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CSR Risks Looming for Corporations Tied to Afghanistan Mine

OTTAWA, Jan. 29, 2018 /CNW/ - Due diligence in the mineral supply chain can mean different things to different people. To the uninterested, it is a burden. To the SEC issuer (company traded on an American stock exchange), it may be a legal obligation. To the miners in the DRC, it could lead to a brighter future and improved stability for their families, even if that transition does not always happen quickly. To the companies that take it seriously, it is a responsibility that industry should adopt wholesale and continue to improve year over year.

Far too often, the naysayers insist that proper due diligence is simply too difficult, too unreasonable, and too impractical. For those willing to put forth the effort, this information is available and impacts are achievable. Claigan Environmental has been providing due diligence research for industry leaders for the past several years. However, the industry as a whole still has a ways to go to mature in order to capture and address these risks.

The minerals supply chain has countless skeletons in the closet that receive less attention or are less known. For example, Forbes has reported that certain Chinese mining companies and refineries in the supply chains of multiple large corporations are pushing to develop,  the Mes Aynak copper mine in Afghanistan. Not only is this mine located atop an ancient Buddhist site, which will be destroyed in order to mine the copper, but the mining will reportedly displace several local villages. More shockingly, it is located in a Taliban controlled region. That is correct. One of the most well-known terrorist organizations has 'volunteered' to protect a mine that would benefit a copper and gold refinery listed in the supply chains of 36% of SEC issuers in their Conflict Minerals Report filed in 2017. Since many SEC issuers do not list the smelters in their supply chain, the actual number is no doubt much greater.

This refinery in question has been audited and included on the London Bullion Market Association Good Delivery List. Their conflict minerals policy states that they do "not tolerate direct or indirect support for illegal armed militaries or organizations" and if they find such an occurrence, they "will immediately suspend or terminate the transaction or contact." They have not yet started mining at Mes Aynak, but they have been attempting to commence for several years.

Often when industry identifies a particular issue, it tends to view the issue as if it existed in a vacuum instead of being part of a greater global phenomenon. We all know that there are severe problems with child labor in the cobalt mines of the DRC, but what about the children working in tin mines in Bolivia or gold mines in the Philippines?  On the environmental side, aluminum smelting is wreaking havoc on the drinking water in Nigeria, and dust from graphite mining contaminates the ground and water in China. Sometimes several different CSR issues occur at the same site such as the Letpadaung copper mine in Myanmar where there are reports of displaced local populations, the contamination of local water and soil, and local protests being met with white phosphorous.

Until companies start taking due diligence in the minerals supply chain more seriously and tackling these issues with a holistic approach, these problems will taint the cars we drive, the phones we use, and the jewellery we wear.

Industry is not without its leaders in conflict minerals and corporate social responsibility. The Enough Project recently recognized Apple, Alphabet, HP, Microsoft, and Intel as companies with strong conflict minerals programs that have taken the extra step to report and address issues within their supply chains that extend beyond the bare minimum that is required by law. Claigan has been providing due diligence expertise rooted in robust research demonstrating how to embrace, rather than begrudge, responsibility and risk management.

Due diligence is not just a one time legal obligation; it is a corporate social responsibility that protects the supply chain. Companies should continue to strive for more information and greater transparency. It should now be clear that the naysayers' protest that it is 'too difficult' is only a mask for their apathy. For the companies that want to drive due diligence continually forward, the resources are out there.

About Claigan Environmental

Dr. Timothy Holt is Senior Technical Lead on Corporate Social Responsibility at Claigan Environmental in Ottawa, Canada. Claigan is a leading provider of compliance and testing solutions for Conflict Minerals, RoHS, REACH SVHC, and related global restriction materials requirements.

To learn more about Dr. Holt's upcoming webinar entitled CSR Due Diligence in the Mineral Supply Chain - Looking at Dodd-Frank and Beyond, please visit http://www.claigan.com/webinars/.

SOURCE Claigan Environmental Inc.

Media Contact: Tim Holt, Senior Technical Lead, Corporate Social Responsibility, [phone], [email protected]