Materials ban has implications for UK companies

And it has not been easy. The Waste Electrical and Electronic Equipment (WEEE) Directive, Restriction of Hazardous Substances (RoHS) Directive, and the Registration Evaluation Authorisation and restriction of CHemicals (REACH) have been the main ones to grab the headlines but End of Life Vehicles (ELV), the Landfill Directive, and numerous others have all had to be dealt with. The European Union has taken a lead role in environmental and ethical legislation when it comes to materials, but it seems that the US has made efforts to keep up of late. Most notably, it has introduced legislation that prohibits its public companies from using certain materials from the Democratic Republic of the Congo. Officially part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, it is much more commonly known as 'Conflict Materials'. The legislation forces US manufacturers not only to disclose what materials are in a product, but for the first time prove where it is from. The recently announced US Securities and Exchange Commission (SEC) rules require that in 2013, all US publicly-traded companies must begin tracking for the presence of conflict minerals in products and determine if the country of origin is the Democratic Republic of the Congo or an adjoining country. Companies must also maintain a documented due diligence trail. Beginning in May 2014, companies will need to report their findings to the SEC. In addition to disclosing whether or not products are 'Conflict Free' to the SEC, they must also post this information on their public websites. The Democratic Republic of the Congo possesses 80% of the world's Coltan (colombo-tantalite ore), but only mines a fraction of it. When Coltan is refined it becomes a heat resistant powder that can hold a high electric charge. It is therefore a vital component in a vast array of small electronic devices, and is in most mobile phones, laptop computers, pagers, and other electronic devices. Tantalum is also ubiquitously used. It can be alloyed with other metals to make carbide tools for metalworking equipment and in the production of superalloys for jet engine components, and is commonly used in automotive electronic components. It also does not irritate the body so is often used to make surgical sutures as well as implants. "It is an enormous issue for US manufacturers," says Scott McCarley, product marketing director for Windchill Product Analytics at PTC. "We work with a number of companies that appreciate the size and complexity of the legislation, but some of them have been left scratching their heads about how they are going to implement it. "You have to report what materials are in your products and now the country of origin, not just a restriction but details of where they come from. Getting down to the smelter or the mine is significant effort." The Democratic Republic of the Congo has seen significant conflict in the recent years and as a result military groups have taken control of many of the mines. These groups are using natural resources to fund its operations and create a crisis by using forced labour. In addition, there have been documented atrocities. Similar stories have emerged from some of the countries adjoining the Democratic Republic of the Congo as well. Miners are often forced to dig with hand tools and even their bare hands in squalid conditions for little or no pay. The United Nations has released reports declaring that the mineral trade in the region contributes directly to the funding of war. As a result the US congress has taken this direct action and said the trade of conflict minerals originating from The Democratic Republic of the Congo must stop. The conflict mineral law requires public companies to disclose the use of such minerals in any products they manufacture. And this is why it is affecting UK companies. By requiring a big manufacturer to report that information, they in turn have to go down the supply chain to component manufacturers. Anyone supplying in to the US manufacturing industry needs to prove that they are not using conflict minerals. "The legislation is having a ripple effect," says McCarley. "The obligation is on US manufacturers, but it will affect manufacturers worldwide." US manufacturers need to report whether or not there are any conflict minerals in products, or if it is indeterminable. If manufacturers are not sure there is a two year grace period. But, it is not the case that those that do not follow the legislation will face heavy fines. The US Government says the naming and shaming of companies that use conflict minerals is enough. "Companies are obliged to put this information on their websites," says McCarley. "The penalty is that your company will be seen as being unethical in its operations and that is a big part of the consumer decision to purchase these days. So companies will risk seriously damaging their brand." The exact materials, and mined minerals affected under this legislation are Tantalum, Tungsten, Tin and Gold – often referred to as 3T&G. Currently in the US, 15% of its Tantalum (used to produce coltan) is from The Democratic Republic of the Congo so it is a significant volume. The other conflict minerals in the US supply chain are Tin (8%), Tungsten (4%) and Gold (1%). Europe and the European Union is largely waiting to see how the regulation unfolds and how its implementation goes before taking similar steps. The belief, however, is that this regulation will drive many manufacturers all over the world to adopt this standard and it is only a matter of time before this kind of regulation is implemented in the UK. Is there a solution? By leveraging full material data retrieved from International Material Data System and a product compliance system, you can systematically generate reports that identify exactly which products, components and suppliers use conflict minerals, as well as demonstrate due diligence. "We have been working with companies and one of our solutions is product analytics," says McCarley. "The solution is about managing compliance, performance and risk starting early in the product development process. "You can track regulations like REACH, RoHS, and conflict minerals as well as other performance criteria like cost, quality and even approximate embedded carbon." The methods and tools available for tracking and managing materials along the supply chain - from production right through to disposal - are continually evolving. Increasingly, however, manufacturers are being asked to document all the materials in products to give greater transparency of who buys what, from where. This is a trend that will no doubt have a big impact on design. Designers face increasing constraints and if a material becomes too expensive, or indeed no longer viable to use, alternatives must be found.