Due Diligence for Responsible Sand and Silicate Supply Chains

Executive summary

The economic significance of sand and silicates

Sand and silicates are the two most extracted solid materials globally. They are essential for construction and infrastructure, in addition to semiconductors and energy. Trade dependencies for silicate-based raw material inputs for solar and semiconductor supply chains fluctuate between OECD countries and the People’s Republic of China (hereafter ‘China’), switching direction multiple times along the supply chain.

China has achieved dominance over the solar supply chain, in addition to key segments of the semiconductor value chain, accounting for 85% of the world’s silicon metal production, 95% of solar-grade polysilicon and 97% of solar-grade silicon wafer production. However, China is dependent on the United States for high-purity quartz (HPQ), a raw material that is vital for crucibles used to process silicon metal into polysilicon for both semiconductors and solar panels. A single US mine is responsible for 70% of the global supply of HPQ.

OECD countries like Germany, Japan, Korea and the United States play leading roles in other parts of the semiconductor supply chain, accounting for 65% of semiconductor-grade polysilicon and over 70% of semiconductor-grade silicon wafers. Beyond the interdependencies within each supply chain, semiconductor raw material and intermediate input producers also depend on demand from the solar industry due to its much larger scale of raw material use, and are therefore exposed to price and industry trends in the solar sector. In a context of growing economic security concerns, this strategic supply chain is an example of interdependency. Parallel measures have ensued, with several OECD countries listing silicon as a critical mineral and China listing HPQ as a strategic material, leading to the discovery of new deposits in China.

The construction sector is the largest user of sand and silicates and accounts for 13% of global GDP. With more than 50 billion tonnes of annual consumption, sand and silicate extraction is taking place in almost every country. Only 1-2% of global sand and silicate output is traded internationally, but trade volumes surpass many high-value minerals due to the sheer size of the sector. Global annual sand and silicate consumption amounts to 70 000 times the combined volumes for cobalt, lithium, gold, tantalum, tin and tungsten. The sand and silicate market is estimated to amount to USD 600 billion annually, making the sector more than 50% larger than the value of annual gold production while being more than a million times larger in volume. The extraction and processing of these materials present unique opportunities for beneficiation, development and livelihoods.

Scale of risks and impacts

Freshwater and marine extraction of sand and silicates can have particularly significant environmental impacts since sand plays a direct role in the functioning of such ecosystems. Biodiversity loss, climate change risks, water depletion, and air, water and soil pollution are all linked to the sector. In some areas, extraction rates are unsustainable, with regional environmental and economic implications. In the Mekong River Delta, sand extraction is ten times the replacement rate, resulting in riverbed instability. From 2018 to 2022, up to one-sixth of dredging occurred in marine protected areas, which are sanctuaries for underwater life. Most conflict-affected and high-risk areas have some sand and silicates production. Corruption, human rights abuses, financial crime and conflict finance are reported across the supply chain, in addition to occupational health and safety concerns and adverse impacts on communities and Indigenous Peoples. While sand and silicates are crucial to global supply chains, governance of their production is fragmented, with regulations varying across local, national and international levels, especially in transboundary freshwater systems. A substantial share of extraction occurs informally, posing challenges for governance, regulatory oversight and illicit trade.

Building responsible sand and silicate supply chains

OECD standards on responsible business conduct (RBC) call on enterprises to undertake risk-based due diligence to identify, prevent, mitigate and account for how they address actual and potential adverse impacts in their own operations and supply chains. Implementation of RBC standards, including sustainability initiatives that facilitate or audit due diligence by companies, generally focusses on widely traded higher-value minerals, but are also an important basis for wider uptake of due diligence in sand and silicate supply chains.

Considerations for companies

The report identifies key actions companies producing and sourcing these materials can take to apply OECD standards and tailor their recommendations to the sector:

• Map material flows and extraction contexts: Identify where sand and silicates originate, transport routes, and overlap with high-risk areas.

• Screen for ecosystem-sensitive sourcing: Include checks for extraction from freshwater or marine environments and high-biodiversity zones.

• Adapt mitigation to supply chain structure: For short, localised chains, use community-based approaches; for transboundary chains, integrate sand and silicates into multi-tiered due diligence frameworks used for minerals due diligence.

• Leverage existing sustainability initiatives: Explore entry points such as lime use in smelting and refining to connect sand and silicate oversight with established sustainability initiatives and, where relevant, audit and certification programmes.

• Address cumulative and systemic environmental impacts at the extraction stage: Consider that risks can propagate beyond the immediate extraction site and accumulate over time; orient engagement with suppliers to ensure they address related environmental risks.

• Invest in circularity and resource efficiency: Where extraction and consumption rates are unsustainable, prioritize recycling, alternative materials, and efficiency measures.

• Collaborate on sector-specific initiatives: Share risk data, develop monitoring systems tailored to sand and silicates, and assess whether a “control point” model is feasible for these supply chains.

Considerations for governments

Given the use of sand and silicates in a range of strategic sectors and potentially unsustainable levels of extraction, there is a shared interest in pursuing global approaches for the responsible and sustainable use of these materials. Governments may consider the following policy measures in support of such aims:

• Infrastructure policy: Support the implementation of RBC provisions in public procurement, export credit agency-backed projects, infrastructure development frameworks, public-private partnerships, and risk management systems of development finance institutions while adopting a risk-based approach adapted to specific types of sand and silicates and varying risk profiles.

• Resilience: Building on existing efforts, consider shifting trade dependencies in the semiconductor supply chain in policies to enhance resilience for critical raw materials.

• Trade monitoring: Harmonise HS trade classifications for sand and silicates to improve trade data transparency for traded types of sand and silicates that cannot be easily tracked at present; progressively extend supply chain due diligence expectations to these materials; and strengthen customs and law enforcement co-operation to counter illicit flows where relevant.

• Environmental conventions and law enforcement: Integrate responsible sand and silicate supply chains into implementation programmes for international environmental agreements, including to foster circularity, recycling and resource efficiency, and ensure enforcement of relevant environmental regulations in line with international best practice, especially in areas where RBC risks are significant and sand and silicate extraction rates unsustainable.

• International collaboration: Pursue international co-operation to track sand and silicate extraction and consumption, especially for construction sand at regional level where extraction can become unsustainable, and foster multi-stakeholder collaboration to enable more sustainable sand and silicate production and consumption rates.