Clash on Dodd-Frank ‘conflict minerals’
Faith leaders and business groups are colliding over a coming SEC ruling on little-known provisions of Dodd-Frank which require companies to track the use of “conflict minerals” in their production of certain consumer products.
One section of Dodd-Frank requires businesses to track - but not halt – the use of so-called conflict minerals from the Democratic Republic of the Congo, including a private sector audit of tracking methods. Another requires those involved in the commercial development of oil, natural gas, or minerals to disclose payments made to governments.
“It’s terrible what we’ve allowed to go on over the last few years without the world paying more attention to it,” said Rep. Jim McDermott (D-Wash.), on a conference call Wednesday with faith leaders. “As many as 7 million people have been killed… this is a mechanism by which we could cut off the flow of money to the rebels [in the Democratic Republic of the Congo]. The rebels are controlling the mines, and selling minerals on the black market.”
The SEC will soon make a decision on how to interpret the law, and certain business groups are suggesting that the sections would needlessly increase compliance costs.
“We’re concerned that industry pressure on the SEC will be so intense that they’ll water down the law and it’ll become ineffective,”said Corinna Gilfillan, the head of Global Witness, a human rights group.
Conflict minerals are found in all sorts of consumer products, and are widely used in electronics. The four main minerals mined in the Congo are tin, tantalum, tungsten and gold. Tin is used in circuit boards, tantalum in electronic capacitors, tungsten to allow mobile phones to vibrate, and gold as a coating for wires.
Heavyweights like the Chamber of Commerce, the American Petroleum Institute and the National Association of Manufacturers have expressed concerns about the provisions.
On the other end, religious figures have stepped up to join human rights groups in urging for a full enactment of the conflict mineral provisions.
“There is broad consensus in the religious community that transparency of minerals coming from conflict regions is a vital responsibility… we’re all concerned with trying to get conflict minerals out of the system,” said Rabbi David Saperstein, director of the Religious Action Center of Reform Judaism, on the conference call.
The faith leaders emphasized that their religions called them to treat other human beings with respect, which compelled them to support the Dodd-Frank provisions.
“What would it mean for us to be a neighbor to everybody in the supply chain used to make the clothes we wear, the computers we type on, and the cars that we drive? Our call to love is not defined by geographical proximity,” said Lisa Sharon Harper, director of mobilizing for the Christian group Sojourners. “We are all responsible for being good neighbors. It doesn’t matter if we have a good excuse… the people in the Congo are made in the image of God.”
“In the Jewish tradition, according to the Talmud, it was absolutely clear that there has to be transparency in the way that businesses went about selling their products. There were explicit prohibitions against deception, against watering down wine, against claiming something was something that it was not,” added Saperstein, also an appointee to the White House Council on Faith-Based and Neighborhood Partnerships.
By: Tim Mak
Source: http://www.politico.com/news/stories/0112/72002.html
Conflict-Free Minerals Reform In The Congo: What You Can Do
The Democratic Republic of the Congo: a region marked by violent conflict since 1996 in which torture, mass rape, forced displacement, and mass murder have been going on for years without much relief. It is a region in which armed groups are able to propagate the violence through the sale of the Congo’s mineral resources.
According to the Enough Project’s Raise Hope for Congo Campaign,
“Armed groups earn hundreds of millions of dollars per year by trading four main minerals: the ores that produce tin, tantalum, tungsten, and gold. This money enables the militias to purchase large numbers of weapons and continue their campaign of brutal violence against civilians, with some of the worst abuses occurring in mining areas.”
Most of these “conflict minerals” are used in the production of electronic devices in a process involving supply chains marked by a disturbing lack of transparency, so that by the time products such as cell phones or laptops end up in the hands of consumers, there is no way to know whether the purchase of those products contributed to the income of armed groups in the Congo.
The goals of many concerned activists are to find a way to ensure transparency in companies’ supply chains and to pressure companies found to be using conflict minerals to discontinue purchasing those minerals. The market for conflict minerals then, ideally, would be limited in terms of profit, reducing resources available to the armed groups, and thus pushing the armed groups toward peaceful resolution of the conflict which could open the region to other reforms.
There have been arguments that the initial attempts toward conflict-free policies have actually been detrimental to the Congo, by driving companies to search for minerals elsewhere, therefore crippling the economy and reducing the income of the general population. However, the UN Group of Experts recently issued a report stating that a conflict-free resolution proves to be an “important catalyst for traceability and certification initiatives and due diligence implementation in the minerals sector regionally and internationally,” and serves to reduce “the level of conflict financing provided by these minerals” in regions that have begun to comply to the due diligence guidelines. So, it seems that passing and implementing conflict-free resolutions are the first steps toward true reform and peace in the Congo.
Why not focus the fight for conflict-free reform on college campuses, which house a “particularly coveted demographic of electronics companies,” namely, students?
The Enough Project’s Raise Hope for Congo Campaign and STAND, a Student Anti-Genocide Coalition, have created the Conflict-Free Campus Initiative, a “nation-wide campaign to build the consumer voice for conflict-free electronics, such as cell phones, laptops, and other devices that will not finance war in eastern Congo.” By focusing on college campuses, the initiative “draws on the power of student leadership and activism to encourage university officials and stakeholders, both of whom are large purchasers of electronics and powerful spokespersons, to commit to measures that pressure electronics companies to take responsibility for the minerals in their supply chains.”
Organizing the student voice at the university level not only expresses the collective desire of individuals to ensure that they and their university do not participate in the perpetuation of the conflict in the Congo, but it also sends a powerful message to both political and corporate entities that consumers care about policies of those entities that may support the conflict. The Conflict-Free Campus Initiative explains:
“Universities are also a large client for most electronics companies and represent a large section of the buyers’ market for consumer electronics. By raising our collective voice as consumers, we can actually bring about a shift in corporate and government policy and help bring peace to Congo.”
Eight universities have issued conflict-free resolutions, including Stanford University, the University of Pennsylvania, and Duke University; more than sixty other colleges and universities throughout the United States and Canada have begun campaigns to do the same (including Yale University, Harvard University, Dartmouth College, Brown University, UC Davis, UCLA, UCSB, UCSC, Notre Dame, and Georgetown University).
The activism geared toward passing these conflict-free initiatives on college campuses has been successful in inspiring activity at the government level. California passed a bill prohibiting “state agencies from signing contracts with companies that fail to comply with federal regulations aimed at deterring business with armed groups in eastern Congo,” the first state bill to be passed regarding conflict minerals. Massachusetts is now also considering a conflict-free bill. Two cities, Pittsburgh, PA and St. Petersburg, FL, have also passed conflict-free resolutions.
If enough colleges, universities, towns, cities and states take the initiative in decisively acting to prevent the perpetuation of the conflict in the Congo by taking steps toward becoming conflict-free, perhaps the income of the armed groups committing mass rape and murder will be decreased sufficiently to prompt the beginnings of an end to the conflict.
Once the fighting ends, addressing the root causes of the conflict – including ethnic tensions – can be addressed through effective institutional reforms. But the fighting has to end before that can happen, and the fighting cannot end unless the actors in the conflict cannot afford to fight.
By: Cara Palmer
Source: http://www.neontommy.com/news/2012/01/conflict-free-minerals-congo-reform
Global Tungsten Shortage Looming
Tungsten is an essential component in many industrial applications including drilling & cutting tools, electronics and specialist steels. The European Union categorises tungsten as a “critical raw material”. China currently produces 85% of the world’s tungsten but their factories are ravenous consumers and China is a net importer. USA, Europe and Japan consume 55% of world tungsten, but produce only ~5%. It should be no surprise that tungsten prices have surged in the last year, while many other commodities have experienced price decline. Image Link: http://www.metalinvestmentnews.com/wp-content/uploads/2011/12/PLY1-Dec.jpg Tungsten is currently selling for $20 a pound. New growth markets include nickel-tungsten alloys which can substitute for gold-nickel plating.
Playfair’s tungsten properties contain an estimated 100 million pounds of 43-101 compliant tungsten, and significant additional historical resources. These resources have potential for expansion.
Tungsten is a low profile commodity. There is no tungsten ETF, and few pure plays. Outside of China only two publicly traded companies currently produce tungsten: Malaga (MLG-TSX) and North American Tungsten (NTC-TSX). With four high-grade Tungsten deposits, Playfair Mining (PLY-TSX) is highly leveraged to rising prices and looming tungsten shortages. Image Link: http://www.metalinvestmentnews.com/wp-content/uploads/2011/12/PLY2-Dec.jpg
“We feel very fortunate to have 4 high grade tungsten deposits at a time when the price of tungsten has started to move sharply higher,” states Don Moore, Playfair CEO, “We acquired these projects when tungsten prices were depressed. China has an ironclad grip on the market. It’s not surprising that we are starting to see some serious interest from large tungsten end-users who need to get stable supply from outside of China.” Image Link: http://www.metalinvestmentnews.com/wp-content/uploads/2011/12/PLY3-Dec.jpg Tungsten is an essential industrial product but typically insignificant on a cost basis. Like the salt in a bag of potato chips - the price of salt could triple and the bag of chips would only increase a penny. But you can’t sell chips without salt. So with China slurping up most of the global supply - tungsten could see dramatic price increases with little demand destruction. Playfair’s veteran team of Donald G. Moore, Neil Briggs is augmented by Director James Robertson who was a principal in Primary Metals, a tungsten producer taken out by Japanese giant, Sojitz Inc.Judging from public statements by Playfair’s management, the strategy may well be to partner with a tungsten end user to help finance the project into production.
Image Link: http://www.metalinvestmentnews.com/wp-content/uploads/2011/12/PLY4-Dec.jpg
In addition to the compliant resources at Grey River (16.2m lbs) and Risby (89.4m lbs), Playfair has historical resources of 18.5m lbs at Lened and 5.3m lbs at Clea. Four high grade Canadian deposits: Grey River representing near term production potential, Risby offering massive size potential and all offering room for exploration upside.
Grey River, located on the south coast of Newfoundland, consists of nine mineral claims covering 1,750 hectares. The Grey River tungsten veins are typical fluorite-rich wolframite-quartz greisen vein deposits. A 1984 GSC Economic Geology Report lists the Grey River deposits as “one of the largest typical wolframite deposits in Canada” and states “It would be remarkable if there were not many more tungsten occurrences’ [on the property].” The Grey River deposit sits at tidewater in an ice free, deep water Atlantic port that offers year round shipping.
Risby is an advanced stage deposit in the Yukon accessible by a 25 km tractor road from an all-weather highway. The property is located approximately 55 kilometres west of Ross River and is comprised of 38 quartz mineral claims, all 100% owned by Playfair Mining.
The property was worked on from 1968 to 1982 by the Caltor Syndicate and Hudson Bay Exploration and Development Co. Ltd. Together their exploration efforts include 48 diamond drill holes (7,057 metres), geological mapping, trenching, stream sediment sampling and ground geophysics (magnetometer and EM surveys). Recent work by Playfair includes diamond drilling, resource expansion and a NI 43-101 compliant inferred resource calculation of 8,537,000 tonnes of 0.475% WO3 at a 0.2% cut-off.
Despite surging tungsten prices, Playfair has been hit hard by tax loss selling is currently trading close to all-time lows at $.07. It has a market cap of $5.4 million. The British Geological Survey (BGS) has tungsten #4 on its “Risk List” stating that it is critically vulnerable to supply disruption. With 122 million fully diluted shares and 100 million pounds of 43-101 compliant tungsten on the books - worth about $2 billion at current prices - Playfair is definitely worth a closer look.
Source: Metal Investment News
Endangered Elements: Tungsten Among China’s Potential Embargo List
ANALYSIS – ProspectingJournal.com – It didn’t take long for the panic to set in, last year, when the Chinese government flexed its muscle by threatening the world’s Rare Earth Element (REE) supply. With 95% of REE supplies coming from China, that scare was indeed legitimate. But REEs aren’t the only elements with which China has the potential to choke off. On American Elements’ 2011 Top 5 US Endangered Elements List, three elements (tungsten, indium and neodymium) have over 50% of world supply coming from Chinese mines.
To refresh the memory of those who followed the rare earth surge from last year, and the subsequent piquing of interest in rare earth companies, it began with Japan. As the summer of 2010 was coming to a close, reports of an embargo of shipments to Japan for REEs raised concern for manufacturers who depend upon the elements for production primarily in the tech industry. Within a month, that embargo spread to North America and Europe, and concern over Chinese monopolization rose, along with REE prices, and those of the companies devoted to them.
When the embargo ended, relief came to the sector, while the pace of development outside of China received only a minor increase. The threat of supply shortages still lingers, especially with tungsten, indium and neodymium.
The example of tungsten is not to be ignored, as 85% of global production comes from China, which has already indicated it might end all exports altogether due to domestic demand increases.
With the highest melting point and greatest tensile strength of all elements, tungsten’s importance is unquestionable. Used in all situations that call for high temperature thresholds or hardness and strength, tungsten is imperative to many modern living standards that depend upon it. From a US perspective, the element’s use in the aerospace program, electronics and military (including in bullets and armor) is critical. To the mining industry as a whole, tungsten is a savior with many uses within the assembly of mining equipment itself, including drills in need of durability.
Strangely enough, the United States dismantled domestic production of tungsten ore in 1994 with the last tungsten mine, the Pine Creek Mine in Inoyo, California, going down as a historical footnote en route to Chinese dependence.
Today, tungsten production remains primarily within China, but awareness of a need to develop outside of the PRC is becoming clearer. Options in the western hemisphere are appearing, and may soon be getting the attention they need to aid this drive for domestic independence. Juniors such as North American Tungsten [NTC – TSX.V] and Playfair Mining [PLY – TSX.V] may provide answers that mitigate a possible future supply breakdown.
For North American Tungsten, the title of being the western world’s leader in tungsten production doesn’t come lightly. Through developing its Cantung Mine, it provides tungsten concentrate production within the borders of Canada’s Northwest Territories, which from an international standpoint is a much more secure mining investment environment to work within.
At a much earlier stage, Playfair Mining is not yet a producer, but is heavily leveraged to the price of tungsten, which today sits around $440/MTU (“metric tonne unit”) or over $20/lb. With a goal in mind to partner with an end user of tungsten metal in order to finance its Grey River deposit into production, Playfair is well aware of the potential impact a tungsten shortage would carry.
Due to its high level of use in the manufacturing sector, a significant number of Fortune 500 companies are dependant upon tungsten’s availability. General Electric and its Tungsten Products Division, along with others like Kennametal and ATI Firth Sterling are among those that would most likely benefit from securing a long term tungsten supply, and are among potential targets should Playfair seek a high-worth partner to put its nearest term tungsten property into production.
The company has 4 high-grade deposits with two located in the Yukon, one in the Northwest Territories and another on the southern coast of Newfoundland. Each of the properties was acquired strategically during a period of massively deflated tungsten prices, prior to this latest surge over the $440/MTU mark. This increase represents a 70% rise from the recent low prices that graced Playfair’s entry period. While the commodity’s price has risen, the company’s stock has yet to follow suit.
While the current price of the stock seems to have languished, the team is making strides to be better prepared for when the bigger end-users in need of tungsten come knocking. The board includes experienced individuals who have taken deals into production before, as well as Director James Robertson who took the last big tungsten company outside of China to successful acquisition.
In both combined 43-101 compliant and non-compliant resource categories, Playfair’s tungsten properties contain more than an estimated 5.5 million MTUs of WO3. It’s to be expected, though, that since Playfair is an exploration company, these resources have room for expansion.
As economic uncertainty lingers in all global markets, crucial and endangered elements such as REEs, tungsten, indium and neodymium will be within the watchful eye of western manufacturers in need of these ingredients for their operations. Whether another anticipated panic is inflicted by possible impending embargo actions by China doesn’t change the dependence we have on endangered elements. And like last year’s REE crisis, a price surge on those companies were set to move prior complications is entirely a likely scenario.
By: G. Joel Chury
Source: http://www.prospectingjournal.com/endangered-elements-tungsten-among-chinas-potential-embargo-list_12_21_2012/
Cracking Down on Conflict Minerals
In the jungles and mountains of the Democratic Republic of the Congo, battles are raging, part of a 13-year-long civil war. Most of the world has paid little attention to the murder and rape that still dominates life in the DRC’s eastern provinces. But U.S. electronics companies like HP, Intel, and Apple recently became deeply interested, thanks to a provision on “conflict minerals” that was slipped into a 2010 financial reform law, the Dodd-Frank Act.
The minerals provision is intended to deprive the Congo’s warlords of funds by cutting off sales from the mines they control. It focuses on the ores that produce the “three Ts”: tin, tantalum, and tungsten, as well as gold. Public companies that use these metals in their products will be required to investigate their supply chains, determine if they use metals that were mined in the DRC, and disclose their findings to the U.S. Securities and Exchange Commission (SEC), in their annual reports, and on their websites. If its minerals did originate in the DRC, a company must submit a larger report on whether the purchase of these minerals financed or benefited armed groups in that part of Africa. The SEC is expected to issue final rules for implementing the law before the end of the year, and companies are scrambling to get ready.
While the conflict minerals law applies only to companies that are required to file annual reports in the United States, it’s expected to have an international impact. Since mineral suppliers sell to electronics companies around the world, any change in operations they make for the U.S. market will have ripple effects elsewhere.
The law doesn’t only affect the electronics industry. But the conflict mineral issue has been linked in the public mind to electronics because the three Ts play crucial roles in smartphones, TVs, and laptops. Tin is used in solder and thus found on every circuit board, tantalum is used in capacitors, and tungsten is used in the vibrating motors of many phones.
Electronics companies had been warned that they’d eventually have to account for their use of these minerals. So firms like HP and Intel asked the Electronic Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative, two trade groups, to investigate the industry’s options.
The groups found that it’s extremely difficult to determine the origin of the tantalum used in a certain batch of smartphones. But they also realized that only about 45 smelters worldwide deal with the three Ts, buying the ores from suppliers and turning them into pure metals. After several years of research, the industry groups came up with the Conflict-Free Smelter Program, which is currently in the pilot phase for its first metal, tantalum.
The program asks each smelter to allow an annual independent audit of its mineral procurement process. If the auditors are convinced that no minerals are sourced from the Congo’s conflict mines, that smelter is certified as “conflict free,” allowing companies to buy its metals without worry. While the program is voluntary, EICC spokeswoman Wendy Dittmer says many smelting firms believe it’s in their interest to participate.
“Electronics companies are starting to ask questions all the way down their supply chains,” she says. “That certainly makes the buyers of the minerals very interested in being able to talk about their own due diligence.”
There are concerns that the law may backfire. By making the reporting requirements more onerous for companies that source minerals from the DRC, the law may reduce demand from all DRC mines, even those that aren’t in conflict regions and don’t finance armed groups.
These concerns about such a de facto ban led Motorola Solutions to initiate the Solutions for Hope Project, in which Motorola and several other companies formed a relationship with a conflict-free tantalum mine in the DRC’s Katanga province.
To establish the program, Michael Loch, Motorola’s director of supply-chain corporate responsibility, visited the mine and accompanied a shipment of ore along its export route. “This pilot allows our industry to stay engaged in the area,” says Loch. “We didn’t want to abandon the region.” But he acknowledges that it took a lot of effort to get the process in place for one mine and says it may be difficult to scale up the program.
The pilot programs should provide a framework to make compliance easier. Still, companies around the world are waiting for the SEC’s final rules with some anxiety. And there may be some efforts to block the rules’ enforcement through U.S. courts. The U.S. Chamber of Commerce, for one, has discussed the possibility of a lawsuit. The chamber disagrees with the SEC’s initial compliance cost estimate of US $71 million, saying that costs will instead be counted in the billions of dollars.
One thing is already certain about the SEC rules: There will be no fines for using conflict minerals. Even so, activists think it will have its intended effect, because companies will want to avoid bad publicity.
“For years we have been unknowing consumers of these minerals because companies have turned a blind eye,” says Sasha Lezhnev, a policy consultant on conflict minerals with the human rights group Enough. “This will enable consumers to make choices on whether or not to buy products from companies that are sourcing from these mines.”
By: ELIZA STRICKLAND
Source: http://spectrum.ieee.org/semiconductors/materials/cracking-down-on-conflict-minerals
Chinese indium export policies pushing price over $1000/kg
Indium is heading for prices of more than $1000/kg, according to industry analyst firm NanoMarkets in a new report “Chinese Indium Strategies: Threats and Opportunities for Displays, Photovoltaics and Electronics”, which examines the impact on the electronics and related materials industries of recent Chinese policies to restrict the export of indium. Even higher prices have been suggested in the Chinese press â as much as $3000/kg.
China is the world’s largest supplier of indium by far, accounting for almost three-quarters of world reserves and about half of production. As such, its policies affect the markets for all indium-related electronic materials.
This activity has recently been formalized in a new Chinese five-year plan, which is designed to stimulate domestic Chinese high-tech industries. NanoMarkets claims that this move by the Chinese government will have significant negative implications for several classes of electronics products (in the areas of displays, lighting, photovoltaics, compound semiconductor chips, lead-free solders). The report therefore examines China’s evolving indium policy in both economic and political terms and explains how it will act as a catalyst for creating new growth opportunities in both the extraction industry and advanced electronic materials industries worldwide, looking especially at the impact on markets for novel transparent conductors and compound semiconductors.
In particular, high indium prices may force the conservative display industry to shift to ITO alternatives, especially those using nanomaterials, believes NanoMarkets.
Japanese indium users, who currently use 70% of China’s indium production, may find themselves without sufficient indium within a year. As a result, NanoMarkets expects firms in countries that have not been large suppliers of indium (including Australia, Canada, Laos and Peru) to rush into the market.
NanoMarkets also predicts that, for the first time, there will be significant amounts of indium extraction from sources other than zinc mines (e.g. sources such as tin and tungsten mining). The Chinese indium policy seems certain to incentivize new sources outside China to produce indium, either through primary extraction methods or through recycling/reclamation, the firm reckons.
Also, a sharp rise in the price of indium will harm the resurgent copper indium gallium (di)selenide (CIGS) photovoltaic (PV) industry, but in turn this will open the door for cadmium telluride (CdTe) and crystalline silicon (c-Si) PVs, which will become more price competitive, says NanoMarkets. In addition, new classes of absorber materials (zinc or tin) may emerge that are CIGS-like but don’t actually use indium.