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GAO: Majority of Companies Can Now Determine Origins of Their Conflict Minerals

08/01/2018 By

For the first time, more than half of companies filing conflict minerals reports are able to determine the source of these minerals, according to a Government Accountability Office report on conflict minerals disclosures filed with the U.S. Securities and Exchange Commission (SEC) in 2017.

Last year, 53% of the companies were able to report whether their conflict minerals — tin, tungsten, tantalum and gold — came from the Democratic Republic of the Congo or one of the nine neighboring countries.

As the chart above shows, this is an improvement from previous years. In 2014, two-thirds were unable to identify their minerals’ countries of origin.

In 2012, the SEC began requiring companies to disclose the origins of conflict minerals used in their products, as part of the Dodd-Frank Act. The conflict minerals disclosure rule was suspended in April 2017, but companies have continued to conduct audits of their supply chains and file reports.

The number of companies filing conflict minerals disclosures has seen a slight drop, however, from 1,281, in 2015 to 1,230 in 2016 to 1,165 last year. The ratio of disclosures from domestic and foreign companies has remained steady, with U.S.-based companies accounting for roughly 90%.

Tin was the most commonly used mineral (reported by 69% of companies that detailed which minerals they used), followed by gold (63%), tungsten (59%) and then tantalum (54%) — figures that are also similar to previous years.

In 2017, four companies declared certain products to be “DRC-conflict free,” meaning that the minerals in those products did not finance or otherwise benefit armed groups in the DRC or its neighboring countries. Three of these companies filed an independent private-sector audit (IPSA) report. Overall in 2017, 16 companies filed an IPSA report.

As a result of supply chain complexity and lack of access to suppliers, companies are continuing to encounter challenges in reporting on the origins of their conflict minerals. However, companies also reported actions they have taken to improve their data collection, including collaborating with suppliers to encourage conflict-free sourcing.

But the good news is that supplier awareness of the use of conflict minerals is continuing to grow, according to interviews that GAO conducted with select companies. Moreover, the process of collecting such data is becoming more “routine and standardized.”

The full report can be found here.