The rule requiring companies to disclose any “conflict minerals” mined in the Democratic Republic of the Congo that are in their supply chains may soon be in jeopardy. The minerals, including gold ore, diamonds, tin, tungsten and coltan, are widely used in jewelry, as well as smartphones, laptops and other electronics. The problem is that the minerals are mined in the Democratic Republic of Congo under conditions of armed conflict and human rights abuses.
Supporters and human rights activists say such disclosures curb funding to armed groups. On the other hand, business groups opposed to the measure have long contended that following the rule makes it cost prohibitive for companies to trace the source of minerals through the supply chain.
Changes may be coming soon because the Trump Administration is considering executive action targeting the 2010 Dodd-Frank law, say sources familiar with the administration’s thinking, a Reuters article reports. Reuters could not learn precisely when the directive would be issued or what the final version would say. However, a leaked draft that has been floating around Washington and was seen by Reuters last week calls for the rule to be temporarily suspended for two years. Reuters could not independently verify the authenticity of the document.
Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010, which was passed in 2010 under the administration of Barack Obama, requires American companies to disclose whether any of the minerals used in their products were mined in Congo. The law explicitly gives the president authority to order the U.S. Securities and Exchange Commission (SEC) to temporarily suspend or revise the rule for two years if it is in the national security interest of the United States.
A draft of Trump’s executive order acquired by The Guardian calls for a two-year suspension for part of the law, saying that while it has helped discourage some American companies from purchasing materials in the region, it has also had “both positive and negative unintended consequences,” including “some job loss,” The Guardian reports. The order cites the SEC’s 2014 estimation that it would cost U.S. companies up to $4 billion in initial costs to comply with the order, on top of around $200 million per year after that.
If the draft executive order were passed, it would be a “gift for companies wanting to do business with the criminal and the corrupt,” Global Witness, an NGO which investigates the role of minerals in eastern Congo’s conflict, said in a statement last week.
“This law helps stop U.S. companies funding conflict and human rights abuses in the Democratic Republic of Congo and surrounding countries,” said Carly Oboth, policy adviser at Global Witness. “Responsible business practices are starting to spread in eastern Congo. This action could reverse that progress and benefit secretive and corrupt business practices.”
In The Guardian article, Oboth further says that it is an “abuse of power” that the Trump Administration is claiming that the law should be suspended through a national security exemption intended for emergency purposes.
Both the Reuters and Guardian articles note that, perhaps anticipating considerable opposition from human rights groups, the draft order says it will replace the regulatory efforts of Dodd-Frank with a new plan. The order gives the Secretary of State and the Secretary of the Treasury 180 days to propose a plan to “more effectively” address human rights violations and the funding of armed groups in the Democratic Republic of Congo and adjoining countries.
What are your thoughts about tracing minerals throughout the supply chain? Do you think the cost is too prohibitive? Should it be done regardless of the cost?