Though not typically prone to cynicism, when the phones started ringing with producers willing to share their perspectives on the conflict minerals rule recently passed by the SEC, one can’t help but think the rule may appear one-sided (i.e. not favoring “illegitimate” sources of supply or producers).
Certainly, companies are struggling now to interpret the conflict minerals rules and implement its mandates, and this is destined to become a top priority for thousands of manufacturing organizations. MetalMiner spoke with two producers of different metals for their reaction to the new rule — Global Advanced Metals (GAM), a tantalum producer, and Nucor, a steel producer. (This is Part One of a two-part series. Part Two here.)
“Not having rules has led to a lack of action by some parties,” said Andrew O’Donovan, president of Global Advanced Metals. “It allowed certain companies that continued to source ‘conflict’ material to continue to prosper and created an uneven playing field and disadvantage for those who are responsibly sourcing tantalum.”
On the other hand, many manufacturers began moving down the path of sourcing conflict-free minerals as soon as President Obama signed the Dodd-Frank bill into law. Some, like GAM, self-imposed purchasing policies on this issue long before then.
O’Donovan shared that many of GAM’s direct customers have moved in the direction of the rule anyway, but farther down the supply chain he saw a different reaction: “A large number of our customers’ customers have been slow to move on this issue,” he said. “When some sit on the fence, it discourages those that are doing the right thing.” That leads to an uneven playing field.
Some have criticized the legislation as harming the artisanal mines (as the first comment below this recent MetalMiner post mentions in great detail). O’Donovan had this to say about the impact on legitimate mines:
“As a significant player within the tantalum industry however, we, like many, share a responsibility to try to ensure that legitimate DRC trade and mining, at fair pay and under correct working conditions, can continue. Until recently, very few, if any, mechanisms to ascertain “good” from “bad” material existed within the DRC or central Africa generally. Most recently, efforts by a number of organizations to do just that are taking root. The Solutions for Hope project for example, in which GAM is participating, is a pilot program to channel ‘conflict-free’ material from the DRC, through processors such as GAM, and on through component- and finished-electronic-device manufacture. The goal of all such initiatives is to establish legitimate and free trade at a fair market price with DRC artisanal mines. That is not an easy target to reach, but any effort toward that goal is worth pursuing.”
The Scrap Metal Sticking Point
Though companies like Global Advanced Metals may appear an obvious “winner” with the conflict minerals rule, many may not know that the rules could have placed severe limits on all domestic metal recycling, had Nucor not taken a proactive stand in explaining to the SEC how the rule would impact EAF producers.