The so-called 3TG minerals -- tin, tungsten, tantalum, and gold -- are some of the most needed raw materials in manufacturing but have become the most perplexing to obtain. Much of the minerals originate from the Democratic Republic of Congo (DRC) and surrounding region, the sale of which funds the warlords and armed groups that control the mines, hence the term “conflict minerals.” A federal law enacted in 2010 is trying to stem the trade of conflict minerals by requiring companies to first investigate their mineral supply chains and report conflict sources and then move toward ethical sourcing.
For Greenville, S.C.-based electronic component maker KEMET, few companies have a bigger stake in sourcing conflict-free tantalum. Forty-six percent of KEMET’s revenue comes from sales of its tantalum capacitors, making the manufacturer one of the world’s largest users of the mineral. The largest deposits of coltan ore, from which tantalum is extracted, are located in the DRC. In an interview with Design News , KEMET CEO Per Loof said acquiring tantalum has always been a problem, but it became an ever bigger challenge during the global recession in 2008.
(Source: US Government Accountability Office)
“Tantalum powder suppliers kept raising prices, seemingly unaware of the world around them,” Loof noted. “We had to figure something out. The DRC no longer was an option. Customers did not want products with raw materials originating from the DRC -- some even said they did not want ‘blood tantalum’ capacitors.”
To cut down on the amount of conflict minerals used by industry, Section 1502 of the Dodd-Frank Consumer Protection Act requires companies to submit disclosures to the Securities and Exchange Commission identifying the countries-of-origin for their 3TG minerals as public information. The mandate remains controversial because of the difficulty in investigating the vast and complex supply chains, and the US House Committee on Financial Services' Monetary Policy and Trade Subcommittee recently held a hearing entitled, “Dodd-Frank Five Years Later: What Have We Learned from Conflict Minerals Reporting?” Loof testified before the subcommittee that the ability to acquire 3TG minerals at stable and competitive prices is vital to global industry.
But dysfunction in KEMET’s existing supply chain was deeply ingrained, and the reporting mandated by the Dodd-Frank rule seemed frustratingly impossible -- at the House subcommittee hearing, Kimberly Gianopoulos, director of international trade for the US Government Accountability Office, reported that 67% of companies that filed SEC reports said they were unable to determine whether their minerals came from the DRC or surrounding countries. Also, KEMET found itself being forced to pay higher prices for tantalum of lower quality from China. So the company went to create a completely closed-loop, transparent, and cost-effective supply chain to procure tantalum-rich ore from the DRC, bypassing untrusted players.
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