Q&A – Stefan Sabo-Walsh
Natalie Daniels talks to Stefan Sabo-Walsh about identifying conflict minerals and the impact of illegal mining on the electronics industry.
Tell me about your background and career to date.
I have worked with Verisk Maplecroft, Canada, for the last three years, conducting risk assessments for multinational businesses operating in the wider extractives sector. Prior to joining Maplecroft, my work focused primarily on the potential impact new oil and gas operations could have on surrounding communities, and how companies could address these issues. At Maplecroft, I lead our commodities risk research, which identifies the 20 political, social, environmental and wider value chain risk issues associated with the production of hard and soft commodities.
How does the oil and gas industry compare with the mining industry in terms of the potential issues arising?
They are similar at the early stages of the projects, which is what I was particularly involved with. I identified the issues the companies would need to be aware of and how they could impact exploration, particularly in regions where the government has very limited influence or capacity.
How did you get into the mining industry?
I grew up in Vancouver, British Columbia, a hotbed of Canada’s mining industry, and had many contacts in the industry prior to joining Verisk Maplecroft. Since 2015, we have worked closely with our sister company, Wood Mackenzie, assessing challenges, opportunities and risks facing the wider extractive industry.
Maplecroft released new data on the problem of conflict minerals. What led you to this research?
We work with a number of the largest multinational technology firms, supporting their responsible sourcing programmes. Conflict minerals have dominated discussion for years, particularly since the implementation of the Dodd Frank Act in the USA in 2010. Section 1502 of the Act requires companies to disclose whether their supply chains contain tin, tungsten, tantalum or gold (3TG) sourced from the Democratic Republic of the Congo (DRC). However, limited supply chain traceability means that businesses sourcing 3TG from DRC or alternative sourcing geographies often don’t know if the metals used in its products come from responsibly managed operations – whether industrial or artisanal – as they lack visibility of the lower levels of their supply chain. This leaves them exposed to the potential for their products to contain minerals mined by workers in extremely hazardous conditions or linked to widespread pollution.
What could this analysis mean for the mining industry?
Many of the human rights and environmental issues identified in the analysis occur in artisanal and small-scale mines, many of which operate on an informal and/or illegal basis. Generally speaking, advanced, multinational operators are not the issue here. Nonetheless, there is a danger that, as with the Dodd Frank Act, some purchasers simply seek to exclude minerals from certain countries entering their supply chain – irrespective of whether it was responsibly mined or not. This could present a risk to legitimate producers.
Similarly, it will be important for the mining sector to cooperate and participate in any traceability and responsible mineral supply chain initiatives to support the due diligence efforts of their customers and provide assurance that the ore has no ethical risk.
However, the real challenge is at the smelting level. This is where legitimate and illegitimate ores can become mixed, with the former becoming ‘contaminated’ by the latter. As such, it is also incumbent on legitimate miners to work with smelters and refiners to maximise the level of traceability within the upstream trading system as a whole, for example in line with the Organisation for Economic Co-operation and Development guidelines, as well as the exclusion of illegitimate sources. This will be in the interest of the miners themselves, as well as the buyers of the metals produced from their ore.
Where does the demand for conflict minerals lie?
Conflict minerals have applications in multiple industries, though much of the attention they receive is due to their presence in everyday electronic goods such as laptops or mobile phones. In these, tin is used in soldering, tantalum is used for microcapacitors and alloys, and tungsten and gold are used to produce microelectrical components and electrodes.
What are the implications of using a mineral mined in extremely hazardous conditions for these technology companies?
A number of technology companies have committed to clean resourcing. There is an expectation from the consumer that at the very least your smartphone or laptop isn't going to include minerals affected by conflict mining in unsafe conditions. Technology companies are increasingly engaging in industry-wide partnerships in an attempt to jointly increase supply chain traceability. This includes sharing information on suppliers such as human rights and environmental risk rankings, alongside self-assessment questionnaire and audit findings. Furthermore, at the upstream section of the value chain, smelters and refiners can undergo assessment to be considered compliant with industry-leading standards related to conflict minerals. A number of industry leading companies have also mapped out their full supply chains to the smelter or refiner level.
How do you determine the social and environmental risks related to the production of tantalum, tin, tungsten and gold?
Responsible sourcing, procurement and corporate responsibility and sustainability professionals come to us to cut beneath Tier 1 suppliers and gain a transparent view of global sourcing risks at the mine level. We help them do this through our commodity risk analytics, which offer data insights into the production of raw materials across 20 environmental, social and governance (ESG) and supply chain risks. This enables companies to generate actionable risk profiles for suppliers of raw materials in the lower reaches of the supply chain. The data is complemented by analysis of the key issues impacting the production of each commodity in key producing countries.
How can these countries stop illegal mining?
Combatting illegal mining in a number of the highest risk geographies identified in our analysis will remain an extremely difficult task, and in particular in countries such as DRC, Myanmar and Colombia, whose governments have very little influence over the regions in which such mining occurs. Furthermore, where government agencies are involved, as in parts of Eastern DRC, many have been linked to widespread corruption.
Countries can support the implementation of responsible sourcing schemes, which aim to ratify the source location of these metals and minerals and limit the amount entering global supply chains.
Why is tantalum in such high demand? Do you see this continuing?
Tantalum plays an important role in multiple industries, and in particular in high temperature applications such as aircraft engines, surgical implants, and in the electronics industry including in microcapacitors and alloys found in day-to-day goods including phones
Do you think companies are becoming more aware of this problem? How has this impacted the industry in the last few years?
Within the technology sector, there has been a particular focus on conflict minerals since the launch of the Dodd-Frank Act. Moving forward, we can expect to see more regulations. A new EU regulation on conflict minerals is due to come into force in 2021, which has broadened out the geographic scope of mandatory due diligence. In the past, focus was given to DRC and surrounding countries. Now, the EU will require due diligence for importers and refiners from those in high-risk areas. We don't have a full list of what those are going to be yet, but there is an understanding that we have to move beyond the borders of DRC.