At the invitation of Wesfarmers, Ethix SRI Advisors' analyst Eamon Surry visited the processing facilities of CSBP in Western Australia in January this year.

CSBP, a Wesfarmers subsidiary fertiliser company, imports phosphate from Morocco which is sourced in Western Sahara. This is in conflict with international norms prohibiting the exploitation of natural resources of Non-Self-Governing Territories unless carried out in full respect of the interests and needs of their people.

The ongoing dispute over Western Sahara has been described by the International Crisis Group as a frozen conflict that draws little international attention or engagement despite the ‘human, political and economic costs’. As many as 155 000 people may still live in refugee camps, although this figure is difficult to verify.

Ethix SRI Advisors has had a fruitful dialogue with Wesfarmers for some time on this issue. The company's position is that it has acted responsibly and has not breached domestic or international law. At the same time, the company states it is investigating alternative sources for its phosphate imports.

At the site visit by Ethix SRI Advisors, which took place on January 5th, Eamon Surry spoke with the Managing Director of CSBP about the company's business operations and also about the Western Sahara issue. The Managing Director informed us that the company has been conducting testing and evaluation of different kinds of phosphate rock to see if other suppliers can be used. CSBP says that one major problem with other kinds of phosphate is high levels of cadmium, which is toxic and can enter the food chain. Another environmental concern relates to the strong smell produced when certain kinds of phosphate rock are processed.

Evaluation by CSBP continues and the company is hopeful that a decision can be made in the near future as to whether a switch in suppliers can be made.

Wesfarmer's openness to dialogue on this issue is welcomed by many investors. Ethix SRI Advisors continues its monitoring and active dialogue with the company. Our current assessment according to Norm-Based Screening remains unchanged.

* Higher resolution photos of the visit are available in the Ethix Clientzone