The association of minerals with conflict in the Democratic Republic of Congo (DRC) has driven the United Nations (UN), civil society and consequently industry and governments to seek to bring transparency and best practice to the extraction and trade of minerals from the Great Lakes Region
In particular the reports of the UN Security Council's Group of Experts on the DRC ('UNGoE') have called for actions to establish due diligence practice and traceability in DRC's mineral trades since 2008. Besides traceability measures, the UNGoE has also more recently called for third party audits and comprehensive due diligence provisions by downstream users and financial institutions (UNGoE 2010b, 2011a).
On July 21st 2010, US President, Barack Obama, signed the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") into Law. The Dodd-Frank-Act requires companies to declare whether the columbite-tantalite (coltan), cassiterite, gold, wolframite or their derivatives in any product originated in the DRC or any adjoining country and, if so, to report on due diligence undertaken on the chain of custody and provide further details if the products are not 'DRC conflict free'. Other countries such as Canada and the EU are currently considering similar measures.
iTSCi (ITRI Tin Supply Chain Initiative) is a joint initiative that assists upstream companies (from mine to the smelter) to institute the actions, structures, and processes necessary to conform with the OECD Due Diligence Guidance (DDG) at a very practical level, including small and medium size enterprises, co-operatives and artisanal mine sites. It is designed for use by industry, but with oversight and clear roles for government officials, in keeping with the recently published OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Area. It also takes into account the recommendations of the UN Security Council (UNSC) to expand due diligence to include criminal networks, as well as armed groups and to include violations of the asset freeze and travel ban on sanctioned individuals and entities. (UN 2010b: 88)
iTSCi offers mineral chain of custody information in keeping with the requirements of the EICC®-GeSI Conflict-Free Smelter Assessment Programme (CFS). Consequently iTSCi will help relevant US companies report on their due diligence efforts to the Securities and Exchange Commission (SEC), as required by the Dodd-Frank Act.
iTSCi has been in development since 2008 and was first piloted in south Kivu, eastern DRC, during the summer of 2010, but project activities had to be closed down due to the mining suspension initiatied by the Government of DRC from September 2010 to March 2011. Projects in the Kivus will be re-started in the near future depending on international and industry approval of non-conflict-mines, further funding, and the confirmation that Dodd-Frank compliant buyers will re-enter the market. Since 2011 , iTSCi has been in the implementation phase in Rwanda and the southern DRC province of Katanga. iTSCi may be extended to Burundi and Uganda, if funding is assured, and eventually the entire GLR.
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iTSCi has been created for use by upstream companies (mining cooperatives and companies, processors/ negociants, exporters/ comptoirs, international traders, and smelters) and mine sites to help these operators ensure that the minerals they supply and purchase have been managed and handled in line with the due diligence requirements of the OECD DDG and UN recommendations. Consequently, iTSCi members must adopt these organisations' recommendations and put in place the necessary management systems to comply.
iTSCi is a member-based programme:, any upstream company can apply to become a full member of iTSCi. Companies engaged in mineral transport and assay can also be accepted to join as full members. Downstream companies (e.g. product manufacturers, retailers, end-users) can become associate members, if they want to contribute to the financing of the Programme [iTSCi as a Programme], and keep abreast of Programme activities and direction, thereby supporting development in Africa and/ or if they want information on specific sites or trading activities covered by the project. Membership is not restricted, or related to ITRI or T.I.C. members.
How iTSCi Works
iTSCi has three components which are chain of custody data collection (traceability), risk assessment, and independant third party audits. Through these, iTSCi helps companies conform with the OECD DDG, but companies remain responsible for their sourcing practices.
Every supply chain operator and mine site must undergoe a risk assessment by the independent risk assessor to participate in iTSCi. Companies are also obliged to publish their policy concerning conflict minerals, include due diligence practices in their contractual agreements and mitigate risk.
Mines and companies who are members of iTSCi and fully participate in the tracking process for all mineral purchases will be able to demonstrate to their customers their implementation of appropriate due diligence practices. All members undergo a risk assessment and in the case of identified risks have to mitigate these risks. All members are audited by the iTSCi auditor. Smelters will also be audited by the CFS (EICC®-GeSI Conflict-Free Smelter Assessment Programme).
The iTSCi chain of custody system allows mineral purchasers to collect all information on production and trade recommended by the OECD DDG. This involves two types of bar-coded tags, each with unique reference numbers and clearly visible areas of allocation : a mine tag and a negociant/processor tag. These are each added to the bags of minerals at the first two points of the supply chain, i.e. extraction and processing. The tagging is accompanied by detailed data collection via purpose designed log books, which effectively provide a record of the tagging process and the additional data required by the OECD DDG.
There are specific types of log books for each relevant point in the supply chain - mine, negociant/processor, and comptoir/exporter. Data is recorded in the log books by the appropriate mining agent located at each site or location. A variety of detailed information is collected via the log books including information on names (mine site, processor/ negociant, exporter/ comptoir, transporter), date and time, tag numbers (mine tag and processor/ negociant), weight, buyer, price, transportation route, transport method, security and any further notes. All mining agents are given instructions on how to complete the log books and are also required to take part in iTSCi led training workshops.
Data collected in the field is then fed into the iTSCi database. Data is held on a secure server in Canada hosted by IBM. The level of security, back-up and other technical safeguards are suitable for protection of data required for legal compliance. The database is on-line, so it can be accessed from anywhere in the world. As the tags and log books all have unique serial numbers, this information can be pre-loaded into the database in advance which provides the data management team with a high level of control and flexibility with regards to the allocation and distribution of assets. Tags and log books can be cancelled or suspended in the database at anytime should the need arise. Once the field data is collected and sent to the iTSCi data centre, the information is uploaded into the database by iTSCi staff. In addition to storing all data electronically, the database is capable of carrying out sophisticated and detailed analysis of the supply chain providing complete traceability from mine to smelter.
iTSCi is a chain of custody and due diligence system that includes independent and third party risk assessment and independent third-party audits and protection against human rights abuses including the worst forms of child labour, as required by the OECD DDG. Risk assessments of the supply chain operators, the general operating context, and mine sites and transportation routes must be conducted routinely. This is done through field visits, document checking, whistle-blowing mechanisms through the local stakeholder committees, and data analysis. Any risks identified are managed and mitigated by the supply chain operators or other responsible bodies in compliance with rules set out by iTSCi based on the OECD DDG requirements.
Each year, all supply chain operators, mine sites and the iTSCi programme is audited by Channel Research.
Click HERE to access reports, presentations, press releases, letters, and other documents related to the iTSCi project