Conflict minerals are resources that are mined and used to influence and finance armed conflict, human rights abuses, and violence.
Global Witness defines conflict resources as “natural resources whose systematic exploitation and trade in a context of conflict contribute to, benefit from or result in the commission of serious violations of human rights, violations of international humanitarian law or violations amounting to crimes under international law”.
Gold that is mined and traded in conflict areas is, by definition, dirty gold.
Conflict Minerals in the DRC
Conflict minerals are usually talked about in the context of the Democratic Republic of Congo (DRC), where a 20-year conflict between armed groups and the state has to mass murder, rape and other human rights violations. More than 3 million people have been killed in the conflict. More complex than a war, the fractious violence is often is often financed by the extraction and sale of conflict minerals, including tin, tantalum, tungsten, and gold. These other end up in our phones and electronic devices.
In response to international outcry and national pressure, Congress included a measure to help address this financing in one section of the Dodd-Frank act, the massive financial reform bill passed in 2010.
Section 1502 of the bill requires companies to audit their supply chains and disclose whether they have purchased conflict minerals that have financed conflict in the DRC. The goal of Section 1502 is to eliminate demand for conflict minerals by increasing transparency.
This is not a ban on minerals from eastern DRC, it simply requires any company using these minerals to disclose whether those minerals originated from the war-torn eastern DRC.
The Securities and Exchange Commission’s Role
In 2012, the SEC adopted rules to uphold the Conflict Minerals law by requiring companies to disclose the use of conflict minerals to the agency. Since then, industry groups such as the US Chamber of Commerce have been fighting these rules, even taking the SEC to court, though the rules have been upheld so far.
Most recently, the US Court of Appeals for the District of Columbia upheld most of the law in May 2014, though it turned down the requirement that companies must publicly state if their mineral resources are not conflict-free.
Shortly after the ruling, on June 2, 2014, marked the deadline for filing a compliance report with the SEC. While conflict mineral disclosure forms have been coming in, many of these are incomplete, according to an initial analysis from Global Witness.
Moreover, many companies have filed but do not yet know whether their supply chain includes conflict minerals.
European Union Regulation
In March 2015, the EU Development Committee issuesd its own conflict minerals legislation, mandating that companies disclose and ultimately remove the presence of conflict minerals in their supply chains. The legislation would require adherence to the voluntary OECD Due Diligence guidelines. The International Trade Committee will make the final vote on the legislation in April 2015.