What are Conflict Minerals?

The term “conflict minerals” refers to columbite-tantalite (coltan), cassiterite, wolframite, gold or their derivatives. Or more commonly: tantalum, tin, tungsten, and gold (3TGs). The term does not only refer to minerals funding conflict, but rather this group of minerals as a whole. For example, if a product contains conflict minerals, it does not mean the minerals inside the product fund conflict, just that the product contains tin, tantalum, tungsten, and/or gold.

The four conflict minerals are identified by Section 1502 of the United States Dodd-Frank Act due to the current and historical exploitation of these minerals by armed groups in the Democratic Republic of the Congo and adjoining countries, known collectively as the “covered countries.”

What are the Covered Countries?

The “covered countries” refers to the Democratic Republic of the Congo and the 9 adjoining countries: Angola, Burundi, Central African Republic, Republic of Congo, Rwanda, South Sudan, Tanzania, Uganda, and Zambia. 

Who is in scope of Section 1502 of the Dodd-Frank Act?

While all SEC issuers (US publicly traded companies) are technically in scope, only those that manufacture or contract to manufacture products containing 3TGs have to complete the Reasonable Country of Origin Inquiry and Due Diligence. 

What are the reporting requirements under Dodd-Frank?

In-scope companies must file the Form SD with an attached Conflict Minerals Report (CMR) to the SEC on an annual basis. Reports cover the company’s conflict minerals program during the previous year (January-December) and must be filed in the EDGAR portal by May 31st each year. The Form SD for the 2024 RY must be filed by May 31st, 2025.

What are the components of a Conflict Minerals program?

Management Systems: Policies, processes, internal stakeholders, supplier training, grievance mechanisms and other tools that help your company conduct and respond to conflict minerals related inquiries. 

Reasonable Country of Origin Inquiry (RCOI)

• Supplier RCOI: Annual outreach to suppliers to collect information on the smelters in your company’s supply chain.
• Smelter RCOI (SEC Issuers): Annual research to determine if smelters in your supply chain are sourcing from the covered countries.

Due Diligence (SEC Issuers): To be conducted on smelters found to be sourcing from the covered countries to determine if they could be benefitting or financing armed groups in the covered countries.

Reporting (SEC Issuers): Annual filing to the SEC.

Depending on an organization’s ESG goals, non-SEC issuing companies may choose to conduct additional program elements such as Smelter RCOI, Due Diligence, and Reporting.

What is a CMRT?

A Conflict Minerals Reporting Template (CMRT) is a standardized reporting tool utilized across industry for providing data on the origin of conflict minerals in a company’s supply chain. The CMRT allows a company to declare which conflict minerals are used in their parts in addition to listing the smelters used in a company’s supply chain. CMRTs can be completed at a company-wide, user-defined, or product-level scope.

What is a smelter?

Smelter or refiners (SORs) are mineral processing facilities considered to be at the “pinch-point” of the supply chain because all mined material must pass through these facilities and be refined to a specific purity before it can be used for downstream applications. According to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals, downstream companies should trace minerals to the smelter/refiner level in order to establish a system of control over the supply chain. 

My company is not an SEC issuer, should my company have a conflict minerals program?

If your customers are in scope of Section 1502, and your company supplies them with parts that contain conflict minerals, then your company will likely receive requests for supply chain data. Many SEC issuing companies in scope of Section 1502 require their suppliers to have a conflict minerals program. Your company will only need to conduct the supplier engagement portion.

What is a high-risk smelter?

A high-risk smelter, under Dodd-Frank, is any smelter that sources from the covered countries and may be benefiting or financing armed groups. A smelter’s participation in industry recognized schemes is used to help companies alleviate concerns that a smelter may be benefiting or financing armed groups.

Are there other high-risk categories beyond Dodd-Frank?

Customers may flag smelters listed in your company’s survey that go beyond the scope of Dodd-Frank in response to expanding ESG programs, global sanctions, and new regulatory requirements. Claigan flags the following risks in response to these changes: smelters connected to forced labour, smelters on the OFAC Sanctions list, smelters sourcing from Russia, and smelters sourcing from EU CAHRAs (see below).

What are CAHRAs?

Conflict-Affected and High-Risk Areas (CAHRAs) are defined in the OECD Due Diligence Guidance for Supply Chains of Minerals as areas identified by the presence of armed conflict, widespread violence, or other risks of harm to people, including areas of political instability or repression, institutional weakness, insecurity, or collapse of civil infrastructure. Any part of the world can be classified as a CAHRA if the circumstances call for it. For example, see the EU CAHRAs list. CAHRAs are relevant for companies that are in-scope of the EU Conflict Minerals Regulation, or for companies looking to go beyond the parameters of Dodd-Frank and the covered countries.

What is an EMRT?

An Extended Minerals Reporting Template (EMRT) is a standardized reporting tool utilized across industry for providing data on the origin of cobalt and/or mica in a company’s supply chain. The EMRT functions the same way as the CMRT with a space to declare the presence of cobalt and mica in your products and a section to list the cobalt refiners and mica processors in your supply chain. Cobalt and mica are not in scope of Dodd-Frank Section 1502.

Why are my customers asking about cobalt and mica sourcing?

Over 70% of the world’s cobalt is mined in the DRC in both small and large scale mines. Small-scale mining, also known as artisanal mining, is an important source of income for many families in the DRC, however mining cooperatives are still in the process of improving working conditions and eliminating child labour from mine sites. Meanwhile, large-scale mining operations in the DRC are often foreign-owned and and have been affiliated with corruption and forced displacement of communities. Cobalt is also one of the minerals in scope of the new EU Batteries Regulation (see below).

Mica is also mined on a small-scale in countries such as Madagascar and India. Mica has been associated with illegal mining, poor working conditions, and child labour in both of these countries. Madagascar is the 3rd largest producer of mined mica at 15% of global production and India is the 6th largest at 4% of global production. There are currently no regulatory requirements specifically geared toward mica supply chain due diligence.

What is a PRT?

A Pilot Reporting Template (PRT) is a new minerals reporting template currently being deployed by companies to collect data on any minerals not covered by the CMRT or EMRT. On the PRT, companies are able to request data for up to 10 minerals of their choosing. Suppliers can expect to see the PRT being used to request data required for the new EU Batteries Regulation (nickel, natural graphite, lithium), and other critical minerals (ex: silicon, aluminum, REE).

What should my company be doing about the new EU Batteries Regulation?

The new EU Batteries Regulation is a complicated text, bringing debate across industry around who should be responsible for conducting due diligence on the battery supply chain. Whether your company wants to be a pioneer in battery minerals due diligence and traceability, or you are simply trying to respond to a customer survey, Claigan has a program to help your company get a head start on this new regulatory beast. Reach out to Claigan, and we can help determine how the Regulation applies to your company. For more information, please see the full text of the new EU Batteries Regulation.

Which minerals are in scope of the new EU Batteries Regulation’s due diligence requirements?

Cobalt, lithium, natural graphite, and nickel.

What are the due diligence requirements for the new EU Batteries Regulation?

Companies conducting due diligence under Chapter 7 of the EU Batteries regulation are required to establish management systems, implement a traceability program (RCOI data), and assess risk across the following risk categories outlined in Annex X of the regulation:

• Human Rights: occupational health & safety; child labour; forced labour; discrimination; trade union freedoms
• Environmental: air pollution; water use and pollution; soil pollution and erosion; biodiversity; hazardous substances; noise & vibration; plant safety; energy use; waste & residues
• Community life, including that of Indigenous peoples.

What are the reporting requirements for the new EU Batteries Regulation?

In-scope companies are required to publish a report annually on the due diligence requirements laid out in Chapter 7 of the EU Batteries Regulation. Reports must be made publicly available on the internet. The first reports are to be published by August 18, 2025.