A UN peacekeeping patrol drives through the eastern Congolese city of Goma.
There was a law passed in August of 2012 mandating applicable companies to disclose information to the public that they are utilizing conflict minerals such as Gold, Tin, Tungsten, and Tantalum from areas in and surrounding the Democratic Republic of Congo. This act was put in place because of the fear that the exploitation of these minerals by various armed groups is contributing to an “emergency humanitarian crisis” in the DRC. Once the companies using these minerals have done a thorough study, it must exercise due diligence measures that comply with the Organization for Economic Cooperation and Development (OECD) and classify its mineral origin under certain categories: DRC Conflict Free, Not Been Found to Be “DRC Conflict Free”, DRC Conflict Undeterminable, Recycled or Scrap Due Diligence. More information can be found at the link below (5).
This doesn’t come into effect for companies in the United States until May 2014 and companies have already started complaining about it. A lawsuit was filed by the National Association of Manufacturers against U.S. Securities and Exchange Commission, 12-1422, US Court of Appeals for the District of Columbia Circuit (Washington). They are complaining that this conflict mineral exposure is “too burdensome.” An article from Environmental Leader: Environmental Management and Energy News identifies “solutions to conflict minerals traceability and compliance assurance.”
One option is for American companies to buy mining rights in the DRC. This way they can know precisely where they are obtaining their minerals and the methods used. Cutting out the middle man. I like it. Another option is to use technology as a way to monitor traceability, using trade compliance assurance software.
The issue of conflict minerals will never be resolved if those fueling the conflict don’t even attempt to put out the fire or are put off by the difficulty of the solution.
Companies like Apple and Boeing who have issues with the conflict mineral ruling announced they had 8 specific problems on November 26 2012. We were already aware from the previous article that this mandate would be burdensome, but they also claim it will be severely expensive as well, costing an estimated $3-4 billion upfront if they showed compliance, as well as $200 million a year. This ruling is affecting about 6,000 companies in the US, even some that aren’t very apparent, like manufacturers making footwear. The companies also state that the SEC (Security and Exchange Commision) admitted there may be little to no benefit from this ruling. The full list of issues as listed in the article are as follows:
- Whether the Commission’s economic analysis of Rule 13p-1 and Form SD is inadequate, in violation of 15 U.S.C. § 78c(f), 15 U.S.C. § 78w(a)(2), and 5 U.S.C. § 603.
- Whether the Commission’s refusal to adopt a de minimis exception to Rule 13p-1 is erroneous, arbitrary and capricious, or an abuse of discretion.
- Whether the Commission’s interpretation of 15 U.S.C. § 78m(p )(2)(B) as including non-manufacturers who “contract to manufacture” products is erroneous, arbitrary and capricious, or an abuse of discretion.
- Whether the Commission’s interpretation of “did originate” m 15 U.S.C. § 78m(p )(1 )(A) as “reason to believe . . . may have originated” is erroneous, arbitrary and capricious, or an abuse of discretion.
- Whether the standard and requirements imposed by Rule 13p-1 ‘s “reasonable country of origin inquiry” are erroneous, arbitrary and capricious, or an abuse of discretion.
- Whether the structure of the transition period established by the rule is erroneous, arbitrary and capricious, or an abuse of discretion.
- Whether 15 U.S.C. § 78m(p) compels speech in violation of the First Amendment to the United States Constitution.
- Whether the Commission otherwise acted in a manner that was arbitrary and capricious, an abuse of discretion, unlawful, or contrary to a constitutional right within the meaning of the Administrative Procedure Act, 5 U.S.C. § 706, or other applicable law in adopting Rule 13p-1 and Form SD.
photo courtesy of: http://blogs.wsj.com/corruption-currents/2012/10/23/in-conflict-minerals-challenge-a-familiar-strategy/