1. Due Diligence within the Conflict Free Smelter Program
World Tin Mining Forum, Kunming
June 24, 2016

2. Introduction Leah Butler CFSI Program Director
10 years of experience in regulatory compliance, stakeholder engagement, and mining governance
Worked for government, consulting firms, and the mining industry in the U.S., South America, and Africa
MA in International Relations, Yale University
Masters of Environmental Management, Yale University
Bachelors of Environmental Science, U.C. Berkeley
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3. Introduction / 讲员介绍 Finny Tang RCS GLOBAL Asia Manager
11 years of experience in procurement engineering, socially responsible compliance, conflict free sourcing management in electronics and mining supply chains
BA in English, Central South University
MBA, Hunan University
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4. AGENDA 1. Program Overview 2. Due Diligence Requirements 3
AGENDA 1. Program Overview 2. Due Diligence Requirements 3. Market Acceptance 4. Resources 5. Summary

5. Conflict Free Sourcing Initiative
Founded in 2008 by members of the Electronic Industry Citizenship Coalition (EICC)
Supports over 330 private companies, representing variety of industries, including: electronic, ICT, auto, retail, aerospace, apparel,
to comply with the responsible sourcing laws in US and pending legislation in EU
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6. Conflict Minerals Background
U.S. Conflict Minerals Law
Law requires U.S. manufacturing companies to submit an annual report about their efforts to identify the sources of tantalum, tin, tungsten, and gold and conduct due diligence
U.S. companies rely on information from all their supply chain partners for compliance EU
The European Union is developing responsible sourcing laws  will likely be global, not limited to DRC
China Audit Scheme
CCCMC rolled out Chinese Due Diligence Guidelines in December 2015 based on the OECD Guidance
AQSIQ leading the development of regulatory requirements

7. U.S. Dodd-Frank Act European Union China System Alignment
Regulatory Alignment
China System
U.S. Dodd-Frank Act
European Union
China
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8. Smelters/Refiners Responsibility for Due Diligence
OECD Step 4: Independent Third-Party Audit of Smelter Due Diligence Practices
Smelters/Refiners in the best position in the supply-chain to:
Understand the country of origin and chain of custody of minerals
Identify and mitigate supply-chain risks
Downstream requests for smelters to participate in a globally-recognized independent third-party audit program:
Conflict Free Smelter Program
London Bouillon Market Association – Responsible Gold Guidance
Responsible Jewelry Council – Chain of Custody
GSM Supply-Chain Sustainability & Regulations

9. Smelter Audits
WHAT: Independent third party audit that validates smelters’ due diligence for 3TG. Who: There are over 260 smelters from over 30 countries currently participating in the program Why: Demonstrate responsible souring of tantalum, tin, tungsten and gold. How: Audit cycle is annual or every 3 years. Results: Compliant smelters are posted to the public:

10. Compliant Smelters since 2010
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11. Identified 3TG Smelters Worldwide
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12. Participation of Smelters in China
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13. Program uptake Eligible to apply: ~39 Applied: 21 Enrolled: 15
Risk Based Program
Reduction of audit cycle to 3 years
Applicable for smelters with low risk sourcing = domestic L1 sources only AND passed two (2) consecutive audits
Smelters contact to apply
More info here:
Program uptake Eligible to apply: ~39 Applied: 21 Enrolled: 15
2 tin smelters in China
Pending: 3
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14. System Linkages Finished Product
MINE SMELTER/REFINERY OEMS
In-Region Systems (mine site)
Note: This highlights the 3 main areas of focus of the EICC and GeSI CM program.
Independent Third Party Audit (smelter)
Company Assurance (downstream)

15. AGENDA 1. Program Overview 2. Due Diligence Requirements 3
AGENDA 1. Program Overview 2. Due Diligence Requirements 3. Market Acceptance 4. Resources 5. Summary

16. Compliance Requirements
= Commitment to policy, processes, and systems that support responsible sourcing
Management System - Conflict Minerals Policy
System of Controls - Mass Balance
System of Controls - Material Type and Origin
Risk Management - OECD Conformance
= Risk identification, assessment, and mitigation. Demonstration of conformance to OECD guidance for high risk sourcing/Level 3
= Demonstration of internal material control and effective management systems
= Support and clarify chain of custody and origin of materials
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17. Documentation Requirements – China Materials
Country of Origin is necessary for:
Ore (LSM, ASM)
Material from non-CFSP compliant smelters (additional due diligence required!)
Country of Origin is not necessary for :
Legacy Material
Assay Material
Secondary/Scrap
Material from CFSP compliant smelter
New China Guidance Available!
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18. Document Reference List for China
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19. Documentation Requirements
Level 3 – High Risk
Country of Origin
Incident Monitoring
Mine Site Due Diligence
Internal Traceability
Internal and International Transportation
Level 2 – Medium Risk
Country and Region of Origin
Visit Reports
Level 1 – Low Risk
Material origin document level determination
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20. CFSP Auditors SGS UL http://www.sgs.com/
International, based in Switzerland
Auditing CFSP since 2011
350 auditors in China UL
International, based in the US
Auditing CFSP since 2010
171 auditors in China
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21. AGENDA 1. Program Overview 2. Due Diligence Requirements 3
AGENDA 1. Program Overview 2. Due Diligence Requirements 3. Market Acceptance 4. Resources 5. Summary

22. Public Information

23. Market Trend Participation of China tin smelters in CFSP is key:
China is the largest tin producer and consumer in the upstream supply chain:
China is a key player in the international tin market
Increasing number of large brands are requiring all their tin to be from compliant smelters:
Market access is difficult for non-compliant smelters
Chinese tin smelters need their suppliers to be validated so they more easily able to pass their own CFSP audit:
Knock-on effect within the China tin market
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24. Working together we can make great progress!
Non-Compliant
Compliant
Smelter A
Smelter B
Smelter C
Smelter Z
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25. Benefits of Participating in Independent Third Party Audits
Some U.S. companies require suppliers to source from smelters that have been validated through an independent third party audit. These programs process access to international market.
Other benefits to smelters:
Cross-recognition means that audit suffices for multiple systems;
Competitive bid processes;
Improve due diligence systems facilitates responsible sourcing practices;
Better information about supply chain = gain efficiencies in sourcing and accounting;
Satisfy source of origin requirements of customers;
Reduce downstream customer requests for information on procurement practices;
Gain international recognition by being listed on public websites;
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26. AGENDA 1. Program Overview 2. Due Diligence Requirements 3
AGENDA 1. Program Overview 2. Due Diligence Requirements 3. Market Acceptance 4. Resources 5. Summary

27. Audit Program Components
Audit Protocol defines audit requirements
Audit Procedure describes how the audit works
Audit tools organize information for the audit
Training explains the audit to smelters and auditors
Oversight body to ensure quality, consistency, and credibility.
The Conflict-Free Sourcing Initiative

28. CFSI eLearning Academy
Free and available to the public
Courses and resources in Chinese
Improves audit preparation
Contains courses for smelters and auditors
Please send an to to be set up with credentials.
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29. Free Technical Assistance
Bowen Zhang, Asia Due Diligence Consultant, RCS Global
Former CFSP auditor for UL based in China
Conducted many CFSP audits in China
Professional one-on-one technical advice
Finny Tang, Asia Due Diligence Consultant, RCS Global
Former IBM Social Responsibility and Conflict Mineral Program Manager in Asia
Managed over 100 suppliers a year and experienced in helping companies improve social responsibility and conflict free sourcing performance
CFSP pays for the service = FREE for smelter!
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30. Contacts in China
Company
Name
Best Buy
Ruby Liu
Intel
Victor Fan
Plantronics
Chilly Mo
Microsoft
Michael Zhao
CFSI members are available to assist smelters throughout the audit process
Explain audit requirements and help smelters prepare for the audit
Conduct pre-audit visits
Audit observations
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31. Thank you lbutler@eiccoalition.org