Tag Archives: CFSI

You May Be Using Unauthorized Information from CFSI

CFSI recently added a Vendor Member category for service providers, which we think is a positive development and provides significant benefit.  However, there are limits to who is allowed to use the CFSI information/data and it is possible that the data is leaking beyond these limits.

CFSI provided this in response to a recent inquiry from Elm on the matter:

Along with CFSI Company Members, Vendor Members have access to member-only tools and resources. Pursuant to the non-disclosure agreement (AECI) between the EICC and each CFSI member, CFSI vendor members cannot disclose, publish or disseminate CFSI’s information to non-CFSI members and CFSI vendor members agree to use CFSI’s data for the benefit of the CFSI. CFSI vendor members cannot share CFSI data with clients that are not CFSI-members or use CFSI data to provide services to non-CFSI members.

We don’t believe Vendor Members would intentionally disseminate CFSI data in an unauthorized manner, but errors can occur.  Elm thinks it is appropriate for non-CFSI members to explore the source(s) of the country of origin data they use and report to ensure they are not using CFSI data inappropriately.

If you have any questions, contact Leah Butler at the CFSI at lbutler@EICCOALITION.org

Dodd Frank – It’s Good, It’s Bad; It’s Working, It’s Not Working; It’s Staying, It’s Being Repealed; New Guidance is Forthcoming, New Guidance is Moot

UPDATE:  As the media continues to report that Trump is rapidly backing away from many major campaign promises, see this article from Bloomberg on plans to keep part of Dodd-Frank in place.

Each day is bringing new insights, arguments and predictions concerning the future of the US conflict minerals requirements. We tried to weave these developments into a coherent narrative, but couldn’t. It is far too soon to know with any reasonable certainty what the future holds for Dodd-Frank and conflict minerals. Here are somewhat conflicting developments we are tracking.

  • Congressman Jeb Hensarling (R-Tx) is the Chair of the House Financial Services Committee and the sponsor of The Financial CHOICE Act, a bill he filed this summer to repeal sections of Dodd-Frank, including 1502. Hensarling said last week that this is not currently one of Trump’s immediate priorities. But in Trump’s first week as President-elect, he has backtracked on a few significant parts of his campaign rhetoric.  It’s anyone’s guess as to the timing or nature of any action that may be taken.  UPDATE:  Reports are surfacing that Trump may be considering Hensarling for a Cabinet post, leaving the Financial CHOICE Act without its sponsor.
  • A new study to be published in the Journal of the Association of Environmental and Resource Economists, paints a bleak picture of the effectiveness of the law in the region, which may not bode well for the future of the law, or similar initiatives:

    while the law may have cut off one source of revenue to armed groups, it led them to intensify their plundering of civilians in the region—exacerbating the humanitarian crisis. By their estimates, violent incidents more than doubled after the law was implemented.

  • Increased attention is now being paid to cobalt sourcing.   Public pressure for cobalt could keep the pressure on conflict minerals as well.
  • At the CFSI Conference last week, we heard that the EU Commission hopes to finalize their conflict minerals directive before the end of 2016, but there will be a phase in period of at least two years.  While the Directive’s future is independent of Dodd-Frank, its ultimate implementation and global uptake is impacted by the fate of the US law.  UPDATE:  The regulation was finalized November 22 and will be sent for formal approval by the Parliament on December 7.
  • Concern that intraparty feuding within the GOP may fracture the party and impede the progress of its agenda, but reports are now surfacing that House and Senate leaders are pledging to focus on policies and not politics. This would speed progress of Trump and GOP initiatives.
  • Trump (through Republican leaders) has asked the Obama administration to refrain from promulgating new regulations in this 11th hour of Obama’s presidency. This action has precedent, as Obama asked this courtesy of the last Bush administration.
  • SEC Chair Mary Jo White, an Obama appointee, announced she will step down at the end of the Obama administration – two years before her term ends. There were already two open Commission seats, meaning that the Commission will almost certainly be made up of a Trump-appointed majority once the three spots are filled.  UPDATE:  Other senior staffers are announcing their departure from the Commission as well.  This will continue as Trump’s inauguration date nears.
  • At the SEC Staff level, new interpretive guidance or Q&As on the conflict minerals disclosure rule has been “forthcoming” for more than two years. Those who don’t believe that Section 1502 has a future would argue that the word “unnecessary” should replace “forthcoming” in the Staff’s current dialog on the matter.

Cobalt is the New Conflict Mineral

Conflict minerals information requests from customers increasingly include cobalt.  While cobalt is not an official conflict mineral, and the basis for the recent public attention is not the funding of armed groups, it is nonetheless being included in conflict minerals CMRT requests.

But cobalt is not one of the CMRT metals, and the CFSI smelter/refiner lists and audits do not include cobalt.  What do you do?  You can build on your existing conflict minerals program, but you need new data collection/verification tools, business criteria and customer reporting methodologies.

These are fundamental issues that every company will have to resolve before meaningful responses to customers can be provided, and it will likely take time.

Latest GAO Annual Report on Conflict Minerals Regulation Efficacy

In case you haven’t already heard, the US GAO issued its latest annual report on the SEC conflict minerals regulation.  GAO is required to provide these reports under Section 1502(d) of the Dodd-Frank Act.

Among GAO’s most important findings:

  • An estimated 67 percent of SEC conflict minerals filers reported they were unable to confirm the source of the conflict minerals in their products, and about 97 percent of them reported that they could not determine whether the conflict minerals financed or benefited armed groups in the Democratic Republic of the Congo (DRC) and adjoining countries.  Our view:  These numbers are reflective of filer’s wide reliance on the CFSI smelter/refiner audits and related information.
  • As of July 2016, the Department of Commerce (Commerce) had not submitted a report that was required in January 2013, assessing the accuracy of the Independent Private Sector Audits (IPSA) nor had it developed a plan to do so. Ten companies filed the audits between 2014 and 2015 as part of their Conflict Minerals Reports, none of which Commerce has assessed. Commerce officials said they established a team in March 2016, but they noted that they did not have the knowledge, skills, or expertise to conduct IPSA reviews or to establish best practices.  Our view:  Commerce is indeed exploring the topic in detail and assessing how to approach the reporting requirement.  Our meeting with them this past summer was a part of their exploration.
  • Facilities that process conflict minerals pose challenges to the disclosure efforts of companies filing a Form SD because (1) these facilities generally rely on documentary evidence about the origin of conflict minerals, which may be susceptible to fraud; and (2) multiple levels of processing operations introduce fraud risk and may increase the cost associated with disclosures.  Our view: Fraud risk has been a common theme and concern from the beginning of the various conflict minerals schemes.  While some physical mechanisms exist in an attempt to eliminate fraud, we don’t know what mechanisms or training are in place for identifying documentation fraud in the various audits/checkpoints in the supply chain.

Finally, Elm is known for our candor and being vociferously critical about excessive fees and misrepresentation of the requirements by some advisors and service providers.  We were pleased that GAO  included our comments on this point:

… because of the uncertainty about IPSA requirements and best practices, some consulting firms were misrepresenting the scope of IPSA services that are needed for compliance in order to justify excessive fees for SEC-filing companies.

As in the past, this latest report provides valuable commentary and we consider it to be a “must read” for all in the conflict minerals space.

What Did Apple Really Say in its CMR? Maybe Not What You Think

Similar to last year, Apple Computers filed its SEC conflict minerals disclosure early.  This is the conflict minerals parallel to Warren Buffet’s annual letter to shareholders. Admittedly, the “Oracle of Cupertino” doesn’t have the same alliterative allure as the “Oracle of Omaha.” But Apple’s conflict minerals report is scrutinized almost as much. This year’s report from the computer giant contained more detail than it has in past years, most likely a reflection that much of their efforts through the years are bearing fruit.

We took a detailed look at the report, carefully considering and evaluating the language in an attempt to divine subtle insights that may exist. A number of topics caught our attention.

  • Apple stated: 100% of the identified smelters and refiners in Apple’s supply chain for current products were participating in an independent third party conflict minerals audit (“Third Party Audit”) program. Comment – Although it has been widely reported that all of Apple’s smelters/refiners have been audited, “participating” is not the same as “audited”. Participation also includes being on the CFSI’s verified smelter/refiner list, beginning the audit process (e.g., contract negotiations or making time commitments) toward becoming audited in the future and publicly acknowledging that. Apple later stated “Of these 242 participating smelters and refiners, 86% had already completed a Third Party Audit by the end of 2015, while the other 14% were in the process of undergoing such a Third Party Audit as of December 31, 2015.” Further, Apple defined “participating smelters and refiners” as “those that have agreed to participate in, or have been found compliant with, the CFSP or cross-recognized independent third party conflict minerals audit programs confirming their conflict mineral sourcing practices.”
  • Apple stated: Apple does not believe that Third Party Audit program participation alone is sufficient to label products “conflict free.” Apple believes it has more work to do. In 2016, Apple is turning its attention to two key areas: enhancing due diligence in the gold supply chain and helping improve local incident reporting and issue resolution. Comment – Given their leadership position, the company may disrupt current expectations that are reliant on smelter/refiner auditing alone. Their focus on gold reflects “allegations of illicit trade of gold” made in publicly-available incident reports and refinery due diligence audits such as the delisting of Al Kaloti Jewelers Factory Limited in April 2015 from the Dubai Good Delivery list.
  • Apple stated: Apple plans to continue to review in detail credible reports of incidents in the Democratic Republic of the Congo (the “DRC”) and adjoining countries (collectively, the “Region”) that may potentially connect to Apple’s supply chain and confirm the transparent reporting and resolution of any incidents related to armed groups where these incidents may reasonably relate to its supply chain. Comment – The company is looking deeper into local incident reporting “[c]onsidering reports from numerous groups and organizations related to traceability gaps, stolen minerals, and fraudulent use of tags, … to determine if local systems are effectively able to capture and remediate incidents when they arise, and if any incidents of concern may be associated with Apple’s supply chain”. This references iTCSi incident reports that are publicly available to members and nonmembers. These reports, governance assessments, company audits and other vital information are publicly available here.
  • Apple stated: Apple will continue to remove from its supply chain those smelters or refiners that do not comply. Comment – The company has been actively pushing suppliers to remove non-conforming smelters and refiners from their supply chain as part of Apple’s risk management processes, meaning that suppliers sometimes have to terminate relationships with some of their suppliers.
  • Apple stated: Apple reviewed more than 700 iTSCi reports for 2015 relating to incidents, potentially associated with mine sites connected to various smelters in Apple’s supply chain… Based on its review, Apple found that in a few cases individuals associated or potentially associated with armed groups, in particular the police in the DRC and the DRC national army, were alleged to be involved in incidents linked to smelters in Apple’s supply chain. While, to date, Apple does not have reason to believe that these incidents resulted in associated specified minerals being included in Apple’s products, Apple remains concerned about a number of reported incidents. Accordingly, Apple is actively engaged with appropriate stakeholders to better understand incident reports and how they are addressed and, in the case of three specific incidents, continues to actively investigate the follow-up actions that have been taken to address these incidents. Comment – As we noted above, Apple’s direct review of publicly-available iTSCi reports supplements their use of smelter/refiner audit information. At the same time, Apple “remains concerned” about incident reporting and corrective action processes. There may also be an implicit questioning of whether/how the various audit mechanisms capture incidents. This level of work may not be feasible for all companies, which underlines why audits should ensure this review is included at each level of the supply chain. To our knowledge, there has been no third party assessment or review of any of the audit programs, although the London Bullion Market Association (LBMA) had plans to conduct a review 4Q15. The upcoming OECD conformance assessment (the scope of which is described here) may not include an efficacy review.
  • Apple stated: Apple has also been conducting spot audits since 2013 to assess suppliers’ understanding of due diligence requirements. Comments – As we have discussed in past articles, Apple is conducting supplier audits that not only confirm the technical data provided to Apple, but also assess that suppliers have an understanding of due diligence requirements. Apple suppliers should ensure that they have thorough internal knowledge of the requirements and their associated systems.
  • Apple stated: Apple’s review identified incidents of varying nature and concern, including, among others, incidents involving theft of, and/or fraud in connection with, tags and minerals and military and police levies or payments at or near mine sites. As of the date of this report, not all 2015 incidents have been publicly reported, fully traced to minerals associated with smelters, resolved or remediated. Comment – This reinforces our comments that Apple “remains concerned” about incident reporting, corrective action processes and audit processes.
  • Apple stated: Apple has received confirmation that three incidents linked to smelters reported in Apple’s supply chain have occurred in which individuals identified as members or potential members of organizations within the meaning of “armed groups,” as defined in Item 1.01(d)(2) of Form SD, in particular the police in the DRC and the DRC national army, were alleged to be involved. Each incident appears to have involved no more than a few individuals in isolated theft, illegal tax or similar criminal activity, potentially for personal gain, and, based on information received to date, the alleged perpetrators have been sanctioned or the specific incident has otherwise received some level of official redress by the local authorities. Comment – iTSCi published a response and notes “the amount of mineral that could be linked to these incidents was around 0.1% of that tracked from mines by iTSCi in 2015, with the potential financial gain of up to around US$425 in total which appeared to be for personal gain of the individuals”. Among several systemic points iTSCi brings forth, they clarify that there remains a relevant question as to “how to interpret the actions of rogue individuals as opposed to actions of ‘armed groups’”.
  • Apple stated: Apple believes there is little doubt that there is a need to enhance gold trading due diligence, to increase local stakeholder involvement, and to ensure that Third Party Audit programs reinforce requirements for smelter and refiners to be aware of and follow-up on the resolution of incidents. Comment – This statement indicates that Apple may see gold refiner audit programs as facing specific challenges that require additional/more detailed checks than currently exist. To our knowledge, there has been no third party assessment or review of any of the audit programs, although LBMA had plans to conduct a review 4Q15.
  • Apple stated: Apple’s reasonable country of origin inquiry is based on Third Party Audit information and, to the extent that country of origin information has not been audited, additional information collected by it and others. To the extent reasonably possible, Apple has documented the country of origin of identified smelters and refiners based on information received through the CFSP, surveys of smelters and refiners, and/or third party reviews of publicly available information. However, some country of origin information has not been audited by a third party because, among other reasons, applicable smelters and refiners have gone out of operation before completing a Third Party Audit, smelters and refiners have not gone through a Third Party Audit, or the Third Party Audit does not yet include reporting of country of origin information. Comment – Specific to gold, prior to the LBMA’s Responsible Gold Guidance (RGG) v.6 (published August 2015, effective January 1, 2016), refiners that conducted third-party audits based on ISO 19011:2002 were not required to issue a Refiner Compliance Report or to publicly disclose countries of origin of mined gold. However, for assurance engagements based on ISAE 3000, country of origin information was required. Since Apple has indicated they have RCOI information for every smelter and refiner, they apparently supplemented LBMA audits with “additional information” and “third party reviews of publicly available information” given that LBMA ISO audits conducted under the previous RGG versions in place for CY15 lack the country of origin information.

 

 

Conflict Minerals – STOP EVERYTHING

Last week at the CFSI Workshop in San Jose, one thread arose through the panels and our meetings and hallway conversations: STOP WHAT YOU ARE DOING.  We don’t mean cease the activities – we mean “do things differently than you are now”.

STOP the hesitation. There continues to be confusion about last month’s Court of Appeals ruling. The ruling only affected a very small part of the disclosure – namely, the use of the product determination wording. It did not put the brakes on overall conflict minerals efforts and reporting, so program development and execution are still necessary.

STOP worrying. There has been no indication as to when will the SEC will issue further interpretive guidance, including on the applicability of the Independent Private Sector Audit (IPSA) for the CY2015 filings. Companies are frustrated with delays and ongoing regulatory uncertainty surrounding the IPSA. But the scope, effort and cost of the IPSA are better understood now and can be far lower than originally feared. Moving ahead with an IPSA regardless of the uncertainty may be a viable, and less painful, option over waiting, worrying and potentially scrambling at the last minute. Remember that the SEC released previous FAQs with little time for issuers to fully react.

STOP being confused about Reasonable Country of Origin Inquiry (RCOI) versus due diligence. There has been a good deal written about separating the two processes, but very little practical guidance on how to distinguish between them. We offer a simple explanation.

STOP focusing on the number of supplier responses. The number of suppliers responding to survey requests can be misleading, or even meaningless. The quality, credibility and validity of responses is critical.

STOP ignoring the criticality of RCOI. Speaking of supplier responses, don’t underestimate the importance of the RCOI. The RCOI forms the basis of regulatory reporting determinations, yet is not subject to formal evaluations and is considered a potential loophole ripe for abuse. We expect additional scrutiny of RCOI processes and determinations beginning with the CY2015 filing.

STOP thinking you can rely completely on what suppliers tell you.  Information inaccuracies and gaps are inherent in the process, especially with large supply chains.  It isn’t intentional on the part of suppliers, it just reflects their ability to complete the form correctly or understand their own supply chain.  We expect to see a drastic increase in supplier conflict minerals audits of various types and using internal expertise to validate supplier claims of 3TG content (or lack thereof).   Further, with the increased awareness of the gap between CFSI audited smelters/refiners and the universe of all smelters/refiners on the planet, more emphasis will be placed on issuers’ own activities to validate those facilities and determine the associated countries of origin.  Issuers will have to do more than simply checking lists.

 

Clarity on Distinguishing Conflict Minerals RCOI and Due Diligence

Confusion is still widespread about the distinction between RCOI and due diligence. This is not simply an academic discussion – the SEC has noted this and blurring the lines between the two will almost certainly result in higher IPSA costs. As a long-time advocate of minimizing IPSA costs, we offer the following thoughts on how to practically separate the two.

What is RCOI?

At its core, RCOI revolves around the process of identifying and communicating with suppliers. This is the initial information gathering stage, which includes ensuring that  information meets the issuer’s completion, consistency and reasonableness criteria – equivalent to OECD Step 2 – Identifying and Assessing Risks in the Supply Chain.  On pages 150 and 271 of the final release of the conflict minerals rule, the SEC stated:

“The reasonable country of origin inquiry is consistent with the supplier engagement approach in the OECD guidance where issuers use a range of tools and methods to engage with their suppliers. The results of the inquiry may not trigger due diligence. This is the first step issuers take under the OECD guidance to determine if further work outlined in the OECD guidance – due diligence – is necessary”.

Additional text on pages 148-150 continues discussing RCOI in the context of receiving representations from suppliers. The following excerpts from CFSI Five Practical Steps to Support SEC Conflict Minerals Disclosure (version 2.0, Feb. 2015) are also helpful:

The RCOI involves determining if the company has reason to believe that SORs in its supply chain are sourcing minerals from a [Covered Country]… the completeness of that list of smelters is advanced through the RCOI process and is not considered a part of risk management as contemplated by the OECD Guidance…

Lastly, Question #18 of the SEC FAQ:

The IPSA does not need to include the reasonable country of origin inquiry because, under the rule, that inquiry is a distinct step separate from the due diligence process.    As a result, the independent private sector auditor need only opine on whether the design of the issuer’s due diligence framework is in accordance with the portion of the nationally or internationally recognized due diligence framework beginning after the country of origin determination.  With regard to the second part of the IPSA objective, the issuer’s conflict minerals report is required to describe the due diligence measures it undertook.  As such, the independent private sector auditor need only opine on whether the issuer actually performed the due diligence measures described in the report after the issuer determined it had reason to believe its conflict minerals may have originated in the DRC or an adjoining country.

What is Due Diligence?

Clearly, SEC’s view is that due diligence occurs after supplier engagement and an issuer uses the suppliers’ final answers from the RCOI as the basis for determining whether additional efforts – due diligence – are needed.

“The conflict minerals statutory provision specifically contemplates due diligence, which goes beyond inquiry and involves further steps to establish the truth or accuracy of relevant information…”

Page 271 of the Final Release.  It is notable that “completeness” of the relevant information is not included, as mentioned above in the CFSI document.

In contrast to RCOI, in due diligence the issuer is not communicating with the supplier at this point, but is conducting its own internal verification activities on information that was provided by suppliers’ final answers.

Due diligence comprises two broad activities that take place after communication with the suppliers concludes. The first is verifying “the truth or accuracy” of smelter/refiner information provided by suppliers – specifically, the smelter/refiner status and country(ies) of origin.  Think of this as confirming or denying whether there is  “reason to believe” that materials originated from Covered Countries.  As further illustration, recall that the final release contains a provision whereby if the outcome of RCOI indicated an issuer had reason to believe a supplier sourced from Covered Countries, but the further due diligence proved otherwise, that issuer does not have to file a CMR or conduct an IPSA.  Or at least does not have to include that supplier in a CMR they would otherwise have to file.   See Filing Instructions, Item 1.01 (c)(1)(vi) (pages 350 – 351).

Generally, this information verification involves the issuer comparing the identified smelters/refiners to various lists and conducting additional efforts where necessary to determine the sources of the ores processed by those facilities. It is not uncommon for a supplier’s final answer to be missing this information; therefore it is up to the issuer to make efforts on its own to fill in the blanks, or confirm information that was presented.

The second element of due diligence is making internal decisions based on the smelter/refiner and country of origin information. Will business relationships continue with suppliers that have materials confirmed as originating in the Covered Countries? Will business relationships continue with suppliers that have materials sourced from smelters/refiners that have not been audited? What action plan will be put in place to encourage these non-conforming suppliers to meet expectations about smelters/refiners and countries of origin? This also includes deciding what to do about suppliers who are nonresponsive.

In our view, these activities are aligned with OECD Step 4 – Independent Third Party Audits of Supply Chain Due Diligence at Identified Points in the Supply Chain and OECD Step 3 – Design and Implement a Strategy to Respond to Identified Risks (respectively). While it may not be readily apparent, an issuer’s use of, reliance on and encouragement of third party audits of smelters/refiners is aligned with Step 4 for downstream companies. This was outlined in OECD’s January 2013 Final downstream report on one-year pilot implementation of the Supplement on Tin, Tantalum, and Tungsten.

Keeping it straight

Hopefully, these thoughts help.  Consider that RCOI is where all supplier engagement activities occur.  In due diligence, an issuer is no longer communicating with suppliers, but is using that information for internal purposes.

Be mindful that confusion still exists, even in the ranks of those considered to be experts. Just last week, Deloitte issued a newsletter with some very good information, including a discussion on separating RCOI from due diligence. Unfortunately, their example of how an auditor may approach the description of due diligence measures undertaken used text describing RCOI activities. <Sigh>.

Contact us if you’d like to discuss this further. We are happy to take the time to help.

Make Plans to Attend the 2015 CFSI Conflict Minerals Conference and Catch Us as Well

The Conflict Free Sourcing Initiative (CFSI) has announced the date and agenda for their 2015 Conflict Minerals Annual Conference, to be held in San Jose on September 24, 2015.  This year, the conference is a single day – see the agenda here.

In our opinion, this is the single best and most valuable conflict minerals meeting there is.  We highly recommend that anyone involved in conflict minerals attend if at all possible.  We will be there, arriving the day before for meetings.  If you would like to meet  either before or during the meeting, let us know and we can plan and schedule our time together.

Let us know and we look forward to seeing you there.

 

Mike Loch Becomes Elm Sustainability Partners Affiliate

We can finally put our recent cliffhanger to rest – Michael Loch is leaving Motorola Solutions to launch his own consultancy, Responsible Trade LLC, and will also become an affiliate of Elm Sustainability Partners based in the Chicago area.

We don’t think Mike needs any introduction as he is one of the most recognized conflict minerals experts in the world. Not only did he develop and implement Motorola’s conflict minerals program from its beginning, he was also instrumental in launching the Solutions for Hope platform, held leadership roles in EICC and the Conflict Free Sourcing Initiative (CFSI), helped develop the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, participated in numerous meetings and briefings with government officials in the Covered Countries, the US and the EU, and is a frequent speaker on the matter.

We are very pleased to have the opportunity to work with Mike on client engagements and upcoming Independent Private Sector Audits (IPSAs).

Avoid This Major Conflict Minerals Smelter/Refiner List Error

Only a few days remain before the deadline for the SEC conflict minerals submittals and as you may expect, we are busy conducting last minute reviews of the Form SD and conflict minerals reports (CMRs).  Here is an important reminder about smelter/refiner lists.

The CMR must include “a description of … the facilities used to process the necessary conflict minerals,  … the country of origin of the necessary conflict minerals…”  The SEC did not provide guidance on what constitutes a “description”, but we have written on this matter previously.  We also offered commentary on smelters/refiners that are not on the Conflict Free Sourcing Initiative (CFSI) lists.

But confusion continues about “the country of origin“, which is really the heart of the entire disclosure.  Simply put, the country where the facility is located is frequently different from the country from which the ore came out of the ground.  Unprocessed or partially processed ores are transported globally for final processing, and there are few smelters/refiners actually located in the Covered Countries.

Where are you getting your information about countries of origin? There are essentially four ways to get this information, but sometimes you may really be getting the the country where the facility is located, rather than the country from which the ore originates.

  • The “RCOI Data” from the CFSI.  This data is available only to CFSI members.  Third parties, such as conflict minerals data management systems and consultants such as us, are not allowed access to that information.  From what we understand, CFSI’s RCOI data doesn’t actually list specific countries of origin associated with the audited smelters/refiners, but presents groups of countries called Level 1, Level 2 and Level 3 – assigned based on potential risk.  Those companies using this information should then list in their CMR all the countries that are included with each Level associated with the relevant smelters/refiners.
  • Suppliers can provide this information in the CMRT.  Column O of the Smelter List tab is intended to capture the country of origin information from suppliers.  But many suppliers are unaware of  both the actual country of origin and Column O in the CMRT.
  • IT system providers.  Those who employ commercial conflict minerals IT solutions may expect the system to have, or extract from suppliers, the actual country of origin information.  Be careful about relying only on a list generated by an IT solution: thoroughly determine what information is being reported, and where it comes from to ensure the correct information is being generated.  And as we said earlier, make sure that the system is not automatically filtering out facilities that do not have a smelter ID.
  • Do your own research.  This option can be the most labor intensive of them all, but it also results in a high level of certainty and control.  Doing your own research can involve a number of activities, such as internet research, phone calls, emails and first hand visits to the facilities.  More efficient methods available include using stand alone third party smelter/refiner verification data and the iTSCi audits that are available online.

Remember that you are ultimately responsible for your due diligence activities and results, even if you rely on third party information.  It is worth making sure you are reporting the correct information.