Next week marks a significant milestone in the effort to eliminate the brutal conflict minerals trade in the Democratic Republic of Congo, which has funded armed insurgents responsible for mass murder and rape for the past twenty years.June 2 is the deadline for companies to comply with the Dodd-Frank conflict minerals legislation, and file reports with the Securities and Exchange Commission (SEC) disclosing whether the tin, tantalum, tungsten and gold they have purchased have fueled conflict in the region.
The Dodd-Frank Wall Street Reform and Consumer Protection Act passed in 2010. Section 1504 of that law required the SEC (Securities and Exchange Commission) to issue rules compelling companies that extract oil, natural gas, or minerals to publish payments they make to governments. The purpose here was to lift what is known as the “resource curse”- where some of the most mineral rich nations suffer with some of the poorest populations. The solution: shine the light of transparency on nations led by regimes where mineral riches go to only multinational corporations and corrupt government officials who exploit their indigenous populations.
The Extractive Industries Transparency Initiative (EITI) is an international effort to provide a robust yet flexible standard for disclosing revenues paid to governments from oil, gas, and mining companies for the people’s valuable minerals. What’s unique about EITI is the process. Rather than some international institution or government ordaining regulations, EITI establishes a collaborative process involving representatives from industry, government, and regular folks who through consensus develop the right transparency rules to fit the society.
Follow The Money
The EITI road is a two way street. Industry publishes the taxes, royalties, and other payments they make to governments. And governments disclose the money they receive. This transparency is especially critical in developing regions of the world where riches under the ground have led to enormous conflict, corruption, and strife. For wealthier nations, the transparency standards create greater certainty and reassurance for investors and stronger accountability for elected officials. Right now, the United States is vetting nominees to serve on our own EITI working group.
Washington, DC: Earthworks and other civil society groups welcomed the Securities and Exchange Commission (SEC) approval yesterday of its long-delayed rules for Section 1502 (conflict minerals) and Section 1504 (disclosure of payments) of the Dodd-Frank Act.
“The SEC’s rules on conflict minerals and payment disclosure represent a turning point in global efforts to reduce corruption and human rights abuses fuelled by mineral extraction,” said Payal Sampat, International Program Director at Earthworks, a mining and energy industry watchdog group headquartered in Washington, DC. “Although industry groups lobbied hard and succeeded in winning delays and loopholes, the tide has clearly shifted in favor of greater transparency and accountability in the extractive industries. ”
On August 22, 2012, over a year after the deadline given by Congress, the Securities and Exchange Commissions (SEC) will have a meeting to discuss the implementation of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Sunshine Act Meeting is open to public and will, amongst other things, finalize controversial rules regulating the responsibility companies have to consumers to disclose whether or not their products contain conflict minerals.
Conflict minerals, in terms of the Dodd-Frank Act, are gold, tin, tantalum and tungsten, elements that are commonly used in the production of electronics, jewelry, and automobiles. They are called conflict minerals because revenues and trade in these minerals have also financed wars, armed conflict, and human rights violations in countries such as the Democratic Republic of Congo (DRC).
There are varied definitions for conflict minerals. I usually define conflict minerals as minerals that are mined and used to influence and finance armed conflict, human rights abuses, and violence.
I also like Global Witness’ definition of “conflict resources” as “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”.
Two years ago this term “conflict minerals” hit the US business community with a thud. See, the 2010 Dodd-Frank Act had a small section, section 1502, that mandated companies fully understand their supply-chain and report whether or not they were using conflict minerals - in this case tin, tungsten, tantalum, and gold - from the Democratic Republic of Congo (DRC). The definition used for this law is a specific one and only looks at conflict associated with minerals in the regions of eastern DRC.
The Securities and Exchange Commission (SEC) closed its comments period over a week ago on rules that would require companies to disclose their use of possible Blood Gold from the Democratic Republic of Congo (DRC). Many jeweler comments are now posted online. Even as controversy continues to grow over recent DRC gold shipments smuggled through Kenya and possibly South Africa to Dubai, the comments reveal that several large jewelry associations pushed for loopholes that could allow gold mining to continue to finance conflict in DRC.
The loopholes that these trade groups -- Jewelers of America, the Jewelers Vigilance Committee, Manufacturing Jewelers and Suppliers of America, the American Gem Society, and the Fashion Jewelry and Accessories Trade Association -- are calling for include: delaying implementation of the SEC rules for two or three years, furnishing disclosure on special reports (rather than "filing" in annual reports), broad exemptions on scrap metals, exemptions for retailers that contract for or have partial control over manufacturing, and allowing companies to just say they are "unable to determine" the relation of their gold to DRC conflict.