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Conflict Minerals

IBM and other member companies of the Electronic Industry Citizenship Coalition (EICC), in conjunction with the Global e-Sustainability Initiative Supply Chain Work Group (GeSI), have continued working on the objective of achieving an electronic supply chain free of DRC conflict region-originated minerals. As introduced in the prior report, four minerals (tin, tantalum, tungsten and gold) originating in the Democratic Republic of Congo (DRC) are considered conflict minerals, although these same materials are often found in other parts of the world and from legitimate sources within the DRC that are not conflict-related.

In the past year, IBM formulated and published its conflict minerals standard outlining our recognition of the adverse impacts of the situation and our plans to take definitive steps to keep these materials out of our extended supply chain. This standard is posted to the Global Supply website and has been brought to the attention of our upstream suppliers.

In 2011, EICC/GeSI published its Conflict Free Smelter (CFS) assessment results for the first group of companies that went through this rigorous assessment. The CFS assessment process is directed to smelters and refiners that play a key role in the extended supply chain, as they are the point at which concentrated ores are refined into the higher level materials that ultimately flow into technology products.

This year also saw the release of the EICC/GeSI Conflict Minerals Reporting Template and Dashboard. This survey (and desktop consolidation software) was developed to provide companies with a common survey format for their upstream suppliers to identify the use of the four materials, the smelters used in the extended supply chain and where possible, the country of origin of the four minerals. In the third quarter of 2011, IBM deployed this survey template to 38 direct suppliers of subcomponents to our Microelectronics group. From this work, we learned the identities of over 100 upstream tantalum, tin, and tungsten smelters and gold refiners, located in 21 countries, currently used by our direct suppliers. This information has empowered us to take action to direct these smelters to the EICC/GeSI CFS program. In addition, we were able to share the consolidation of these survey results with over 30 customers of the Microelectronics group in support of external interest in this topic.

During 2012, we plan to deploy this template with direct suppliers to our Systems and Technology group to gain insight to the upstream smelters feeding into that portion of our extended supply chain. This work is in support of our published standard and in preparation for reporting that will be required by the United States Security and Exchange Commission relating to section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.