01 Overview of Conflict Minerals Issue
The Democratic Republic of the Congo, Central African Republic, is currently undergoing a dispute over mineral resources. In the eastern part of Congo, militants are killing and raping lots of people in order to take control of the mine. Human rights such as child labor and forced labor are also being violated in the mining process.
In July 2010, the United States enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act in the face of growing international concern. Under Article 1502 of the Act, a listed company in the United States must disclose the country of origin information when filing an annual report, if it contains any conflicting mineral (tantalum, tin, tungsten, gold, or any mineral designated as contributing to the dispute in the Democratic Republic of the Congo and neighboring countries).
This is to prevent violence and exploitation in the conflict area by disclosing companies using the mineral in the region. Under the new law, announced in August 2012, listed companies in the United States are required to submit a report on the use of disputed minerals beginning with the fiscal year 2013 report.
02 The Stance of Seongji on Conflict Minerals
The partner companies of the Seongji Industrial establish a policy of prohibiting the use of disputed minerals and has to prove the place of origin when delivering parts and products containing the four major minerals (tantalum, tin, tungsten and gold). In addition, smelter of the four major minerals contained within Seongji Industrial’s products are encouraged to obtain a certificate through the Conflict Free Smelter Program of the Electronic Industry Citizenship Coalition (EICC).
If a sufficient number of smelters that don’t use disputed minerals are secured, the Seongji Industrial will require partners to receive minerals from a certified smelter.
However, by recommending the use of minerals that are legally traded in the disputed area, the economic situation of the country and the suffering of the local residents are not incurred.
03 The Countermeasure of Seongji
Seongji Industrial has included the prohibition of raw materials illegally mined in the Purchasing Policy and Supplier Code of Conduct of 2010. In addition, the Master Purchase Agreement revised in 2011 ensures that all suppliers of Seongji Industrial comply with them. In addition, we are working closely with various stakeholders such as domestic and foreign companies, government, and EICC.
In 2012, we conducted Due Diligence Surveys for domestic and overseas partner companies for about 7 months. Using the Conflict Minerals Reporting Template of the EICC, this was processed to identify the status of the smelters of the parts suppliers including the four major minerals. A survey of about 460 parts suppliers including the four major minerals through the hazardous material management system showed that the response rate was about 60% and about 300 smelters were identified. In February 2013, we reviewed the smelters identified with the EICC Conflict Mineral Response team and related stakeholders, and 161 smelters were identified.
Seongji Industrial is carrying out an enterprise task for building a Conflict Minerals Regulation Countermeasure System under the supervision of the Quality Center Product Testing Institute. We are working with relevant departments and domestic and international experts to establish the tracking system of origin of the four major minerals contained within the product. We will build processes and IT systems related by the end of 2013.
On the other hand, the international society recently expressed deep concern over environmental destruction and poor working conditions of tin mines located on Bangka Island, Indonesia. Seongji Industrial plans to respond appropriately.