Conflict Minerals: the debate goes on

A year and a half after the Dodd-Frank Act became law and we still don’t have any hard and fast rules explaining how to convert law into practice.

A recent meeting held by The Brookings Institute and Global Witness brought together various stakeholders from across industries to discuss the issue of conflict minerals.

This is an overview of their key findings:

• A U.N. expert group has found that since the signing of the Dodd-Frank Act, there has been a reduction in the amount of mined minerals that is funding armed conflict. By denying financing to the armed groups that perpetuate violence in the region, the provision can contribute to increased stability and improved human rights.

• No one is sure how much implementing measures will cost. The SEC estimated $71.2 million. The National Association of Manufacturers’ (NAM) estimated $9-$16 billion. The most recent estimate produced independently by Claigan Environmental predicted costs to be less than $815 million.

• The Electronics Industry Citizenship Coalition and the Global e-Sustainability Initiative have partnered with firms to develop the "Conflict Free Smelters Program", which allows companies performing due diligence to trace their mineral supply chain down to the smelters who are certified as being either conflict free or not. Efforts are being made to 'certify smelters in the DRC region under this program to help preserve access to the international markets for impoverished artisanal miners. However, only a minority of companies has signed up so are burdening themselves with much higher costs than expected. Once rules are issued and regulations implemented, this cost would be spread among a larger proportion of firms'.

• Some parties have talked of unintended consequences resulting from Section 1502, including the outright boycott of materials from the DRC regardless of whether they are ‘conflict free’ or not. at Section 1502 will have negative unintended consequences on citizens in the region. However, alternative reports suggest that since April 2010, when the DRC-government-imposed six-month minerals embargo ended, the trade in minerals has been on the rise.

• CREDDO have suggested that much of the talk of unintended consequences was 'akin to fear mongering;... mineral trade in that region is a relatively recent activity and citizens had (and continue to have) other sources to support their livelihoods;... (and) the benefits of increased security and reduced violence and instability are too great to dismiss Section 1502 outright'.

• The success of Section 1502 of Dodd-Frank is dependent on ‘effective implementation’.

• Whilst the SEC should ‘carefully weigh potential benefits and costs in the implementation of Section 1502 and 1504, the balance should be in favour of transparency’.

To read the full article:  http://www.brookings.edu/opinions/2011/1220_debating_dodd_frank_kaufmann.aspx

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