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Conflict Free Sourcing Initiative (CFSI) Program Update [ SIO Conference, Vancouver ]

Conflict Free Sourcing Initiative (CFSI) Program Update [ SIO Conference, Vancouver ]. John Plyler BlackBerry CFSI Workgroup 18 June 2013. CFSI Conflict-Free Sourcing Approach . Finished Product. MINE SMELTER/REFINERY OEMS. In-Region Programs.

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Conflict Free Sourcing Initiative (CFSI) Program Update [ SIO Conference, Vancouver ]

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  1. Conflict Free Sourcing Initiative (CFSI) Program Update[SIO Conference, Vancouver] John Plyler BlackBerry CFSI Workgroup 18 June 2013

  2. CFSI Conflict-FreeSourcing Approach Finished Product MINE SMELTER/REFINERY OEMS In-Region Programs Conflict-Free Smelter Program (CFS) Company Assurance

  3. CFSI Conflict-FreeSourcing Approach Finished Product MINE SMELTER/REFINERY OEMS In-Region Programs Conflict-Free Smelter Program (CFS) Company Assurance

  4. In-Region Programs • Public-Private Alliance (PPA) • Established by US State Department and USAID • Mission: The development of traceability, validation, and due diligence schemes for minerals sourced in from the DRC and adjoining countries. • $5.2 Million total expected public/private funding (~$1M already donated by industry) http://www.resolv.org/site-ppa/ • iTSCi (Bag-Tag scheme in SE DRC/Rwanda currently) • iTSCi scheme is the first in-region mineral tracing initiative • Developed by Tin/Tantalum Industries; aligned with CFS • Three CFS compliant smelters receiving iTSCi material thus far, as well as a few other smelters not yet CFS compliant

  5. In-Region Programs • Solutions for Hope Project • 1st demo of a verifiably conflict-free, in-region sourcing model • Tantalum ore sourced from Southern DRC • Initial material segregated, once proof of concept achieved, material has become standard part of material flow for component manufacturer’s supply chain http://solutions-network.org/site-solutionsforhope/ • Conflict-Free Tin Initiative • Dutch Government Supported Initiative kicked-off mid-2012 • 1st demo of verifiably conflict-free material from Northern DRC http://solutions-network.org/site-cfti/

  6. CFSI Conflict-FreeSourcing Approach Finished Product MINE SMELTER/REFINERY OEMS In-Region Programs Conflict-Free Smelter Program (CFS) Company Assurance

  7. Conflict-Free Smelter (CFS) Program CFSI has spearheaded the development of a multi-stakeholder assessment process to verify that smelters/refiners are sourcing conflict-free minerals. Why: Provide a mechanism that enables and encourages responsible sourcing of tantalum, tin, gold, tungsten Schedule: Addressing each metal separately, but concurrently • Tantalum, tin and gold smelter/refiner assessments are underway; tungsten smelter assessments are expected to begin in 2013. • Gold CFS assessment process has been harmonized with Responsible Jewelry Council and London Bullion Market Association audit processes Results: A list of smelters/refiners who are compliant with the CFS assessment protocol is posted on the CFS website: http://www.conflictfreesmelter.org ** Companies make their own sourcing decisions. **

  8. Supply Chain Focal Point – Smelters/Refiners Raw Materials Upstream Smelters / Refiners Downstream Why Here? Conversion of distinguishable starting material into an indistinguishable product Small Numbers – tantalum, tin, tungsten andgold smelter/refiners total less than 500 companies globally Conflict-Free Smelter (CFS) Program Finished Products

  9. CFS Audit Focus • Company Mass Balance • Includes all inventory • Includes all facilities • Company Program Validation • Conflict Free Policy • Conflict Free Sourcing Systems Sourcing Processes Validation Ore / Concentrate Smelter Company Unfinished Products Intermediates Finished Products Recycled / Scrap Conflict Free Policy Toll Supplier Toll Customer

  10. Audit Protocol Improvements • 3Ts harmonized protocol released 22 Dec 2012, effective 28 Feb 2013 • Improved Level 3 Country requirements • Separation of Audit Procedure and Protocol content • Improvements from stakeholders • Translation to several key smelter languages • Further improvement underway (May 2013 release) • Addressing further tin industry concerns (definition, ASM, secondary materials, slags) • Improving standardization, readability and clarity • Recognition of U.S. SEC Rule grandfathering allowances

  11. CFS Online Program Indicators http://www.conflictfreesmelter.org/CFSindicators.htm

  12. CFS Program Indicators Changing • Plan: • Indicator reduction: • Number of smelter/refiner companies currently active in the CFS process (active = signed agreements, audit on track) • Number of companies with compliant smelters/refiners • Qualitative program status is provided to stakeholders on a monthly basis (company names not included) • Reasoning: • Previous indicators allow tracking in and out of corrective action status when Compliant and Active lists compared • Previous indicators provide no pre-audit details on specific company and thus no means for smelter engagement

  13. Audit Program Improvements • Further work being undertaken to ensure CFS Program compliance with ISO Standards • ISO 19011 and ISO/IEC 17021 • Auditor accreditation program being developed • Will allow other audit firms to become qualified • Will allow smelters/refiners to become educated to content auditors are trained on

  14. CFSI Conflict-Free Sourcing Approach Finished Product MINE SMELTER/REFINERY OEMS In-Region Programs Conflict-Free Smelter Program (CFS) Company Assurance

  15. Company Assurance Development, integration and maintenance of tools and processes which support a down- stream company’s management system and risk assessment activities: • Policy language included in the EICC Code of Conduct (http://www.eicc.info/eicc_code.shtml ) • Created; maintaining a tool to collect information about a supplier’s due diligence processes and sourcing: Conflict Minerals Reporting Template • Establishing resources and processes to support data collection and analysis

  16. Conflict Minerals Reporting Template Flow 1. Sends request to direct suppliers 2. Sends request to sub-suppliers Template User Direct Suppliers Sub-Suppliers Smelter Direct Suppliers Sub- Suppliers Smelter Direct Suppliers Sub-Suppliers Smelters 4. Direct suppliers return aggregated roll up template 3. Cascades through supply chain until smelters identified. Sub-suppliers return template to suppliers. Original User Direct Suppliers Direct Suppliers Direct Suppliers 5. User returns final aggregated roll up template Customer

  17. Company Assurance Program Updates • Conflict Minerals Reporting Template & Dashboard • Revision 2.02 released March 2013; Revision 2.03 in process • MRPRO Dashboard (free) improved to accept all 2.xx versions as well us upgrade Rev.1 templates (available here) • Supporting Solution Providers creating database versions • Reporting template and dashboard tool available at http://www.conflictfreesmelter.org • Considering a quarterly update schedule; primary purpose is revision of the Standard Smelter List; next major release contingent on IPC Standard • Online training for CFSI members in process

  18. Release 2.02 Noteworthy Improvements • Addition of Italian translation (ninth language in addition to (English, Mandarin, Japanese, Korean, German, Spanish, Portuguese, French) • Simplification of “terms of use” language • Additions / edits to the “Standard Smelter List” • Addition of “Smelter ID” • Added more rows for reporting smelters (2500)

  19. IPC1755 Standard • EICC and GeSI collaborating with the IPC (www.ipc.org, “Association Connecting Electronics Industries”) with the objective to: • Develop a standard for exchange of data related to conflict minerals used in manufactured products to facilitate efficient data exchange across companies, supply chain levels, and industries • Not an actual data collection tool – but a set of due diligence information requirements and “instructions” to allow different tools to communicate • IPC facilitating an open ANSI standard process

  20. IPC Progress and Next Steps • Work began in November 2012 and continues: • Committee last met on Feb 21 to resolve comments received on the Final draft for Industry Review; post meeting briefings held • Revising schema; text according to committee decisions • Circulate Proposed Standard for Ballot in July - August • Publish final standard in Fall 2013 • Open to engagement by Individual Companies and Trade organizations • Contact Fern Abrams: FernAbrams@ipc.org

  21. Summary In-region activities are critical to promote the responsible sourcing of materials for smelters and refineries from the DRC and surrounding countries CFS Program is a voluntary initiative in which an independent third party audits smelter and refiner sourcing activities to demonstrate that all minerals processed originated from conflict-free sources Company assurance activities are focused on improving company capabilities to validate responsible sourcing of materials by creating common tools and processes

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