The legislation requires companies that report to the US Securities Exchange Commission (SEC) to disclose if any of the minerals used in their products have been sourced from the Democratic Republic of Congo or any of the adjoining countries, and to describe how they have verified this.

1. Introduction

The Democratic Republic of the Congo (DRC) is a Central African country with large natural resources, including reserves of cassiterite (tin), columbite-tantalite (aka coltan – source of tantalum), wolframite (tungsten) and gold. For many years, armed groups have fought to control mines within the DRC and its adjoining countries; those armed groups have been cited for committing human rights violations and labor and environmental abuses. Therefore, tin, tantalum, tungsten and gold were named “conflict minerals”.
With the goal to cut direct and indirect funding of armed groups engaged in conflict and human rights abuses policies, processes and a legal act were developed.

Currently, ArcelorMittal is subject to three major bodies of regulation that address conflict minerals reporting:

  • Dodd Frank Act
  • The related United States Securities and Exchange Commission final rule on compliance with Dodd-Frank[2] (SEC final rule)
  • OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas [3](OECD Guidance)

The SEC final rule embodies a three-step approach to Dodd-Frank compliance:

  1. Determining applicability of the rule
  2. Conducting a “reasonable country of origin inquiry” (“RCOI”) to determine whether or not there is reason to believe that conflict minerals from DRC or an adjoining country are present in a company’s product
  3. Conducting due diligence to determine the source and origin of those conflict minerals and the facilities smelter(s) or refiner(s) - “SOR(s)” in which they were processed

In order to fulfill the due diligence requirements a company must use a nationally or internationally recognized standard such as the OECD Guidance in order to meet their compliance and reporting obligations.

ArcelorMittal is using the OECD Guidance for the RCOI and, if applicable, the due diligence in order to meet its SEC compliance and reporting obligations.

OECD Guidance consists of the following 5 steps:

  • OECD Guidance Step 1: Conflict Minerals Program – Management systems
  • OECD Guidance Step 2: Identify and assess risk in the supply chain
  • OECD Guidance Step 3: Risk Management
  • OECD Guidance Step 4: Independent third-party audit or smelter(s) or refiner (s) [SOR(s)] due diligence practices
  • OECD Guidance Step 5: report annually on supply chain due diligence

This five-step framework will structure this procedure.

The Responsible Sourcing Team follows the evolutions of the European Regulations: this procedure will be updated once official statements are made.

2. Definition

2.1 Definition of Conflict Minerals by Dodd-Frank Act

The term “conflict minerals” means (A) columbite--‐tantalite (coltan), cassiterite, gold, wolframite, or their derivatives; or (B) any other mineral or its derivatives determined by the Secretary of State to be financing conflict in the Democratic Republic of the Congo or an adjoining country.

 2.2  Metals and Minerals covered

  • “3T” metals
    • Tin: Cassiterite
    • Tantalum: Columbite-tantalite (Coltan)
    • Tungsten: Wolframite
  • Gold
  • Others determined by the Secretary of State to be financing conflict in DRC

2.3 Adjoining Countries

An adjoining country is defined as a country that shares an internationally recognized border with the Democratic Republic of Congo.

  • Angola
  • Burundi
  • Central Africa Republic
  • Republic of Congo
  • Rwanda
  • Tanzania
  • Uganda
  • Zambia

2.4 Covered Countries

The adjoining countries plus the DRC are altogether called “Covered Countries” in the Dodd-Frank Act.

2.5 ArcelorMittal Conflict Mineral Supply Chain

3. OECD Guidance Step 1: Conflict Minerals Program - Management systems

3.1 Conflict Minerals Policy: Code for Responsible Sourcing

ArcelorMittal included “conflict minerals” in its Code for Responsible Sourcing already in 2010[4]. Here is the respective excerpt:

ArcelorMittal is committed to use raw materials of legal and sustainable origin and not to source ‘conflict minerals’ contributing to finance armed conflicts and enable human rights abuses. ArcelorMittal maintains due diligence processes to achieve compliance with this commitment and requests relevant suppliers to fully support ArcelorMittal in this effort.

3.2 Conflict minerals team

3.2.1 Conflict Minerals working group

ArcelorMittal established a working group in charge of the creation and implementation of its conflict mineral program. The working group was supported from the beginning by the respective Senior Executive Officers.

Members of the following departments were involved in the working group:

  • European Procurement Organisation (EPO)[5]
  • Corporate responsibility
  • Legal & Compliance
  • Company Secretary
  • Sales & Marketing
  • Government Affairs
  • R&D

This working group has now been replaced by the European Procurement Organisation (EPO) supported the respective Senior Executive Officers. The members of the EPO team act as internal experts for this topic: e.g. due diligence survey on tin suppliers has been performed since 2011 by this team.

3.2.2 Governance

Under the leadership of the EPO a framework was built to formally establish and monitor the conflict minerals program.

Allocation of resources – conflict minerals team in EPO

ArcelorMittal decided to follow OECD Guidance for the RCOI and, if applicable, the due diligence to meet its SEC compliance and reporting requirements. This task was allocated to the team in charge of Responsible Sourcing within EPO. This team - the “conflict minerals team” - collaborates closely with the buyers for tin and tungsten (the only two conflict minerals contained in ArcelorMittal products) in order to properly assess the supply chain risks. The conflict minerals team is also in charge of answering customer requests regarding conflict minerals in products sold by ArcelorMittal.

Each year, a review meeting takes place (EPO Head of Systems, Processes and Group Compliance and Data Protection Officer as main participants) to discuss and assess the results of the yearly survey.

A final meeting is organized with an external legal firm in charge of filing those results to the SEC.

3.3 System of controls and transparency

The Conflict Minerals Reporting Template - CMRT[6] - (previously referred to as “EICC template”) issued by Electronic Industry Citizenship Coalition and Global e-Sustainability Initiative (EICC and GeSI) has been chosen by ArcelorMittal to facilitate the transfer of information throughout its supply chain and provide control and transparency over the conflict minerals country of origin and the SOR(s) involved.

ArcelorMittal identified OECD Guidance supported by the CMRTs as the process employed by most of its customers. The CMRTs serve as means of communication both between ArcelorMittal and its suppliers and ArcelorMittal and its customers.

The CMRTs are filled out by the relevant suppliers, sent to the conflict minerals team and permanently stored in INTEGRA vendor management – ArcelorMittal’s central electronic vendor database.

3.4 Engagement with relevant suppliers

ArcelorMittal enforces its commitment to supporting and implementing its conflict minerals program through the relevant section in the Code for Responsible Sourcing. The Code for Responsible Sourcing is sent to the relevant suppliers. The acknowledgement of the Code for Responsible Sourcing or the reference to an equivalent responsible sourcing program is also stored in INTEGRA vendor management. In parallel with the completion of the CMRT, explanatory conference calls with suppliers are organized when needed .

4. OECD Guidance Step 2 – Identify and Assess Risk in the Supply Chain

4.1 Identification of suppliers by identifying the relevant steel products

ArcelorMittal offers a complete spectrum of steel products. The conflict minerals team, together with R&D teams, sales teams and other experts from all segments/regions, investigated which steel products are in the scope of the conflict minerals program.

Out of more than 2000 steel products only a very limited number of steel products were identified as containing tin or tungsten intentionally added and therefore as necessary to the functionality or production of a product. Only tin and tungsten, and none of the other metals or minerals described in 3.2, were identified as being contained in ArcelorMittal’s product portfolio.

ArcelorMittal’s packaging business produces tinplate for a global market. A very few steel grades for electrical applications can also contain intentionally added tin. Tungsten is used to bring extreme hardness to some steel products (tool steel plate and some quarto plates).

In addition to the products that are sold to customers, some products for self-consumption and / or steel production can contain mainly tungsten (e.g. rolls and tool steel plates). Tin and tungsten are added as raw materials. Raw materials are purchased centrally by EPO. Therefore, the buyers of tin and tungsten are in the position to identify the relevant suppliers.

4.2 Request information from relevant suppliers

ArcelorMittal uses the CMRT to collect yearly the names of the SOR(s) from the identified suppliers.

4.3 Review information provided by relevant suppliers

The conflict minerals team reviews the information provided in the CMRT with regard to completeness and reasonableness. Furthermore, conflict minerals policies of the suppliers are checked – if available.
Prior to a new vendor being approved, it will be asked to supply a CMRT. If an incomplete or unsatisfactory response is provided, the potential vendor will be disqualified.

4.4 Compare SOR(s) identified by the supply chain to assess possible risks

The conflict minerals team compares the names of the SOR(s) listed in the CMRTs against the CFSI (Conflict-Free Smelter Initiative) Conflict-Free Smelter Program list. If a SOR is not independently verified as part of the RCOI, the conflict minerals team investigates further whether the minerals are sourced from a Covered Country based on the geographic location of the SOR(s) .

5. OECD Guidance Step 3 – Risk Management

5.1 Red flag triggers

The following red flags trigger further due diligence to be conducted by ArcelorMittal:

  • Unidentified smelters
  • The minerals originate from or have been transported via a conflict-affected or high-risk area.
  • The minerals are claimed to originate from a country that has limited known reserves, likely resources or expected production levels of the mineral in question.
  • The minerals are claimed to originate from a country in which minerals from conflict-affected and high-risk areas are known to transit.
  • The company’s suppliers or other known upstream companies have shareholders or other interests in companies that supply minerals from or operate in the above mentioned red flag locations of mineral origin and transit.
  • The company’s suppliers or other known upstream companies are known to have sourced minerals from a red flag location of mineral origin or transit in the last 12 months.

5.2 Due diligence

ArcelorMittal’s due diligence is conducted based on following information:

  • Independent assessment or validation schemes (preferably CFSI)
  • Statements or other assertions of SOR(s)
  • Indirect information (such a smelter location, metal association reports, independent reports, UN reports etc.)

Since ArcelorMittal is not directly in contact with SOR(s) the conflict minerals team is performing a documentation-based review only.

5.3 Risk management plan

The conflict minerals team produces a table of SOR(s) for tin and tungsten. If SOR(s) cannot be identified or if any other red flag - as described above - is triggered, ArcelorMittal will require relevant suppliers to encourage or require the SOR(s) they source directly from to participate in an independent validation scheme.

6. OECD Guidance Step 4 – Smelters or Refiners

Since early 2011, ArcelorMittal has been an active participant in the OECD working group on implementing the due diligence guidelines for responsible mineral supply chains.

ArcelorMittal does not have direct business relationship with SOR(s) . To support an independent audit approach and minimize the risks of sourcing from illegal and risky sources, ArcelorMittal shares the following instructions with all its existing (and new) tin and tungsten suppliers:

  • Suppliers must map their supply chain back to the mines the SOR(s) extract the minerals from. This must be reported on a yearly basis by completing the Conflict Minerals Reporting Template (CMRT) to identify the SOR(s) and the country of origin of the conflict minerals sold to ArcelorMittal. This report must include complete information regarding all SOR(s). Any changes affecting the information disclosed in the CMRT within the yearly reporting period must be promptly reported to ArcelorMittal;
  • Suppliers must only source conflict minerals from SOR(s) that have been certified “conflict-free” compliant or have demonstrated that they are progressing towards a conflict free certification by an independent third-party organisation or program nationally or internationally recognized;
  • Suppliers must not use any products that would not come from these certified or active SOR(s);
  • Documentary evidences of the certification / audit must be provided when requested
  • If suppliers become aware that they may have sourced conflict minerals from any Covered Countries or that the minerals may have directly or indirectly financed or benefited armed groups, the suppliers must immediately notify ArcelorMittal in writing at [email protected]; the concerned buyer must also be copied. Notifications must include reasonable tracking information to identify which goods may have been affected; and
  • Suppliers must promptly notify ArcelorMittal of all failures to meet the reporting, sourcing and due diligence requirements.

7. OECD Guidance Step 5 – Reporting

Starting in 2014, ArcelorMittal annually discloses the results of its supply chain due diligence on its corporate web page with a focus on conflict minerals. In this disclosure, ArcelorMittal reports the results of its RCOI. The SEC form SD is also filed as required.

8. Appendix

Conflict Minerals Reporting Template (the latest version can be found on: http://www.conflictfreesourcing.org/ )

Results of the Conflict Minerals Survey on Tin and Tungsten Smelters

The conflict Minerals Survey started in November 2019 and was finalized in April 2020. It covers tin and tungsten purchases from January 1st 2019 to December 31st, 2019.

Results of the Survey

Results of the 2019 Conflict Minerals Survey (May, 2020)

   Product

Smelter Facility Location
Country

Number of Smelters

Suppliers Response Rate
  Results for year 2019
  Tin Belgium (recycler), Bolivia, Brazil, China, Indonesia, Malaysia, Peru, Russian Republic, Thailand, Poland, Hong Kong 23 100% Response rate
  Tungsten Vietnam, Republic of Korea, Russian Federation, China 9 100% Response rate
  Results for year 2018
  Tin Belgium (recycler), Bolivia, Brazil, China, Indonesia, Malaysia, Peru, Poland, Thailand 29 100% response rate
  Tungsten Russian Federation, Vietnam, China 4 100% responserate
  Results for year 2017
  Tin Belgium (recycler), Bolivia, Brazil, China, Indonesia, Malaysia, 23 100% response rate
  Tungsten Vietnam, Brazil, Russian Federation, China 6 100% response rate
  Results for year 2016
  Tin Belgium (recycler), Bolivia, Brazil, China, Indonesia, Malaysia, Peru, Poland, Poland*, Taiwan, Thailand 29 100% response rate
  Tungsten China, Russian Federation, Vietnam 5 100% response rate
  Results for year 2015
  Tin Bolivia, Belgium (recycler), Brazil, China, Indonesia, Peru, Poland, Russian Federation, Taiwan 15 100% response rate
  Tungsten China, Russian Federation, Vietnam 7 100% response rate

 

[1]Full text available at: http://www.gpo.gov/fdsys/pkg/STATUTE-124/pdf/STATUTE-124-Pg1376.pdf

[2]Full text available at: http://www.sec.gov/rules/final/2012/34-67716.pdf

[3]Full text available at: http://www.oecd.org/daf/inv/mne/GuidanceEdition2.pdf

[4]The Code for Responsible Sourcing is available at: https://corporate-media.arcelormittal.com/media/qrzbtwyz/code-for-responsible-sourcing.pdf

[5]European Procurement Organisation (EPO) formally known as European Purchasing Platform (EPP)

[6]CMRT: https://corporate-media.arcelormittal.com/media/n3gf1o5c/rmi_cmrt_6-0.xlsx