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August 22, 2012
SEC to Vote Today on Disclosure of Conflict Minerals
    by Robert Kropp

The Enough Project reports that reforms are underway as a result of Dodd-Frank legislation, but warns that further steps must be taken to prevent conflict minerals in the Congo from subsidizing armed conflict. First of a two-part series.


More than two years after passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act authorizing it do so, the Securities and Exchange Commission (SEC) is set to issue regulations today requiring US corporations to disclose whether their products contain conflict minerals.

The Commission will also vote today on a rule requiring companies engaged in resource extraction to disclose payments made to the US or foreign governments.

Conflict minerals, which are found in many electronic devices, are smuggled out of the Democratic Republic of the Congo (DRC), and armed groups use payments for them to fund a conflict which has resulted in the loss of more than five million lives.

Trade associations such as the US Chamber of Commerce and the National Association of Manufacturers (NAM) are considered likely to file suit in an effort to block the measure on conflict minerals, should the Commission vote to enact the regulation. However, many companies are taking steps already to eliminate the minerals from their products, as a report by the Enough Project points out.

According to the Enough Project, "Passage of the conflict minerals legislation within the Dodd-Frank Wall Street Reform law and new tech industry sourcing policies have helped lead to a 65 percent drop in armed groups' profits from the trade" in conflict minerals over the past two years.

The Enough Project has also
ranked the largest electronics companies on their efforts to reduce conflict minerals in their products. Intel, which has publicly committed to the manufacturing of conflict-free products by 2013, ranked first, followed by HP, Philips, and SanDisk. Nintendo, which has failed to make public any effort to audit the flow of conflict minerals through its supply chain, was the only company to receive a grade of zero.

"According to interviews conducted with over more than 100 miners in North and South Kivu," the report states, "Most miners view the transformation to a clean trade free of armed groups as a process to liberate themselves from the slave-like conditions under which they have worked for years." While many miners report decreased harassment from armed groups at the mines that produce conflict minerals, however, ongoing conflict in the Kivus has prevented sustainable investment from occurring, and miners in the region have seen their incomes decrease as a result.

Much of the improvement in the conditions, the Enough Project reports, can be attributed to reforms enacted by the Congolese government in response to Dodd-Frank. The government now requires all mineral exports to be traced to conflict-free zones, and a new price structure that benefits conflict-free minerals has helped as well.

Yet more needs to be done, the Enough Project concluded. Increased mine security should be supported by the US and the European Union (EU), and a miner empowerment fund should be established to increase employment. Certification of conflict-free mines should occur more rapidly, and the US and its partners should exert pressure on Rwanda to end its interference in the DRC.

Finally, other industry sectors, such as automotive, jewelry, and retail, should join the electronics industry in ensuring that conflict-free minerals do not find their way into their products.

Today's anticipated action by the SEC should be an important next step.

 

 
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