It is a simple question companies are required to ask and, depending on the direction of the latest appellate court decision, perhaps even answer: do your connectors contain conflict minerals? For the vast majority of connectors, conflict minerals are a non-issue, however the answer “no.” is no longer sufficient. A small requirement of the 2012 Dodd-Frank Act compels publicly-held American companies to certify the tin, tungsten, gold or tantalum in their raw materials stream do not come from the war-torn region of central Africa.
How is it that a war in sub-Saharan Africa, has impacted the supply chain of modern electronics, manufactured in Asia under contract to American corporations? Buried in a 2,300 page law overhauling the financial regulation of the U.S. banking system is a section requiring manufacturers to reveal if materials from mines in the Democratic Republic of Congo (DRC) are in their supply chain. These mines utilize child and slave labor under almost inhumane working conditions, producing profits that have perpetuated a war that has killed more than five million people since 1998.
Perhaps it is because of these strange beginnings and wide ranging efforts that the actual compliance with the law is so difficult. The complexities of modern international supply chains and the abilities of major corporations to trace raw materials to their sources, multiple transactions removed from their final manufacturing process is challenging at best.
Even then, knowing you aren’t using conflict minerals in your supply chain and proving it to the satisfaction of the Securities and Exchange Commission are two entirely different propositions. Reviewing a selection of Dodd-Frank compliance statements on TTI’s website shows that companies seem to fall into three camps: international companies not impacted by the provisions of American law, those small enough or close enough to the source of their raw materials to make a declaration about their product sourcing status, and the largest group – American based manufacturers with wide ranging, multi-level supply chains who are still in the process of the expensive and time consuming required audit. This group is relying on litigation to buy enough time to complete these audits or even overturn the law as too onerous.
For the second group of connector manufacturers, complying with the new law has been relatively straightforward. The impact of conflict minerals on the connector business is virtually nil, since the majority of the targeted raw materials aren’t usually employed in manufacturing connectors. There may be some specialty products or unique applications, but by and large at TTI, our connector business is not impacted nearly as much as some other areas like passives. Tantalum’s major use is in capacitors and while a significant portion of the world’s supply traditionally has come from the Congo, none is used in typical connector manufacturing. Gold is an important mineral and the DRC produces one percent of the world’s supply, but there are alternative sources and those can even be easier to trace. Titanium has similar alternatives. Casserite is refined to make the tin used in solder, alloys and some contacts, but the reforms have had the intended impact on the ore coming from the Congo area. What was once a third of the world’s supply is now less than three percent and production of tin in the region dropped from 12,000 tons in 2009 to 2,900 tons1 just two years later.
Which leads to the conundrum concerning the complexity of the law – for all of its difficulties and strain on the electronics industry, it does seem to be working. Mines are closing and lives are being saved. And that is difficult to argue.
Reprinted with permission from Electronics Sourcing North America.