What Do You Need to Know About CMRT for Industrial Compliance?  

Companies who file SEC Exchange Act Sections 13(a) or 15(d) reports and use tantalum, tin, gold, or tungsten in the production of goods are required to file a yearly Conflict Minerals Disclosures and Responsible Sourcing report. The CMRT is a free template to aid in supply chain reporting.

Regulatory bodies believe that it is the responsibility of every company to know where conflict minerals are coming from. From direct inclusion in products, to use in the production of products, companies are now required to trace and report where they are sourcing conflict minerals. It is also expected that companies will switch to suppliers and smelters who can be certified as not connected with violent regimes or terrorist groups.

What Are Conflict Minerals?  

Conflict minerals include tantalum, tin, gold, and tungsten. While there are also other minerals and gems that are known to fund conflict and violence in mining regions, the United States and other Organization for Economic Cooperation and Development nations have singled out these four minerals as having undue economic impact on violence in the DRC region.

It is important to note that when completing the Conflict Minerals Reporting Template (CMRT), there are no minimum amount thresholds for reporting. It is important that every manufacturer take a close look at every possible material used in production, and analyze it for containment of tantalum, tin, gold, or tungsten. The EU calls these minerals the 3TG. Here are a few examples of places 3TG may be hiding.

• Gold is found in flash memory devices, semiconductors, jewelry, and touch display screens on tablets and other mobile devices.

• Tungsten is used in lightbulb filaments, rocket engines, and saws and drill bits, propeller shafts, bearings, and valves.

• Tin is in a myriad of products from soldered components to parts made from alloys, and even in some plastics and pharmaceutical and food packaging.

• Tantalum carbide is used in cemented-carbide tools used for machining.

Countries Affected By Conflict Minerals Acts  

The Responsible Minerals Initiative (RMI) and the Organization for Economic Cooperation and Development (OECD) identify affected countries as those who suffer from war, conflict, destabilization, and lack of security due to the funding of violent groups or civil warfare through mineral mining. This includes egregious civil rights violations and violations of national and/or international law.

OECD member nations, including nine additional non-member nations agree to responsibly source minerals, assuring that the supply chain does not support groups that seek to destabilize and do violence to the citizens of affected countries.

The affected countries include the Democratic Republic of the Congo (DRC) as well as other Conflict Affected and High Risk Areas (CAHRAs). Nations that have been identified as a CAHRA change, and the list is updated quarterly. Currently the CAHRA list includes:

• Afghanistan

• Burkina Faso

• Burundi

• Cameroon

• Central African Republic

• Chad

• Columbia

• DRC

• Egypt

• Eritrea

• Ethiopia

• India

• Libya

• Mali

• Mexico

• Mozambique

• Myanmar

• Niger

• Nigeria

• Pakistan

• Philippines

• Somalia

• South Sudan

• Sudan

• Ukraine

• Venezuela

• Yemen

• Zimbabwe

It is important to note that the acts do not prohibit trade in minerals with the CAHRA nations. It does require that trade is certified to be conflict free, or not contributing to conflict, violence, destabilization, and human rights violations in the area.

Contract to Manufacture

The SEC ruling applies to any company who contracts to manufacture any item or process that includes conflict minerals. The term “contract to manufacture” means that the company has influence over the manufacturing process.

According to the SEC, this rule does not include companies who:

• Affix a brand label to a product that is manufactured entirely by a third-party provider.

• Service products or make repairs on products that may contain conflict minerals.

• Do any other contractual business that has nothing to do with the manufacturing process of a product.

Supply Chain Certification  

Companies who determine that their product or process includes conflict materials are required to file an SEC report by May 31 every year that discloses the minerals, the source of the minerals, and certifies that they have done due diligence to ensure that the supply chain for the minerals does not support violent CAHRA regimes. This process includes several reporting and verification steps.

• The company must file a Form SD with the SEC yearly, providing product and supply chain information on conflict minerals and the supply chain information.

• The company must post updated information on its public-facing website, and include that internet link on the Form SD for verification.

• Perform due diligence to trace the mineral sources in the supply chain including the country of origin, facilities used to process the mineral, and the mine of origin.

DR Conflict-Free Certification  

If the company finds that the supply chain is conflict-free, or found to originate from scrap materials, then it must obtain an independent audit of the supply chain. This information is required to be posted in multiple places for verification.

• The audit must be performed according to the standards provided by the Government Accountability Office (GAO).

• A detailed description of the steps taken and evidence obtained for conflict-free certification must be included on the Form SD.

• Audit must be included on the SEC Form SD as well as the name of the auditor.

If your company audit has difficulty determining supply chain sources, then the SEC allows a temporary “undeterminable” filing.

Economic Impact  

Unfortunately, the economic impact of these rulings has the greatest immediate negative impact on individuals working in the mining sectors in CAHRA countries. In some cases, the SEC regulations have caused a significant decrease in the demand for minerals from mines in these regions, negatively impacting the income and livelihoods of miners, smelters, and their families.

However, as time passes, more CAHRA regions and companies in those regions are working to disentangle their business workings from violent and negative regimes who are responsible for the CAHRA designations. This ultimately stimulates greater economic growth, with funds going to livelihoods and community improvements that are not oppressive to the workers and citizens in affected areas.

What Is the CMRT?  

The Conflict Minerals Reporting Template (CMRT) is a free standardized template provided by the Responsible Minerals Initiative to help companies complete their SEC filings. The RMI is a third-party auditor that is working to build a global database that includes all verified smelters and refiners. This work helps industries to work with verified providers to maintain a conflict-free certification without the headache.

The template serves several purposes.

• Enables companies to accurately complete the SEC supply-chain reporting.

• Helps companies to choose verified mineral suppliers via the RMI database.

• Identifies additional smelters and refiners who need verification.

Conclusion  

When companies work together to use minerals that are sourced from supply chain companies that are careful to avoid financing violent regimes, they make a positive difference in the quality of life for those who are living in at-risk regions. They also provide an economic deterrent from actions that violate human-rights.

Governing bodies and consumers alike believe that companies have the responsibility to know where raw materials are coming from and to source those materials in a way that protects the workers who are producing those materials.

The CMRT and the RMI, who produces it, are tools that help companies large and small to fulfill their SEC reporting investigations, tasks, and filings in a way that is more efficient, cost effective, and straightforward.