Report: Dodd-Frank Act Effective at Eliminating Conflict Minerals from Supply Chain

conflict minerals Sergey Milovidov/Adobe Stock

U.S. conflict mineral regulations have been effective in increasingly supply chain transparency and reducing the amount of tin, tantalum, tungsten and gold sourced from armed militia groups in the Democratic Republic of Congo, according to a new report from human rights organization The Enough Project.

The group conducted field research in Eastern Congo and reported positive developments like a significant reduction in mining areas controlled by armed militia groups and improved safety and health standards for miners. It also said the region had implemented its first system to assess mines and certify them as conflict-free zones, the report stated. The Enough Project said regulations like Section 1502 of the Dodd-Frank Act and the U.S. Securities and Exchange Commission’s Conflict Minerals Rule are behind many of these positive changes in the DRC and have improved transparency in the global minerals supply chain.

The Enough Project also pointed to data on mine inspections and conflict mineral exports to prove improvements were being made. Congolese mining records show multistakeholder teams had inspected 193 mines in Eastern Congo for conflict minerals and child labor abuses, and 166 of the mines passed inspection. Additionally, 948 tons of conflict-free tantalum was exported from eastern Congo in 2015, a record amount and a 19% improvement over 2014 and a 387% increase from 2013, the report said.

Continuing the Momentum

Despite the improvements in the DRC and the global mineral supply chain, The Enough Project made a number of recommendations to continue the positive momentum and ensure Dodd-Frank 1502 and other regulations are fully implemented. These recommendations include the Congolese government ramping up its mining police forces and having the U.S. Congress and SEC strengthen the focus on regional enforcement of the Dodd-Frank Act. The Enough Project report also called for agencies like USAID and the European Union to provide additional support to the International Conference on the Great Lakes Region (ICGLR) Independent Mineral Chain Auditor (IMCA) to hire inspectors to combat mineral smuggling in the DRC and surrounding areas.

Companies Still Struggle With Regulation

Last year, a report from Tulane University and software services firm Assent Compliance stated more than 80% of companies were unable to determine if their supply chains contained conflict minerals from the DRC. The research showed how many companies were struggling to adhere to the Section 1502 of the Dodd-Frank Act, which mandates publicly traded companies disclose conflict mineral information in annual reports. The report also detailed the lengths some major companies went to in an attempt to adhere to the U.S. regulation. Intel, for instance, sent 90 employees to mineral smelters around the globe to conduct investigations in 2014.

The Enough Project report said companies sourcing minerals from the DRC should be paying close attention to conflicts in the region and develop strategies to ensure they are not sourcing smuggled minerals from conflict mines. The report also said since Section 1502 of the Dodd-Frank Act passed, companies have developed new models to support conflict-free mines and help end child labor in the DRC and other regions. Some companies saw the Dodd-Frank 1502 as motivation to improve their supply chains, the Enough Project report said.

“When the Dodd-Frank Act passed, I sensed a business opportunity,” Per-Olof Loof, CEO of electronics company KEMET, told Congress in Oct. 2015. “Dodd-Frank could be the impetus for developing, in the DRC, an innovative and socially sustainable source of conflict-free tantalum.”

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