The disclosure comes as the US Securities and Exchange Commission (SEC) mandates that if a public company manufactures or contracts to manufacture products containing cassiterite (tin), columbite-tantalite (tantalum), gold and wolframite (tungsten), the company must “undertake a reasonable country of origin inquiry.” That review is supposed to determine whether those minerals are coming from “Covered Countries,” which includes the Democratic Republic of the Congo, the Central African Republic, South Sudan, Uganda, Rwanda, Burundi, Tanzania, Zambia and Angola.
Charles River contract manufactures two products that contain electronic components with tantalum and tin, including the Endosafe-PTS Portable Test System and the Endosafe-MCS Multi-Cartridge System.
Supply Chain Complexity
The problem for Charles River is that its supply chain has become so complex that it can’t figure out if it actually sources the minerals from any of the “Covered Countries.”
“Given the breadth and complexity of our Endosafe Products and supply chain, and the responses received to date in our RCOI [reasonable country of origin inquiry] process, we could not determine that our supply chain was not sourcing Conflict Minerals from one or more of the Covered Countries,” the company said in its filing.
The finding comes as the company says it reached out to its 21 suppliers for the minerals, nine of which reported “that the source of the Conflict Minerals was unknown,” and eight of which said the minerals were sourced from conflict-free smelters.
“In other cases, the responses we received were only partially complete or did not provide sufficient detail to allow us to trace potential Conflict Mineral smelters/refiners back to one of our Endosafe Products,” Charles River says.
The filing also reveals, when compared with an SEC filing from 2014, that Charles River’s supply chain has grown drastically from one supplier that did not source the minerals from any covered countries, to the 21 suppliers it now uses.
Charles River spokeswoman Amy Cianciaruso told us: “We reported more suppliers this year due to a combination of: a more thorough and complete review of our supply chain this year, an expanding list of suppliers, and a growing business.”
The company also revealed in its most recent filing a number of new due diligence measures to help it assess whether the minerals are being sourced from the questionable countries, including a plan to manage the risks related to the suppliers’ compliance with the “Conflict Minerals” requirements.