Conflict minerals law: Difference between revisions
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The statute specifies that the audits be "conducted in accordance with standards established by the [[Comptroller General of the United States]], in accordance with rules promulgated by the Commission." This means that the same auditing standards that apply to other SEC auditing requirements will also apply to conflict minerals audits <ref name="Section 1502b" /> Because of this statutory mandate, SEC will have little discretion to allow companies to issue self-generated statements or certifications to satisfy the law. |
The statute specifies that the audits be "conducted in accordance with standards established by the [[Comptroller General of the United States]], in accordance with rules promulgated by the Commission." This means that the same auditing standards that apply to other SEC auditing requirements will also apply to conflict minerals audits <ref name="Section 1502b" /> Because of this statutory mandate, SEC will have little discretion to allow companies to issue self-generated statements or certifications to satisfy the law. |
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Third party audits for conflict minerals supply chain traceability began in summer 2010 under the Electronic Industry Citizenship Coalition (EICC), a US-based electronics manufacturing trade association.<ref>[http://www.eicc.info/PDF/PR%20Extractives%20Smelter%20Audit%20Launch%20FINAL.pdf]{{ |
Third party audits for conflict minerals supply chain traceability began in summer 2010 under the Electronic Industry Citizenship Coalition (EICC), a US-based electronics manufacturing trade association.<ref>[http://www.eicc.info/PDF/PR%20Extractives%20Smelter%20Audit%20Launch%20FINAL.pdf] {{wayback|url=http://www.eicc.info/PDF/PR%20Extractives%20Smelter%20Audit%20Launch%20FINAL.pdf |date=20111102203237 }}</ref> Under this program, EICC selected three audit firms to conduct the actual audits, with two of the three participating in the pilot audits in 2010. After concluding the pilot, one of the two firms involved in 2010 withdrew from the program specifically in response to the SEC's proposal and to reduce potential legal risks to the audited entities.<ref>{{cite web|url=http://www.sdcexec.com/web/online/Global-Focus-News/Conflict-Minerals-Sustainability-and-Audit-Services-to-Align-with-US-SEC-Audit-Standards/50$13230 |title=Find It: |publisher=Sdcexec.com |date= |accessdate=2014-04-25}}</ref> |
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Neither the law nor the proposed regulations provide guidance on what will be considered an acceptable audit scope or process, preferring to allow companies the flexibility meeting the requirement in a manner that is responsive to their own individual business and supply chain.<ref>75 Fed. Reg. 80957</ref> At the same time, the law contains a provision that preserves the government's rights to deem any report, audit or other due diligence processes as being unreliable, and in such cases, the report shall not satisfy the requirements of the regulations,<ref>Section 1502(b)</ref> further emphasizing the need for such audits to conform to established SEC auditing standards. Comments on the proposed regulation pointed out that, should SEC not specify an applicable audit standard, it cannot also be silent or ambiguous on the auditor standards as well, or the Commission will violate the plain language of the Law mandating "standards established by the Comptroller General of the United States".<ref name="sec.gov">See numerous comments filed at http://www.sec.gov/comments/s7-40-10/s74010.shtml</ref> It is generally expected that SEC will provide specificity on both the audit standard and the auditor standard. SEC's proposal attempted to clarify its position on auditor requirements.<ref>75 Fed. Reg. 80958</ref> |
Neither the law nor the proposed regulations provide guidance on what will be considered an acceptable audit scope or process, preferring to allow companies the flexibility meeting the requirement in a manner that is responsive to their own individual business and supply chain.<ref>75 Fed. Reg. 80957</ref> At the same time, the law contains a provision that preserves the government's rights to deem any report, audit or other due diligence processes as being unreliable, and in such cases, the report shall not satisfy the requirements of the regulations,<ref>Section 1502(b)</ref> further emphasizing the need for such audits to conform to established SEC auditing standards. Comments on the proposed regulation pointed out that, should SEC not specify an applicable audit standard, it cannot also be silent or ambiguous on the auditor standards as well, or the Commission will violate the plain language of the Law mandating "standards established by the Comptroller General of the United States".<ref name="sec.gov">See numerous comments filed at http://www.sec.gov/comments/s7-40-10/s74010.shtml</ref> It is generally expected that SEC will provide specificity on both the audit standard and the auditor standard. SEC's proposal attempted to clarify its position on auditor requirements.<ref>75 Fed. Reg. 80958</ref> |
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* [[ReliefWeb]]<ref>{{cite web|url=http://www.reliefweb.int/rw/rwb.nsf/db900SID/KHII-8DP3J9?OpenDocument&RSS20=02-P |title=Certifying Congo's Deadly Conflict Minerals | ReliefWeb |publisher=Reliefweb.int |date=February 1, 2011 |accessdate=November 18, 2011}}</ref> |
* [[ReliefWeb]]<ref>{{cite web|url=http://www.reliefweb.int/rw/rwb.nsf/db900SID/KHII-8DP3J9?OpenDocument&RSS20=02-P |title=Certifying Congo's Deadly Conflict Minerals | ReliefWeb |publisher=Reliefweb.int |date=February 1, 2011 |accessdate=November 18, 2011}}</ref> |
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* [[Ashley Judd]]<ref>{{cite news| url=http://www.cnn.com/2010/TRAVEL/09/02/judd.congo.conflict.minerals/index.html | work=CNN | title=Ashley Judd confronts Africa's deadly mineral issue | date=September 8, 2010}}</ref> |
* [[Ashley Judd]]<ref>{{cite news| url=http://www.cnn.com/2010/TRAVEL/09/02/judd.congo.conflict.minerals/index.html | work=CNN | title=Ashley Judd confronts Africa's deadly mineral issue | date=September 8, 2010}}</ref> |
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* [[Ryan Gosling]]<ref>[http://halogentv.com/articles/video-ryan-gosling-raises-hope-for-congo-on-jimmy-kimmel-live/]{{ |
* [[Ryan Gosling]]<ref>[http://halogentv.com/articles/video-ryan-gosling-raises-hope-for-congo-on-jimmy-kimmel-live/] {{wayback|url=http://halogentv.com/articles/video-ryan-gosling-raises-hope-for-congo-on-jimmy-kimmel-live/ |date=20130620121701 }}</ref> |
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* Southern Africa Resource Watch<ref name=ALL>{{Citation |
* Southern Africa Resource Watch<ref name=ALL>{{Citation |
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| url = http://allafrica.com/stories/201211151385.html |
| url = http://allafrica.com/stories/201211151385.html |
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![](http://upload.wikimedia.org/wikipedia/commons/thumb/b/b5/Conflict_minerals_961w.jpg/220px-Conflict_minerals_961w.jpg)
Conflict resources are natural resources extracted in a conflict zone and sold to perpetuate the fighting.[1] There is both anecdotal and statistical evidence that belligerent accessibility to precious commodities can prolong conflicts (a "resource curse").[2][3][4] The most prominent contemporary example is the eastern provinces of the Democratic Republic of the Congo, where various armies, rebel groups, and outside actors have profited while contributing to violence and exploitation during wars in the region.
The most commonly mined conflict minerals are cassiterite (for tin), wolframite (for tungsten), coltan (for tantalum), and gold ore, which are extracted from the Eastern Congo, and passed through a variety of intermediaries before being purchased by multinational electronics companies. These minerals are essential in the manufacture of a variety of devices, including consumer electronics such as mobile phones, laptops, and MP3 players.[5]
The extraction and sale of blood diamonds, also known as "conflict diamonds", is a better-known phenomenon which occurs under virtually identical conditions. Even petroleum can be a conflict resource; ISIL uses oil revenue to finance its terrorist activities.
Various international efforts have been made to reduce trade in conflict resources, to reduce the incentive to extract and fight over them. For example, in the United States, the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act[6] requires manufacturers to audit their supply chains and report conflict minerals usage.
History
The concept of 'conflict resource', or 'conflict commodity' emerged in the late 1990s, initially in relation to 'conflict diamonds' financing rebellions in Angola and Sierra Leone. (The media often called these 'blood diamonds'.)[7] Then 'conflict timber' financed hostilities in Cambodia and Liberia.[8]
Conventions
The concept was first officially discussed by the UN General Assembly for 'conflict diamonds':.[9] The UN Security Council has since referred to conflict resources in several resolutions.
The advocacy group Global Witness has called for an international definition facilitating a more systematic application of UN resolutions, the prevention of complicity in abuses during hostilities by commercial entities exploiting or trading in conflict resources, and the prosecution of war profiteers suspected of supporting or abetting war criminals.[4].
Conflict resources are natural resources whose systematic exploitation and trade in a context of conflict contribute to, benefit from or result in the commission of serious violations of human rights, violations of international humanitarian law or violations amounting to crimes under international law.
— Global Witness, proposed Definition of conflict resources[10]
Since 1996 the Bonn International Center for Conversion has tracked resource governance and conflict intensity by country.[11] Aside from fossil fuels, metals, diamonds, and timber it tracks the governance of other primary goods that might fund conflicts, including: poppy seeds (Afghanistan), rubber (Côte d'Ivoire), cotton (Zambia), and cocoa (Indonesia).
Conflict minerals
The four most prominent conflict minerals, for example codified in the U.S. Conflict Minerals Law, are:
- Columbite-tantalite (or coltan, the colloquial African term) is the metal ore from which the element tantalum is extracted. Tantalum is used primarily for the production of tantalum capacitors, particularly for applications requiring high performance, a small compact format and high reliability, widely from hearing aids and pacemakers, to airbags, GPS, ignition systems and anti-lock braking systems in automobiles, through to laptop computers, mobile phones, video game consoles, video cameras and digital cameras.[12] In its carbide form, tantalum possesses significant hardness and wear resistance properties. As a result, it is used in jet engine/turbine blades, drill bits, end mills and other tools.
- Cassiterite is the chief ore needed to produce tin, essential for the production of tin cans and solder on the circuit boards of electronic equipment.[13] Tin is also commonly a component of biocides, fungicides and as tetrabutyl tin/tetraoctyl tin, an intermediate in polyvinyl chloride (PVC) and high performance paint manufacturing.
- Wolframite is an important source of the element tungsten. Tungsten is a very dense metal and is frequently used for this property, such as in fishing weights, dart tips and golf club heads. Like tantalum carbide, tungsten carbide possesses hardness and wear resistance properties and is frequently used in applications like metalworking tools, drill bits and milling. Smaller amounts are used to substitute lead in "green ammunition".[14] Minimal amounts are used in electronic devices, including the vibration mechanism of cell phones.
- Gold is used in jewelry, electronics, and dental products. It is also present in some chemical compounds used in certain semiconductor manufacturing processes.
These are sometimes referred to as "the 3T's and gold", 3TG, or even simply the "3T's". Under the US Conflict Minerals Law, additional minerals may be added to this list in the future.[15]
Democratic Republic of the Congo
As of 2010, the conflict resource fueling the world's deadliest war is gold in the Congo.[16] Gold bars are less traceable than diamonds, and gold is abundant in the Kivu conflict region. In any case, no jewellery industry standard exists for verifying gold origination, as it does for diamonds (though jeweler's total outlay on gold is five times that on diamonds).[17] Other conflict minerals being illicitly exported from the Congo include cobalt, tungsten, cassiterite,[18] and coltan (which provides the tantalum for mobile phones, and is also said to be directly sustaining the conflict).[19][20]
Armed conflict and mineral resource looting by the Congolese National Army and various armed rebel groups, including the Democratic Forces for the Liberation of Rwanda (FDLR) and the National Congress for the Defense of the People (CNDP), a proxy Rwandan militia group has occurred throughout the late 20th century and the 21st century. Additionally, the looting of the Congo's natural resources is not limited to domestic actors. During the Congo Wars (First Congo War (1996–1997) and Second Congo War (1998–2003)), Rwanda, Uganda and Burundi particularly profited from the Congo's resources. These governments have continued to smuggle resources out of the Congo to this day.
The profits from the sale of these minerals has financed fighting in the Second Congo War and ongoing follow-on conflicts, and control of lucrative mines has also itself become a military objective.[21]
Mines
Mines in eastern Congo are often located far from populated areas in remote and dangerous regions. A recent study by International Peace Information Service (IPIS) indicates that armed groups are present at more than 50% of mining sites. At many sites, armed groups illegally tax, extort, and coerce civilians to work. Miners, including children, work up to 48-hour shifts amidst mudslides and tunnel collapses that kill many.[22] The groups are often affiliated with rebel groups, or with the Congolese National Army, but both use rape and violence to control the local population.[23]
United States law
![]() | It has been suggested that this section be split out into another article titled Conflict minerals law in the United States. (Discuss) (May 2015) |
In April 2009, Senator Sam Brownback (R-KS) introduced the Congo Conflict Minerals Act of 2009 (S. 819) to require electronics companies to verify and disclose their sources of cassiterite, wolframite, and tantalum. This legislation died in committee. However, Brownback added similar language as Section 1502 of the Dodd–Frank Wall Street Reform and Consumer Protection Act, which passed Congress and was signed into law by President Barack Obama on July 21, 2010.[24]
The U.S. Securities and Exchange Commission (SEC) issued its proposed, far-reaching draft regulations to implement the Conflict Mineral Law. The regulations were proposed on December 15, 2010, and published in the Federal Register of December 23, 2010[25] would require U.S. and certain foreign companies to report and make public the use of so-called "conflict minerals" from the Democratic Republic of the Congo or adjoining countries in their products. Comments on this proposal were originally due by January 31, 2011, but SEC extended the public comment period until March 2, 2011.[26] The law itself requires the regulations to be finalized no later than April 15, 2011.[27] According to the SEC website, section 1502 is one of the rules scheduled to be promulgated between January 2012 and June 30, 2012. In a March 2012 statement, SEC chairwoman Mary Schapiro said that the agency hopes to complete the process in “the next couple of months”, a statement that would be consistent with the website’s target date.[28][needs update]
One report concerning the proposal[29] stated the following statistics for the submitted comments:
- Slightly more than 700 comment letters were submitted to SEC on the proposal;
- Approximately 65% of those were form letters or basic letters from the general public supporting the rule's intent;
- The remaining 35% (roughly 270) represent views of businesses, trade/industry associations, the investment/financial community, professional auditing firms, and other relevant governmental entities; and
- Of those 270 comments, an estimated 200 contained substantive and/or technical comments.
That report also contained what it calls a "preview of the final SEC regulations" synthesized from their detailed research and analysis of a large body of documents, reports and other information on the law, proposed regulation and the current budget/political setting facing the SEC in the current administration.
The comments on the proposal were reviewable by the public.[30]
The final rule went into effect 13 November 2012.[31]
The SEC rule has not gone unnoticed by the international community, including entities seeking ways to undermine any required traceability efforts. A report published by a metals trading publication illustrated one DRC ore/mineral flow method that has apparently been devised to thwart detection.[32]
On July 15, 2011, the US State Department issued a statement[33] on the subject. Section 1502(c) of the Law mandates that the State Department work in conjunction with SEC on certain elements of conflict minerals policy development and support.
On October 23, 2012 U.S. State Dept Officials asserted that ultimately, it falls on the U.S. State Dept. to determine when this rule would no longer apply.[34]
In April 2014, the United States Court of Appeals for the District of Columbia Circuit struck down several parts of the SEC Rules as unconstitutional.[35]
Auditing and reporting requirements
Fundamentally, the US Conflict Minerals Law contains two requirements that are closely connected: independent third party supply chain traceability audits and reporting of audit information to the public and SEC. However, even companies not directly regulated by SEC will be impacted by the audit requirements because information/audit requirements will be pushed down through entire supply chains, including privately held and foreign-owned companies.
SEC has estimated that 1,199 “issuers” (i.e., companies subject to filing other SEC reports) will be required to submit full conflict mineral reports. This estimate was developed by finding the amount of tantalum produced by the DRC in comparison to global production (15% – 20%). The Commission selected the higher figure of 20% and multiplied that by 6,000 (the total number of "issuers" SEC will be required to do initial product/process evaluations).[36] This estimate does not account for the companies who supply materials to the “issuers” (but are not themselves SEC-regulated) but who will almost certainly be required to conduct conflict minerals audits to meet the demands of those customers. Other estimates indicate that the total number of US companies likely impacted may exceed 12,000.[37]
A study of the potential scope and impact of the regulation was undertaken in early 2011 by the IPC – Association Connecting Electronic Industries trade association.[38] This study was submitted as part of the association's comments to SEC on the rule and provides the respondents' views on their estimates of the breadth of effort required to meet the regulations.[39] The study states that the IPC survey respondents had a median of 163 direct suppliers. Applying that number to the SEC's estimated number of impacted issuers results in the possibility of over 195,000 businesses that could be subject to some level of supply chain traceability effort.
Applicability in general
Under the law, companies would be required to submit an annual conflict minerals report to the SEC if: (a) they are required to file reports with the SEC under the Exchange Act of 1934 and, (b) conflict minerals are necessary to the functionality or production of a product that they manufacture or contract to be manufactured. That statement contains two separate – but critical concepts: the purpose of the conflict mineral in the product/process, and the control that the company exerts over the manufacturing process/specifications.
A company would be deemed to contract an item to be manufactured if it:
- Exerts any influence over the manufacturing process; or,
- Offers a generic product under its own brand name or a separate brand name (regardless of whether the company has any influence over the manufacturing process) and the company contracted to have the product manufactured specifically for itself.
This language implies that some retailers who are not themselves manufacturers are likely to be subject to the audit and disclosure requirements.[40]
A company is considered to be “contracting to manufacture” a product if it has some actual influence over the manufacturing of that product. This determination is based on facts and circumstances, taking into account the degree of influence a company exercises over the product’s manufacturing.[41]
A company is not be deemed to have influence over the manufacturing if it merely:
- Affixes its brand, marks, logo, or label to a generic product manufactured by a third party.
- Services, maintains, or repairs a product manufactured by a third party.
- Specifies or negotiates contractual terms with a manufacturer that do not directly relate to the manufacturing of the product.
The proposed regulations attempted to clarify that tools used in the assembly/manufacturing process will not trigger the applicability of the law.[42] The intent is to cover minerals/metals that are incorporated directly into the final product. There is currently nothing specifically addressing the applicability to intermediate chemical processes using chemicals that contain conflict minerals.[43] Additionally, neither the law nor the proposed regulation established a de minimis quantity or other form of materiality threshold that would preclude the applicability of the auditing/reporting requirements.[44]
Supply chain traceability auditing
The law mandates the use of an "independent private sector auditor" to conduct the audits. SEC has proposed two different activities related to the audits: the "reasonable inquiry" and the "due diligence".[45] Should the final rule include this structure, the reasonable inquiry would be the first step to determine if the company can on its own, using reasonable efforts and trustworthy information, make a reliable determination as to the source/origin of its tin, tantalum, tungsten and/or gold. Where companies are unable to make such a determination for any reason, they would then be required to take the next step of the "due diligence", which is the independent private sector audit.
The statute specifies that the audits be "conducted in accordance with standards established by the Comptroller General of the United States, in accordance with rules promulgated by the Commission." This means that the same auditing standards that apply to other SEC auditing requirements will also apply to conflict minerals audits [27] Because of this statutory mandate, SEC will have little discretion to allow companies to issue self-generated statements or certifications to satisfy the law.
Third party audits for conflict minerals supply chain traceability began in summer 2010 under the Electronic Industry Citizenship Coalition (EICC), a US-based electronics manufacturing trade association.[46] Under this program, EICC selected three audit firms to conduct the actual audits, with two of the three participating in the pilot audits in 2010. After concluding the pilot, one of the two firms involved in 2010 withdrew from the program specifically in response to the SEC's proposal and to reduce potential legal risks to the audited entities.[47]
Neither the law nor the proposed regulations provide guidance on what will be considered an acceptable audit scope or process, preferring to allow companies the flexibility meeting the requirement in a manner that is responsive to their own individual business and supply chain.[48] At the same time, the law contains a provision that preserves the government's rights to deem any report, audit or other due diligence processes as being unreliable, and in such cases, the report shall not satisfy the requirements of the regulations,[49] further emphasizing the need for such audits to conform to established SEC auditing standards. Comments on the proposed regulation pointed out that, should SEC not specify an applicable audit standard, it cannot also be silent or ambiguous on the auditor standards as well, or the Commission will violate the plain language of the Law mandating "standards established by the Comptroller General of the United States".[50] It is generally expected that SEC will provide specificity on both the audit standard and the auditor standard. SEC's proposal attempted to clarify its position on auditor requirements.[51]
The Organization for Economic Cooperation and Development (OECD)[52] published its Guidance on conflict minerals supply chain traceability.[53] This guidance is gaining much momentum as "the" standard within US policy. However, a recent critical analysis of the standard in comparison to existing US auditing standards under SEC highlighted a number of significant inconsistencies and conflict with relevant US standards.[54] Companies subject to the US law who implement the OECD Guidance without regard for the SEC auditing standards may face legal compliance risks.
Reporting and disclosure
Companies subject to the SEC reporting requirement would be required to disclose whether the minerals used in their products originated in the DRC or adjoining countries (as defined above). The law mandates that this reporting be submitted/made available annually. Many comments to the proposed regulation asked SEC to clarify whether the report must be "furnished"—meaning it is made available to SEC but not directly incorporated within the company's formal financial report—or "submitted"—meaning the report is directly incorporated into the financial report.[50] At first glance, this may appear to be a minor point; however, this difference is very important in determining the audit/auditor standards and related liabilities.
If it is determined that none of the minerals originated in the DRC or adjoining countries, the report must include a statement to that effect and provide an explanation of the country of origin analysis that was used to arrive at the ultimate conclusion. On the other hand, if conflict minerals originating in the DRC or adjoining countries were used (or if it is not possible to determine the country of origin of the conflict minerals used), companies would be required to state as such in the annual report. In either case, companies would also be required to make this information public by posting their annual conflict minerals report on their websites, and providing the SEC with the internet addresses where the reports may be found. Further, the proposed regulations would require companies to maintain records relating to the country of origin of conflict minerals used in their products.
Media outlets have reported that many companies required to file Specialized Disclosure Reports to the U.S. Securities and Exchange Commission (SEC) and any necessary conflict minerals reports for 2013 under the SEC’s conflict minerals rule are struggling to meet the June 2, 2014 report filing deadline.[55] Many impacted companies were hoping for clarification regarding filing requirements, from the United States Court of Appeals for the District of Columbia Circuit from a lawsuit filed by the National Association of Manufacturers.[56] The appellate court’s ruling left the necessary conflict minerals reporting requirements largely intact and it has been suggested that impacted companies should review the SEC’s Division of Corporation Finance’s response[57] to the court’s ruling which provides guidance regarding the effect of the appellate court’s ruling.[58]
Criticism of the law
The law has been criticised by many for not addressing the root causes of the conflict, leaving to the Congolese government the responsibility for providing an environment in which companies can practice due diligence and legitimately purchase the minerals they need, when the reality is that mechanisms for transparency do not exist.[59] The effect has been to halt legitimate mining ventures that provided livelihoods for people, reducing the Congo's legal exports of tantalum by 90%.[60]
Technology manufacturers criticized a law which required them to label a product as not "DRC Conflict Free" as compelled speech, and in violation of the First Amendment.[61]
Conflict resources in supply chains
Due to increasing business process outsourcing and globally dispersed production facilities, social problems and human rights violations are no longer only intraorganizationally rooted, but also often occur in companies’ supply chains, which makes them a complex and vital challenge for supply chain managers.[62] Besides the negative effects of conflict minerals on those that are directly affected by it, human rights violations also bear an enormous reputational risk for companies allegedly associated with conflict minerals. Key stakeholders (e.g., consumers, mass media, employees) expect companies to behave responsibly and have become intolerant of those not fulfilling their human rights expectations. Consequently, firms that are located downstream in the supply chain and that are more visible to stakeholders are particularly threatened by social supply chain problems. The recent debate concerning conflict minerals illustrates the importance of social and human rights issues in supply chain management practice as well as the emerging need to react to social conflicts. Conflict minerals, are processed in many different components throughout various industries and hence have a high overall impact on business.
In recent attempts to cope with conflict minerals, both international and national initiatives like the Dodd–Frank Wall Street Reform and Consumer Protection Act or the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas[63] demand supply chain managers to verify purchased goods as ‘‘conflict-free’’ or to implement measures in order to better manage these problems.
Minerals mined in Eastern Congo pass through the hands of numerous middlemen as they are shipped out of Congo, through neighboring countries such as Rwanda or Burundi, to East Asian processing plants.[64] Because of this, the US Conflict Minerals Law applies to materials originating (or claimed to originate) from the DRC as well as the nine adjoining countries: Angola, Burundi, Central African Republic, Congo Republic, Rwanda, Sudan, Tanzania, Uganda, and Zambia.
As a reaction, firms have begun to apply several governance mechanisms to avoid adverse effects of conflict mineral sourcing. However, the mere transfer of responsibilities upstream the supply chain apparently will not stop the trade with conflict minerals, notably due to two reasons: On the one hand, globalization has created governance gaps in a sense that companies are able to abuse human rights without being sanctioned by independent third parties. This gap results in a non-allocation of responsibility that makes the problem of human rights abuses and social conflicts within dispersed supply chains very likely to endure, particularly without collaborative approaches to remedy these deficiencies. On the other hand, conflict minerals usually originate from globally diverse deposits and are difficult to track within components and manufactured products. This is the case because these minerals are mostly mixed with minerals of different origin and added to metal alloys.[62] Consequently, although the share of these minerals in single end products is negligible, they are prevalent in numerous products and commodities. Together, these circumstances leave downstream firms nearly incapable of detecting risks associated with conflict minerals. Hence, the topic of conflict minerals becomes one of supply chain management rather than of individual companies’ legal or compliance divisions alone. What is needed is effective and supply chain wide mechanisms of traceability and due diligence that allow firms to take individual and collective responsibility as parts of supply chains.[62]
In the context of mineral supply chains, due diligence represents a holistic concept that aims at providing a chain of custody tracking from mine to export at country level, regional tracking of mineral flows through the creation of a database on their purchases, independent audits on all actors in the supply chain, and a monitoring of the whole mineral chain by a mineral chain auditor. In this sense, due diligence transcends conventional risk management approaches that usually focus on the prevention of direct impacts on the core business activities of companies. Moreover, due diligence focuses on a maximum of transparency as an end itself while risk management is always directed towards the end of averting direct damages. However, besides the Dodd–Frank Wall Street Reform and Consumer Protection Act and the OECD Guidance, there is still a gap in due diligence practices as international norms are just emerging. Studies found that the motivation for supply chain due diligence as well as expected outcomes of these processes vary among firms.[62] Furthermore, different barriers, drivers, and implementation patterns of supply chain due diligence have been identified in scholarly research.[62]
Organizations and activists involved
There are a number of organizations and celebrities that are working to raise awareness of and find solutions for conflict minerals. Some of these include:
- Save the Congo[65]
- The Enough Project[66]
- Partnership Africa Canada[67]
- The Conflict Free Tin Initiative[68]
- Solutions for Hope[69]
- Raise Hope for Congo[70]
- Stand Canada[71]
- Conflictminerals.org[72]
- Congo Siasa[73]
- ReliefWeb[74]
- Ashley Judd[75]
- Ryan Gosling[76]
- Southern Africa Resource Watch[77]
Moreover, FairPhone is the name of a foundation to raise awareness for conflict minerals in the mobile industry and a company which aims on producing a smart phone with 'fair' conditions along the supply chain. Various industry and trade associations are also monitoring developments in conflict minerals laws and traceability frameworks. Some of these represent electronics, retailers, jewelry, mining, electronics components, and general manufacturing sectors. One organization – ITRI (a UK-based international non-profit organization representing the tin industry and sponsored/supported by its members, principally miners and smelters.[78]) had spearheaded efforts for the development and implementation of a "bag and tag" scheme at the mine as a key element of credible traceability.[79] The program and related efforts were initially not likely to extend beyond the pilot phase due to a variety of implementation and funding problems that occurred.[80] In the end however, the device did enter the market.[81]
In late March 2011, the UK government launched an informational section on its Foreign & Commonwealth Office website dedicated to conflict minerals.[82] This information resource is intended to assist British companies in understanding the issues and, specifically, the US requirements.
On Jan 6th 2014, the semiconductor giant Intel announced that it would distance itself from conflict minerals. As a result, all Intel microprocessors henceforth will be conflict-free.[83]
Commercial reporting solutions
Manufacturers and supply chain partners needing to comply with the ever increasing reporting regulations have a few commercial options available.
A major research report from November 2012 by the Southern Africa Resource Watch revealed that gold miners in the east of the Democratic Republic of Congo were being exploited by corrupt government officials, bureaucrats and security personnel, who all demand illegal tax, fees and levies from the miners without delivering any services in return. Despite the alleged gold rush in regions of the country, none of the population and workforce is benefiting from this highly lucrative industry.[77]
See also
References
- ^ p.8, Conflict and Development: Peacebuilding and Post-conflict Resolution; Sixth Report of Session 2005–06, Great Britain: Parliament: House of Commons: International Development Committee, The Stationery Office, 2006
- ^ Philippe Le Billon, "Fuelling War: Natural Resources and Armed Conflicts", Adelphi Paper 373, IISS & Routledge, 2006.
- ^ Michael Ross,"How Do Natural Resources Influence Civil War? Evidence from Thirteen Cases", International Organization, 2004.
- ^ James Fearon and David Laitin, "Ethnicity, Insurgency, and Civil War" American Political Science Review, 2003.
- ^ Dias, Elizabeth (July 24, 2009). "First Blood Diamonds, Now Blood Computers?". Time. Time Warner. Archived from the original on December 16, 2010. Retrieved December 16, 2010.
- ^ Section 1502, known as the "Conflict Mineral Law", to be enforced by the Securities and Exchange Commission
- ^ "'Blood diamonds' crackdown deal". BBC News. 2000-06-28. Retrieved 2010-06-05.
Peter Hain: without blood diamonds, the war in Sierra Leone could not be financed... In the face of enormous suffering caused by the diamond-fuelled wars in Sierra Leone, Angola and the Democratic Republic of Congo, we have a duty to ensure that we are doing as much as we can
- ^ "Liberian 'conflict' timber faces trade ban". Greenpeace UK. 2003-05-07. Retrieved 2010-06-05.
- ^ UNGA Resolution 55/56 (2001)
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the Responsible Jewellery Council says that it is developing a system for the industry that will, one day, trace gold to its source.
The 2010-04-19 Responsible Jewellery Council discussion paper proposes a Chain-of-custody system to enable jewellery makers and dealers to trace gold back to its original mine as a "Means to avoid ‘conflict’ resources", but warns "The gold market is much larger and more geographically diversified than diamonds. The gold jewellery market is five times larger than diamonds at first cost". - ^ "Mining in the DRC". www.pulitzercenter.org. 2006. Retrieved 2010-06-05.
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'Sexual attacks peak when there's fighting,' said Shabunda-based human rights activist Papy Bwalinga Kashama. 'The reason the military and militia are fighting is to control the mines,'… it is not hard to find mines in the hands of men with guns
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(help) - ^ 75 Fed. Reg. 80953
- ^ For instance, some electronic components use chemical solutions containing gold at some point in the manufacturing processes. Tin is used during the chemical processes for manufacturing PVC and certain high performance paints/coatings.
- ^ 75 Fed. Reg. 80963
- ^ 75 Fed. Reg. 80956
- ^ [1] Template:Wayback
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- ^ 75 Fed. Reg. 80957
- ^ Section 1502(b)
- ^ a b See numerous comments filed at http://www.sec.gov/comments/s7-40-10/s74010.shtml
- ^ 75 Fed. Reg. 80958
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- ^ An overview and timeline of ITRI's activities on conflict minerals can be seen here – http://www.itri.co.uk/POOLED/ARTICLES/BF_PARTART/VIEW.ASP?Q=BF_PARTART_310250
- ^ "Tin Markets, Technology and Sustainability". ITRI. Retrieved 2014-04-25.
- ^ Production of Fairphone
- ^ [3][dead link]
- ^ Schwartz, Ariel. "Starting Now, All Intel Microprocessors Are Conflict-Free: Here's How The Company Did It". Co.Exist. Fast Company. Retrieved 14 January 2014.
Further reading
- Eichstaedt, Peter (2011). Consuming the Congo: War and Conflict Minerals in the World's Deadliest Place. Chicago: Chicago Review Press. ISBN 1-56976-310-0.
- Nest, Michael (2011). Coltan. Malden, MA: Polity Press. ISBN 0-7456-4932-7.
External links
![](http://upload.wikimedia.org/wikipedia/en/thumb/4/4a/Commons-logo.svg/30px-Commons-logo.svg.png)