• Reasoning:– Previous indicators allow tracking in and out of corrective action

status when Compliant and Active lists compared– Previous indicators provide no pre-audit details on specific

company and thus no means for smelter engagement

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Audit Program Improvements

• Further work being undertaken to ensure CFS Program compliance with ISO Standards– ISO 19011 and ISO/IEC 17021

• Auditor accreditation program being developed– Will allow other audit firms to become qualified– Will allow smelters/refiners to become educated to

content auditors are trained on

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In-Region Programs

Conflict-Free Smelter Program (CFS)

Company Assurance

Finished Product

MINE SMELTER/REFINERY OEMS

CFSI Conflict-Free Sourcing Approach

Company AssuranceDevelopment, integration and maintenance of tools and processes which support a down- stream company’s management system and risk assessment activities:

– Policy language included in the EICC Code of Conduct (http://www.eicc.info/eicc_code.shtml )

– Created; maintaining a tool to collect information about a supplier’s due diligence processes and sourcing: Conflict Minerals Reporting Template

– Establishing resources and processes to support data collection and analysis

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Conflict Minerals Reporting Template Flow

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Smelter SmelterSmelters

Sub-SuppliersSub-

SuppliersSub-Suppliers

Template User

Direct SuppliersDirect

SuppliersDirect Suppliers

1. Sends request to direct suppliers

2. Sends request to sub-suppliers

3. Cascades through supply chain until smelters identified. Sub-suppliers return template to suppliers.Direct

SuppliersDirect SuppliersDirect

Suppliers

Original User

Customer

4. Direct suppliers return aggregated roll up template

5. User returns final aggregated roll up template

Company Assurance Program Updates

• Conflict Minerals Reporting Template & Dashboard– Revision 2.02 released March 2013; Revision 2.03 in process– MRPRO Dashboard (free) improved to accept all 2.xx

versions as well us upgrade Rev.1 templates (available here)– Supporting Solution Providers creating database versions– Reporting template and dashboard tool available at

http://www.conflictfreesmelter.org – Considering a quarterly update schedule; primary purpose is

revision of the Standard Smelter List; next major release contingent on IPC Standard

• Online training for CFSI members in process

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Release 2.02 Noteworthy Improvements

• Addition of Italian translation (ninth language in addition to (English, Mandarin, Japanese, Korean, German, Spanish, Portuguese, French)

• Simplification of “terms of use” language• Additions / edits to the “Standard Smelter List”• Addition of “Smelter ID”• Added more rows for reporting smelters (2500)

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IPC1755 Standard

• EICC and GeSI collaborating with the IPC (www.ipc.org, “Association Connecting Electronics Industries”) with the objective to:– Develop a standard for exchange of data related to

conflict minerals used in manufactured products to facilitate efficient data exchange across companies, supply chain levels, and industries• Not an actual data collection tool – but a set of due diligence

information requirements and “instructions” to allow different tools to communicate

• IPC facilitating an open ANSI standard process

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IPC Progress and Next Steps

• Work began in November 2012 and continues:– Committee last met on Feb 21 to resolve comments

received on the Final draft for Industry Review; post meeting briefings held

– Revising schema; text according to committee decisions– Circulate Proposed Standard for Ballot in July - August– Publish final standard in Fall 2013

• Open to engagement by Individual Companies and Trade organizations– Contact Fern Abrams: FernAbrams@ipc.org

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SummaryIn-region activities are critical to promote the responsible sourcing of materials for smelters and refineries from the DRC and surrounding countries

CFS Program is a voluntary initiative in which an independent third party audits smelter and refiner sourcing activities to demonstrate that all minerals processed originated from conflict-free sources

Company assurance activities are focused on improving company capabilities to validate responsible sourcing of materials by creating common tools and processes

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