Dodd-Frank and supply chain assurance

a strategy to manage it, appropriate to the level of risk.  

The details of the risk assessment for a particular business depend on several factors, including where the business is located on the mineral supply chain and which mineral is involved, gold or tungsten. The supply chain begins at the mine and ends with the retailer. Gold purifiers and tungsten smelters are critical points on the chain, as determining origin is very difficult after mineral processing. Thus, for many businesses, an important part of the risk assessment will be to identify where gold was purified, or where tungsten was smelted. Once a business has that information, it will then need to find out if the purifier or smelter has a system in place to ensure a responsible supply chain. If so, this is a low-risk supply chain, meaning that the business can assure its customers that their minerals have not funded conflict.

This may sound daunting, but there are several industry validation programs to help with the task.  For example, the London Bullion Market Association has designated a list of Good Delivery purifiers that have been successfully audited against exacting standards. Another helpful initiative is the Conflict-Free Smelter Program, which identifies conflict-free metal processors, including tungsten smelters and gold purifiers. Metal processors on the Conflict-Free list have taken robust measures to keep conflict minerals out of their supply chain and have also been audited for compliance to applicable standards. Sourcing gold or tungsten, either directly or indirectly, from purifiers or smelters that participate in these programs helps ensure a conflict-free supply chain.

Nonetheless, some businesses will find that there are risks in their supply chains. This could be, for example, because their own suppliers are unable to identify the companies that purified their gold. Or the risk might be that their tungsten originated in the DRC and the smelter that processed it does not take adequate  steps to ensure that those metals did not fund conflict. These companies will need to develop a strategy to manage these risks. In the alternative, the businesses might elect to find other suppliers of gold or tungsten, ones that can not only identify purifiers or smelters, but have verified their commitment to responsible supply chains.

JVC’s Supply Chain Assurance Kit
JVC has developed a do-it-yourself Supply Chain Assurance Kit to help suppliers with these new challenges. The kit has the templates and guidance you need to gather necessary information, as well as to assess and manage risk. These include:

-- Sample letters requesting information about the gold or tungsten that you buy
-- Sample logs to track information you receive
-- A sample policy showing your commitment to responsible mineral supply chains
-- Sample language to include in vendor contracts, indicating your requirements regarding responsible supply chains
-- Templates to use to assess risk, and manage risk if any is found

Because assurance systems differ, depending on where a company is on the mineral supply chain, and whether it is supplying gold or tungsten, JVC’s kit offers customized guidance and templates to meet the obligations created by Dodd-Frank. The kit also includes an explanation, and examples, to help users determine their position on the supply chain and exactly which kit materials to use.  

Conclusion
Protection against legal and financial risk requires up-to-date information on laws that impact the mineral supply chain, and other laws and regulations pertinent to the industry. JVC is available to help with this task by providing educational resources and legal information to the trade, such as our Supply Chain Assurance Kit. For information about membership, or to order the kit or a copy of any other JVC publication, please visit our web site at JVCLegal.org.