merck's mica supply chain update may...

Merck's Mica Supply Chain

Update May 2011

Merck„s mica supply chain – update May 20112

Bihar

Jharkhand

GayaNawada Jamui Banka

Bhagalpur

Hazaribagh

Koderma

Giridih

Bihar

Jharkhand


Bhagalpur

Hazaribagh

Koderma

Giridih

Bihar

Jharkhand


Bhagalpur

Hazaribagh

Koderma

Giridih

Background

The effect pigment business of Merck‟s chemical division is based to a large extend on

Indian mica. This specific mica has the characteristics necessary for the production of the

high quality pigments. This mica is sourced mainly from Bihar and Jharkhand.

India

Bihar

Jharkhand


Background

The mica from India is sourced through a supply chain with many actors, Merck buys

mica from exporters. Processors have been visited and audited regularly for many years

by Merck.

In recent years reports proved that child labour occurs in the very first step of the mica

supply chain, i.e. the collection of mica.

Unorganised(e.g. private persons)

Company/organisation

Collection of MicaFunction

Local traders(unknown)

Trading of Mica

Partners

Milling and sieving

Partners

Trading and Processing

MerckMerckCollector Trader Processor Exporter

Mines

Quarries

Decreasing influence of Merck

BrandBrand ShopShop

Consumer


Our commitment

Merck strongly opposes child labour. As a signatory of the United Nations Global

Compact, the company is actively engaged in eliminating child labour and the Merck

Social Charter explicitly bans child labour. Moreover, Merck KGaA stipulates in its

contracts that suppliers do not employ children.

Merck has started activities to get better control of this initial stage of the mica supply

chain and initiate change

– To secure a child-labour-free supply chain

– To improve living conditions in the region


Our target: Merck will eliminate child labour in its supply chain for natural mica.

As of October 1, 2010, Merck guarantees that all mica used for the

manufacture of its Merck-branded cosmetics and Candurin® portfolio

will be from child-labour-free sources. The conversion process for all

Taizhu-branded cosmetic pigments from China will be completed by

July 2011. This means that all cosmetic pigments produced from July

2011 onwards are based on controlled mica.

By End of 2011 we will have converted all raw mica supply for our

entire effect pigment portfolio.

Promising steps towards a child-labour-free supply chain have been

achieved by:

1. establishment of business relationships with mining companies in India

2. start of a project to develop “child-friendly villages”

3. operation of schools and a medical centre


1. Routine supply of mica from mines in India

In 2010 we began contracting with mine owners. In the mean time we

established routine processes for sourcing mica from these mines. This is an

important element for securing a child-labour-free mica supply for our entire

portfolio because these contained facilities are easier to control.

A tracking system that gives us transparency throughout the supply chain was

implemented.

Further mines are being evaluated in order to expand our direct supply of child-

labour-free mica.

An audit system was developed to ensure that the mines are socially

compliant, including unannounced audits by third parties (IGEP, ERM) and

specialists from Merck.

MerckMerckProcessor ExporterMines

BrandBrand ShopShop

Consumer

2. Social activities

Besides our strategy to gain control along the mica supply chain, we want to

improve the social and living situation of families in the mica region

Based on a detailed evaluation and assessment, Merck is collaborating with

expert partners to develop and implement educational and health programs in

Jharkhand:

– With IGEP, we are operating schools and a health centre within close proximity to

the mines from which Merck is sourcing mica

– BBA is implementing the concept of child-friendly villages



2. Social activities: school in Tisri run by IGEP

The first Merck-sponsored school was opened in Tisri in January 2010 and has been well accepted by the villagers and their children. There are app. 70 students in two classes. The education provided is holistic and includes civics , hygiene and health education. Additional benefits include free mid-day snacks, drinking water, uniforms, books and school supplies.

Regular tests are given in order to identify students in need of special attention by the teachers. Supplementary classes help these students to catch up.

In addition, the school offers vocational training in the field of sewing and tailoring. There are 15 students aged 12 years and older who are learning the basics of tailoring, sewing and embroidery. These vocational lessons are given in the students´ free time and have become a popular activity.

Also, a crèche was opened and is well received by the residents. It offers basic lessons and supervision for 13 children. Most of their parents are working in the mica-industry.


2. Social activities: schools and medical centre

A second Merck school was opened in Barkitand in January 2011 with over 50 children in 2 classes. The educational approach that proved successful in Tisri was transferred to this school.

We are looking for an appropriate location for a third school in the proximity of another mine we are using.

A medical centre was opened close to a mine in the village of Saphi. The medical centre is highly welcomed by the 20,000 residents in this area, where no medical care has been available.

.


2. Social activities: child-friendly villages

BBA (Bachpan Bachao Andolan)and Merck signed a cooperation agreement to develop child-friendly villages in Jharkhand. A steering committee, including representatives of Merck, local communities, traders, processors and exporters, identified 30 villages were the concept of the child-friendly village will be established. This committee meets on a regular basis to supervise the development of the project.

In July 2010, BBA began working in these 30 villages, located in three districts of Jharkhand and Bihar – Koderma, Giridih and Nawada. The activities in 20 villages are sponsored by Merck.

In the first year of the project, BBA worked with local communities and stakeholders such as government officials, teachers and especially with the children and young people in the villages to gain acceptance for the project and to develop a sound relationship. Various activities were carried out to create awareness of the importance of education, enrol children in school and disseminate information on the concept of child-friendly villages.


Back up


Engagement with Bachpan Bachao Andolan (BBA) – child friendly villages

A child-friendly village is a place where all children are free from labour and

attend school. A child-friendly village engenders the principles of democracy,

good governance, gender parity and economic sustainability. The project goals

are the withdrawal of children from work, enhancement of quality education

and also a holistic development of Indian villages toward creation of a child-

friendly society.

Throughout the process, emphasis

is given to child participation,

community mobilization, promotion

of education and ensuring long-

term sustainability. The conversion

of the selected villages to child-

friendly villages is planned to take

about three years.

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