Thanks to Paul Dudek of Latham & Watkins for the heads up on this item. The Responsible Minerals Initiative (RMI) – an industry organization that “offers companies and their suppliers an independent, third-party audit that determines which smelters and refiners can be verified as having systems in place to responsibly source minerals in line with current global standards” – recently announced it is suspending new Responsible Minerals Assurance Process (RMAP) audits in Russia.
The suspension of RMAP assessments in Russia will impact inclusion of auditees in Russia on the public RMAP Conformant and Active lists, available here. Russian auditees will be removed from the Active or Conformant list in September or January, based on auditees’ last RMAP assessment and in keeping with RMAP Conformant list removal procedures, in two categories:
1. Any Active or Conformant Russian auditees which have passed the one-year mark for an assessment and did not receive a re-assessment and determination letter confirming conformance by September 1, 2022, will be removed by September 30, 2022.
2. Any Conformant Russian auditees that pass the one-year mark after October 1, 2022, will be removed from the Conformant List on January 31, 2023.
What This Means
RMI’s announcement may complicate supply contracts, procurement departments and supplier relationships, because companies will have less visibility into Russian smelters in their supply chains for tin, tantalum, tungsten and gold. In addition, it may make it more difficult for companies to prepare next year’s SEC conflict minerals filings (Form SDs), which often include information about whether smelters and refiners in supply chains are deemed “conflict free.” Removal from the Conformant List doesn’t necessarily mean that the facility is non-conformant and supporting a conflict, as there are “in-between” situations – but it certainly makes things less straightforward. More information on the lists is available here.
Companies with Russian smelters or refiners in their supply chains will need to make decisions about how to manage this development. While there is almost universal reliance on RMI’s audit program and results, RMI may be able to rely on assessments conducted by other organizations with which RMI has mutual recognition. However, this may solution may not be available in this instance, so it is worth watching. RMI also emphasizes:
Companies are responsible for their own sourcing decisions, including selecting suppliers and counterparties, and should review all applicable laws with their legal counsel before making such decisions. RMAP assessments are not a material validation, and a facility’s conformant status or lapse does not confer approval or ban of minerals or related products.