“iTSCi Is In Very Real Danger Of Failing” Says Richard Burt, President of the Tantalum Niobium International Study Center

In a press release issued January 14th, 2011 Richard Burt, President of the (Tantalum Niobium International Study Center) stated that “Without immediate additional funding commitments from third parties, iTSCi (The ITRI Tin and Tantalum Supply Chain Initiative due diligence scheme in the Democratic Republic of Congo {DRC}) is in very real danger of failing – not just the industry, but failing the millions of people in the Eastern Congo who totally rely for their livelihood on a vibrant, legitimate, mining industry.”

As a result of market reaction to the recent US conflict minerals legislation (The recently signed Financial Reform Bill-HR 4173 contains Sec. 1502, which requires manufacturers to report annually to the SEC if their products contain “conflict minerals” from the Democratic Republic of Congo (DRC). The new law will apply to manufactured goods containing tin, tantalum, gold and tungsten used in a variety of electronics and other goods- which will reject untraceable mineral from central Africa after 1st April 2011, the iTSCi programme faces serious challenges and requires urgent and significant funding commitments in order to progress. ITRI and T.I.C. are therefore asking for contributions from companies at the downstream end of the tin and tantalum supply chains in order to allow a solution to this issue to be put in place.

The conflict mineral issue has been widely reported and many studies have been carried out analyzing the situation and recommending actions that involved stakeholders should take; the increased due diligence required incorporates both certification of conflict free mines and traceability of the product throughout the supply chain from mine to smelter. The ITRI Tin Supply Chain Initiative (iTSCi) is the one project that has been tested on the ground in Africa and been shown to directly and practically address these needs, linking that activity throughout the upstream and downstream supply chain, and working with the support of the DRC and Rwandan Governments and the inter-Governmental regional body the ICGLR.

Although the general mining suspension continues in North and South Kivu and Maniema, it is important that implementation is carried out without delay in up to six mining areas in Katanga Province. In order to allow some degree of continuing trade after April, this part of the project must begin by the end of January 2011.

The African mining sector itself is expected to fund two thirds of the total 5 year US $31 million implementation and operational cost of the iTSCi scheme throughout the DRC.

However, an estimated shared financing commitment of $12 million over a three year period is required, to enable the scheme to be self funding by the end of 2013 as a result of increasing mine production and trade from the region. Of this, US$1.5 million is required immediately to enable the commencement of the Katanga programme. Further funding of around US$5 million will also be required once the mining suspension is lifted and the project can continue in North and South Kivu and Maniema.

Kay Nimmo, Manager Sustainability & Regulatory Affairs at ITRI, commented “Ensuring minerals do not in any way contribute to conflict is a serious and pressing concern for the entire supply chain from the mine to the consumer. Now is the time for companies throughout the supply chain to choose to engage and to commit financially to the initiatives being undertaken.”

Author’s Note: The Organization for Economic Co-Operation and Development (OECD), a 32 country organization, is currently developing a framework on “Due Diligence Guidance for Responsible Supply Chain Management of Minerals From Conflict-Affected and High Risk Areas (http://www.oecd.org/document/36/0,3343,en_2649_34889_44307940_1_1_1_1,00.html).” The United States is a member of the OECD. As a result, these developing guidelines may be considered by the SEC as they draft regulations to implement the requirements under Section 1502. The OECD aims to finalize its framework by the end of September at an international meeting in Nairobi on conflict minerals.

This proposed guideline defines a risk-based due diligence framework throughout a supply chain. Due diligence in the supply chain refers therefore to company efforts to clarify its chain of custody and the qualitative circumstances involved in the mineral extraction, trading and handling in order to identify and manage actual or potential risks associated with the activities and relationships of all upstream actors.
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