ITRI Supply Chain Initiative and conflict minerals traceability

Transcription

1 ipad conference Kinsahsa, 25 October 2010 ITRI Supply Chain Initiative and conflict minerals traceability Kay Nimmo, Manager of Sustainability and Regulatory Affairs ITRI Ltd, St Albans, AL2 2DD, UK, tel: +44(0)

2 Progression of Tin Mining Ipoh city in Malaysia.. renowned for rich tin deposits since 16th century... vulnerable to attempts from rival chiefs to seize the throne and gain control of the lucrative tin trade s Chinese immigrants mining by the use of waterwheel steam engine Typical technological and social issues

3 Where does tin come from? traceability traceability? traceability??? mines or primary smelters secondary scrap refiners ITRI members ~80% tin production INDICATION ONLY - NOT TO SCALE

4 50% of tin from small scale or artisanal mining China Indonesia Peru Bolivia DR Congo Brazil Potential for increased production Big Small Rest of world 2007 mine production, '000t Malaysia has minimal tin mining, but is a major smelter and investor

5 Forecast supply and tin price Weeks supply, price in US$/tonne Forecast Weeks' supply Prices ,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

6 DRC Potential vs Current Reductions DRC tin value 1,061 tpm x US$ 26,500 = US$28m per month Global large scale tin projects mainly 2 or more years away

7 Actions in Tin Supply Chain consumer miner PHASE 2 negociants, comptoirs etc concentrate trader retailer recycler PHASE 1 USER AUDITS smelter refiner metal trader EICC, GeSI assembler solder producer

8 itsci Phases and Objectives A Phased and Constructive Approach Towards Improved Due Diligence, Governance and Traceability PHASE 1: LEGITIMACY OF EXPORT AVAILABLE DATA Harmonised document requirements on all shipments including written declarations confirming lack of involvement of illegal armed groups PHASE 2: TRACEABILITY FROM MINE NEW CHALLENGE Developing and implementing a system to ensure mineral traceability from exporter back to the mine site and develop chain of custody data PHASE 3: SUSTAINABILITY OF SECTOR LONGER TERM AIM Implementing basic social and environmental performance standard measurement at mine sites and consider improvement plans Integrating third party independent audits and checking mechanism Priority issue of conflict minerals DRC and Rwanda

9 PHASE 1 Data collection Independent confirmation

10 PHASE 1: Comptoir Certificate Implemented from 1 st July 2009 Requires 8-10 official DRC export docs And best available information on; COMPTOIR DESCRIPTION OF MATERIAL ORIGIN OF MATERIAL SUPPLY ROUTE SUPPLIER BUYER Supply Chain awareness and vigilance improved Also required for DRC material via Rwanda Smelter auditors statement to ITRI

11 PHASE 2 Field implementation Data handling/statistics Verification

12 PHASE 2: Traceability to Mine Site Mine Mine certificate Mine Reference certificate Mine M1234 Reference certificate M1234 information Reference M1234 Reference M123 Mine Mine certificate Mine Reference certificate Mine M1234 Reference certificate M1234 information Reference M1234 Reference M456 Negociants information Reference N123 Negociants information Reference N456 Comptoirs information Reference C789 export Initial pilot trial of Phase 2 started June 2010 at Kalimbi, South Kivu Pilot project funding from; Industry comptoir/smelter levy on cassiterite Contributions from traders, electronics companies, tinplate sector Contribution from T.I.C. Ta association

13 At the mine Kalimbi, South Kivu Currently Sn only SAESSCAM and miners record; Date Time Tag number Miner/co-operative Weight Price Negociants/buyer Destination

14 At the negociant Nyabibwe, South Kivu Negociant and Div. of Mines record; Date Time Mine tag number Mine name Weight in Neg. tag number Weight out Sales price Comptoir/buyer Transport route

15 At the comptoir Bukavu, South Kivu Comptoir and CEEC record: Date Time Negociant tag number Mine name Weight in Price Weight out Export certificate number (OFIDA)

16 IBM Maximo Database & Reporting On-line, traceability, reporting, financial software package links 10,000 entries = 60% of records so far; future >1 million a year Critical part of project development

17 Verification and Audits Independent assessment and audit team (Channel Research) Set up project to define terms of reference and audit method Monthly monitoring of indicators 1. System integrity Are suitable key checks made; weight etc itsci database manager Is tag and book information accurate assessment team 2. Collection of field information From itsci staff on site From assessment team Possible NGO governance network project co-operation

18 PHASE 3 Site conditions Co-operation with BGR-CTC

19 Conflict Free Smelter Program (EICC/GeSI) Drafting audit specifications with ITRI members and NGO s First audits by end 2010 Following audit, smelter is deemed conflict or non-conflict Suppliers/component manufacturers required to source from those smelters High percentage of the tin market Audit requirements depend on source location; Level 3 = if sourced from DRC Level 2 = if sourced from countries adjoining the DRC, or any other Level 1 country with no plausible mine production Level 1 = if sourced from other known production countries

20 The International Dimension. US disclosure from April 2011 (?) OECD agreement Oct roadtest from Jan 2011 ICGLR proposed Oct % of Rwandan minerals by Dec 2010, 100% by April 2011 DRC currently under a mining suspension! No funding! No tagging! No expansion!

21 US Legislation timing & impact Securities Exchange Commission SEC Currently considering possible draft rules First draft by autumn 2010 Final rules by 15 th April 2011 Could use OECD guidance as basis for rules Possible disclosure by US companies from April 2011 Will NOT buy metal from Africa not under itsci scheme from April, probably before Comments can be made - Title XV - Miscellaneous Provisions

22 OECD Guidance: supply chains of minerals from conflict affected or high risk areas Due diligence Framework document Supplement on tin, tantalum and tungsten Supplement on gold (not drafted yet) Final draft stage, followed by roadtest Annex I: 5 step framework 1. Company management systems C: Systems of control and transparency through chain of custody, traceability etc 2. Identify and assess risk A: Map risks according to mineral supplement B: Assess risk against supply chain policy 3. Design and implement risk strategy 4. Independent third party audits 5. Reporting on due diligence

23 OECD Step 1:C1 local mineral exporters EITI itsci phase 2 a) all tax etc payments to government (phase 1) b) other payments made to governmental officials c) all payments to military or other armed groups d) ownership of the exporter? itsci ass. team e) the mine of mineral origin check f) quantity, dates and method of extraction check g) locations where consolidated, traded, processed check h) identification of upstream actors check i) transportation routes check

24 OECD Mitigation Annex II: model supply chain policy Intolerable risks Illegal armed groups Suspension or discontinuation Public or private security forces Bribery and fraudulent risks Money laundering Payments to the Government Measurable mitigation UNDER WHAT TIMESCALES?

25 CONCLUSION Traceability is possible Traceability and risk management is required International markets purchase deadline Dec 2010 April 2011 itsci relevant to tin, tantalum, tungsten Planning for implementation in Rwanda and Katanga Requires significant funding for rapid expansion Local activity, community involvement Database development Full auditing Support from other programmes Capacity building of SAESSCAM and CEEC among others

26 Thank you! Further information can be found on ITRI Sustainability webpages

27 Issues in the tin market China: Local mine production now well below domestic demand, low grade/high cost mines Indonesia: Small scale production falling, environmental issues Peru: Reserves will be exhausted in 6-7 years Bolivia: Issues with state-funded projects Mine projects in the rest of the world are low grade and 3 years or more away from start-up

28 Tin prices: back to the 80s! Prices in US $/tonne 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Real prices expressed in December 2009 US$ Nominal Price Real Price

29 Consumption recovers, supply stretched World Supply/Demand Balances in Refined Tin ('000 tonnes) Forecast e 2011 World World Refined Production DLA Sales World Refined Consumption Global Market Balance Reported stocks LME Producers Consumer/other Total World Stock Ratio (week s consumption)

30 Where is tin used..? (2007) 13.9% 5.5% 2.1% 9.2% Solders - electronic 44.1% Solders - industrial Tinplate Chemicals Brass & Bronze Float glass 16.4% Other 8.8%