Resilinc: How Supply Chains Can Avoid Conflict Mineral Trade

November 14, 2024

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Cobalt mining in DRC is often primitive and dangerous.

Resilinc are among the companies offering supply chain risk management to legislate against the use of minerals mined in areas of conflict, such as the DRC

The mining sector is under close watch over the extraction of conflict minerals.

These resources, retrieved in conflict zones, notably the Democratic Republic of Congo (DRC) and surrounding nations, have raised major concerns with regulatory bodies, governments, activists and businesses alike. Not only do these minerals fund violence, but their trade also profoundly affects human rights in these regions.

Conflict minerals typically include four major metals: tin, tantalum, tungsten, and gold, collectively known as 3TG and each has significant applications across varied industries. Tin appears in solder and alloys, tantalum in capacitors for electronics, tungsten in cutting tools, and gold serves in electronics and jewellery.

Unfortunately, their extraction is frequently marred by severe issues including forced and child labour, as well as excessive environmental damage such as deforestation, water pollution and soil degradation. The resultant profits often support armed conflicts, fuelling ongoing disturbances and instability.

Companies can use the RMI's list of RMAP-conformant smelters and refiners as a starting point for their due diligence efforts

Global efforts to regulate conflict minerals

In an effort to counter these abuses, significant international legislation has been enacted. The US, through the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, specifically within its Section 1502, requires US listed companies to be transparent about their use of conflict minerals. The Securities and Exchange Commission established rules in 2012 to enforce this, enhancing the industry's transparency and accountability.

Similarly, the European Union launched its EU Conflict Minerals Regulation in 2021, targeting EU-based importers of 3TG minerals. It aims for 95% of these imports to be responsibly sourced, demanding comprehensive due diligence of the supply chains. These contributions are vital in the global mission to ensure that conflict minerals do not perpetuate harm.

Promoting responsible sourcing

For companies that rely on these minerals, establishing ethically sound supply chains can be a daunting task. This is where the Responsible Minerals Initiative (RMI) steps in. This industry-driven body aids companies with the Responsible Minerals Assurance Process (RMAP), which evaluates smelters and refiners on their sourcing ethics. Companies are encouraged to use the RMI’s list of RMAP-conformant facilities as a starting point for their supplier assessments, reducing the risk associated with these minerals.

This proactive approach in selecting ethically compliant suppliers is crucial in avoiding inadvertent support of conflict zones.

Challenges of transparency in the supply chain

While it's essential to navigate these regulations, mining companies must also remain profitable and meet market demands, often requiring substantial investments in supply chain transparency. Many businesses have thus turned to technologies like blockchain for a meticulous trace of the mineral supply chain.

Barnabas Ngoga, who has worked as a Legal Advisor on Rwanda's Mining Board, highlights the revolutionary impact blockchain can have in this kind of application.

"Currently, tracking minerals from their origin to end-users is a complex process involving multiple intermediaries. This lack of visibility makes it difficult for companies to ensure that their supply chains are free from conflict minerals or unethical practices," he says.

"By implementing blockchain-based supply chain solutions, companies can create an immutable record of every transaction along the supply chain. This enables them to verify the authenticity and ethical sourcing of minerals at each stage."

A simple representation of the kind of record blockchain keeps throughout the mining process | Credit: Barnabas Ngoga

Supply chain transparency remains a complex issue that extends beyond the 3TG to other critical minerals. Companies are now exploring more stable sourcing regions and investing in technologies to recycle minerals from electronic waste, diversifying their mineral sources and lessening their reliance on high-risk areas.

The pursuit of responsible mining practices and the acquisition of conflict-free minerals are imperative not only for legal compliance but also for fostering ethical and sustainable global markets. By prioritising responsible sourcing, the mining industry can significantly contribute to peace and sustainable development in affected regions.

Bindiya Vaki, CEO and co-founder of Resilinc

Bindiya Vaki, CEO and co-founder of Resilinc, emphasises the growing investor interest in responsible supply chain practices. "This is why deep visibility into sustainable and ethical business practices should be part of a company’s CSR and/or ESG programme," she says.

She notes the evolving landscape of supply chain ESG regulations and stresses the importance of staying informed to mitigate compliance risks and prevent operational disruptions. The clear message is that sustainability isn’t just a trend but a foundational component of modern business ethics and practices.

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