CHICAGO Regulations on
the sourcing of tantalum, tin and tungsten are creating legal
headaches in the U.S. manufacturing supply chain, according to
panelists at the recent MetalMiner-sponsored Conflict Minerals
Edge conference in Chicago.
And the supply chain is bracing
for a deluge of customer inquiries stemming from a final rule
approved by the U.S. Securities and Exchange Commission (SEC)
The rule compels U.S. companies
filing SEC disclosures to provide information about the origins
of certain minerals used in their manufacturing processes. It
is intended to prevent armed groups in the Democratic Republic
of the Congo (DRC) and surrounding countries from profiting
from the minerals trade (
amm.com, Aug. 23).
The stainless sector is one area
Some stainless steel grades
contain tantalum, although two of them are uncommon, according
to Michael Pfeifer, president of Northbrook, Ill.-based
Industrial Metallurgists LLC. Meanwhile, some tool steel grades
contain tungsten, he said.
A "tsunami" of information and
compliance requests is approaching, according to Jeffrey
Friedman, corporate compliance officer for the Americas at
Duisburg, Germany-based Kloeckner & Co. SE.
"I feel like the guy standing on
the shore looking into the water, and a tsunami is coming," he
said. "We are starting to get letters from our customers.
People are waking up. I think in the third and fourth quarters,
its going to get tougher."
Kloeckners strategy has
been to first confirm with each supplier that the material it
sells "does not contain any of the three Ts, and if it does
(that) it didnt come from the Congo or surrounding area,"
The distributor then collects
the confirmations, has its legal counsel examine them and uses
them as support for its due diligence process, Friedman said.
"If someone is buying (materials) from DRC, we cut them off,"
"Cut them offthats
scary," Rose of Sharon DeVos, sales and marketing director at
Chicago-based Stainless Sales Corp., said. She noted that there
are responsible mines in the Congo that dont abuse
workers and that arent involved in armed conflict.
But the rule has generated
emotional responses further down the supply chain as well,
At another recent discussion she
attended, one panelist reported receiving a request from a
customer asking about conflict minerals and was told that "even
though we have been doing business together for 25 years, if we
have anything in our material that comes from DRC, then we are
out as a supplier," she recalled.
"So there are heated feelings
among metals distribution," DeVos said. But the "real issue is
the confusion among our customers customers
customers, who want us to certify that our material is conflict