1. Conflict Minerals Update
11/27/2018 6:05 PM
SIA in US
Conflict Minerals Update
WSC ESH TF - Shanghai
February 2011
Molly Gavin
QUALCOMM
Talking Points

2. Agenda Background Legislation
Securities and Exchange Commission (SEC) Rulemaking
EICC-GeSI Extractives Working Group
Conflict Free Smelter Program
Supply Chain Due Diligence Tool
International Developments incl. OECD Due Diligence Guidance
Questions

3. Democratic Republic of the Congo (DRC)
3Ts (Sn, Ta, W), gold (Au) and Cobalt (Co) are all mined in the DRC.
There is ongoing conflict is in eastern DRC provinces where the 3Ts and gold are mined.
Mining activity is crucial to the DRC economy. However, some mines are controlled by parties that are causing serious social and human rights violations in the region.
These minerals are not unique to the DRC. The majority of the global supply of these minerals originates outside of the Great Lakes Region.
Illegal mining is contributing to
Serious human rights abuses, theft, extortion
Violence over control and taxation of mineral resources
Forced and child labor
Limited development options ->artisanal and small-scale mining
Conservation impact
General environmental concerns related to metal mining and processing include natural resource depletion, land degradation, water and air pollution, and greenhouse gas emissions.
Social concerns include ineffective sharing of wealth generated by mining projects, government and company corruption, human rights violations, native land rights disagreements and aboriginal people displacement, disruption of traditional communities and health and safety issues.
Source: GHGm report “Social and Environmental Responsibility in Metals Supply to the Electronic Industry,” , p. v
Artisanal & small-scale mining (ASM) are crucial to DRC economy
DR Congo Mineral Map source:
Data source: US Geological Survey 3

4. “Conflict Minerals” Mineral Metal Derivatives Related Products
DRC Market Share
Annual Conflict Value
Columbite–tantalite (coltan)
Tantalum (Ta)
Capacitors
15-20%
$11M
Cassiterite
Tin (Sn)
Solder in PCBs and other components; cans
6-8%
$115M
Wolframite
Tungsten (W)
Wiring, circuits LCD screens, drill bits
2-4%
$8M
Gold
Gold (Au)
PCBs, connectors 1%
$50M

5. Usage of the 3 T’s and Gold
Tantalum (Ta)
Tin (Sn)
Tungsten (W)
Gold (Au)
Electrical Non-electrical
Electronics includes not just ITC, but any electronic device such as automotive, household, etc
Data sources from:
1 US Geological survey
2 GeSI report:
3 MakeITfair reports:
4 Enough:
5 GHGm report:
These metals are used widely in electrical products (including automobiles and appliances)
Phase-out / substitution of some of these metals is not currently cost effective, or technically feasible
The amount of these metals used in a typical electronic product are in the order of about 0.7 grams for tantalum, 10 grams for tin, grams for tungsten, and 0.3 grams for gold 5

6. NGO Public Affairs Campaign
Numerous NGOs active and monitoring companies
Extensive news coverage

7. SEC Timeline Draft regulations issued in December 2010
Comments due to SEC March 2nd, 2011
SEC must issue final rules by April 15th, 2011
Companies subject to SEC reporting must report on first fiscal year that begins after promulgation of rules

8. Conflict Minerals – SEC Rulemaking Proposal Requirements (comments due March 2nd)
If yes or do not know, submit report 1 2
Submit annual SEC disclosure? 3
Determine if covered
(a) Issuer that files reports under Securities and Exchange Act?
and
(b) If any conflict mineral (or metal derivative) is “necessary” for the production or functionality of a product that you “manufacture”
Determine
whether
products contain “conflict minerals” produced in DRC or adjoining countries
by a
“reasonable country of origin inquiry”
Descriptions of:
measures to exercise due diligence on source and chain of custody of minerals
And of
any products that are not “DRC conflict free”
facilities used to process those conflict minerals (i.e., smelter)
country of origin of those conflict minerals

9. Decision Tree on Proposed SEC Rules
Source: PWC January 2011

10. EICC and GeSI Approach to Responsible Sourcing
Finished Product
MINE SMELTER/REFINERY OEMS
In Region Sourcing
Conflict Free Smelter Program
Due Diligence

11. Conflict-Free Smelter Program
What: Multi-stakeholder developed audit process to assess whether smelters are sourcing DRC conflict-free minerals
Why: Given minerals lose traceability after processing, smelter /refinery most practical place to validate conflict-free sources of Tantalum, Tin, Gold, Tungsten
How:
Addressing each metal separately, but simultaneously
Order of priority is Tantalum, Tin, Tungsten, Gold
Validation protocol for each metal
Smelter must have: policy, tracing mechanism back to origin, documentation showing purchased materials from non-conflict sources; for minerals sourced from DRC, material must be verified through credible in-region chain of custody tracing scheme
Audits conducted by independent third party auditor
Names of compliant smelters will be published.
Electronic component and final product manufacturers will have option to direct suppliers to source material compliant smelters
Industry-wide efforts by EICC/GeSI to adopt sectoral standards for smelter auditing and validation: Conflict-Free Smelter Program
Minerals lose traceability after processing
Independent audits of smelters as sourcing conflict-free minerals
Companies can direct suppliers to source materials from these smelters
Starting with tantulum (audits of smelters under way now) and then tin
Combined with ITRI tin tracking/tracing system upstream of smelter
Will need to be combined with new supplier declaration standards for communication up and down supply chain
Names of compliant “smelters” and elements of audit results to be posted on EICC and GeSI websites
Companies will have option to direct suppliers to use “compliant” smelters/refiners
Audit results and information on CFS Program will be available for use by other industries
EICC and GeSI are developing an industry tool to engage suppliers

12. Conflict-Free Smelter Program: Industry Milestones for Tantalum, Tin, Tungsten, Gold
Tantalum Schedule
Tin Schedule
Tungsten
Schedule
Gold Schedule
Initial Meeting of Supply Chain
Sept 2009
May 2010
None
N/A
Smelter Visits and gaps identified
Feb 2010
Sept 2010
Dec 2010
Mar 2011
Validation checklist finished
June 2010
Feb 2011
TBD
Smelter Gaps closed
Oct 2010
Smelter 3rd party validation completed
May 2011
Smelter list publically available
June 2011
Goal is to have first round of validations across all metals done by end of Q3 2011

13. EICC-GeSI Due Diligence Efforts
Purpose
The purpose of the EICC-GESI Due Diligence Subteam is to define company due diligence processes that align with SEC due diligence reporting regulations, that will allow companies to consistently interface with their supply chains, create efficiencies and industry standard tools
Accomplishments to date
Draft Due Diligence Tool that aligns with current SEC proposed rules
Declaration
Smelter and Mine List
Proposed Pilot Plan and Schedule (under review)
Challenges
Vagueness of exactly what ‘due diligence’ is in the US legislation and the proposed SEC rules.
Varying opinions of companies on assumptions of what ‘due diligence’ might be.
Minimum due diligence standards still unclear:
Will require assessment of products that contain conflict minerals, adoption of policy for suppliers, requirement that suppliers adopt policy
Will generally require traceability to “approved” smelters that use audited/certified supply chains

14. International Developments
OECD “Due Diligence Guidance for Responsible Supply Chain Management of Minerals from Conflict-Affected and High-Risk Areas”
States in region; NGOs; business groups (EICC, ITRI, etc.)
Would provide guidance on best practices, and help harmonize cross-sectoral expectations for best practices
Endorsed this week by UN expert group report, which in turn endorsed by UN Security Council
Likely to be highly influential with SEC
Five steps:
Strengthening company management systems
Identifying and assessing risk in the supply chain
Designing and implementing a strategy to respond to identified risks
Ensuring independent third-party audits
Publicly disclosing supply chain due diligence and findings
Some early indications that EU considering also action to require due diligence for conflict minerals