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A Silver Lining in the Dodd-Frank Act

By Per Loof, November 19, 2015​

I recently had the privilege to testify before the House Financial Services Committee’s Monetary Policy and Trade Subcommittee. The hearing was held as part of the full committee’s continued oversight of the Dodd-Frank Act, signed into law by President Obama five years ago. The focus of the hearing was on the conflict minerals provision in Dodd-Frank. Section 1502 of Dodd-Frank requires public companies to disclose whether they source “conflict minerals” – tin, tungsten, tantalum, and gold – from the Democratic Republic of Congo (DRC) and its nine neighboring countries. These minerals are used in countless products, from cell phones to satellites.

Many critics of Dodd-Frank suggest that the well-intended conflict minerals rule is actually harming the very people it was designed to help, and that Section 1502 has led to a de facto embargo, further impoverishing Africans while leaving local militias unaffected. But at KEMET, the story for us is different. We have seen many positive socio-economic results from Section 1502, both for businesses and for the people of the DRC.

At KEMET, we saw an opportunity with the passing of Section 1502. This legislation was the impetus and roadmap for us to develop an innovative and socially sustainable source for conflict-free tantalum ore in the DRC. In 2011, we formed “The Partnership for Social and Economic Sustainability” with the objective to create a vertically integrated, closed-pipe, sustainable sourcing model. We assisted in the creation of a conflict-free mine which is operated according to a special agreement between KEMET, our mining partner MMR, and the people of the mining town of Kisengo. Getting to and from the mine is difficult due to the lack of basic infrastructure; thus, we built roads and bridges. To ensure our supply was closed-pipe, we built an ore processing facility in Matamoros, Mexico. We then bought a tantalum power production company in Carson City, Nevada (USA). KEMET’s overall investment in our tantalum supply chain is in excess of $110 million.

Furthermore, our investment in the DRC has reduced extreme fluctuation in ore and powder pricing that was part of our former supply model. KEMET is one of the largest tantalum users in the world, and it is our hope that our vertically integrated, closed-pipe supply chain has stabilized pricing of tantalum not just for us, but for the industry as a whole.

Now, there is no question on provenance and there is a clear road map to ethically source tantalum from the DRC. All of our facilities have been audited and validated as compliant with the Conflict-Free Smelter Program of the Electronic Industry Citizenship Coalition and the Global e-Sustainability Initiative. At KEMET, we have embraced the DRC and developed a sustainable and secure supply chain, improving our competitiveness and the lives of the people in the DRC.

Our investments have resulted in:
  • A mechanized mine, making it safer for the workers
  • A new hospital for the people of Kisengo (over 14,000 cases have been treated in the last 16 months)
  • A new school with 1,500 students
  • Access to clean water (we have eradicated cholera in the village)
  • Creation of local business supporting the mine, school, and hospital
  • Installation of solar powered street lights
  • Refurbished basic infrastructure (roads, bridges, and water wells)

We know KEMET cannot solve all the problems in the DRC, but we do believe we will continue to have a positive and lasting impact. Congressman Brad Sherman (D-CA) a senior member of the House Foreign Affairs Committee and former chairman of the Subcommittee on Trade, noted during the hearing that companies such as KEMET are, “doing well by doing good.” For us, this statement is true. We have shown that it is possible to succeed while being economically and socially responsible. To learn more, please visit: http://www.kemet.com/conflictfree and watch our videos.