The U.S. Securities and Exchange Commission (SEC) set a new set of rules Wednesday related to the so-called “conflict minerals.” The new rules compel U.S. companies to release whether they purchase particular metals that have helped fuel war in the Democratic Republic of Congo (DRC).
The minerals affected by the new rules are gold, cassiterite, wolframite and columbite-tantalite, better known as coltan. Cassiterite and coltan are used in the manufacturing of mobile phones, computers and other electronic devices. Wolframite is used for armor-piercing ammunition, as well as hard tungsten carbide machine tools.
In the opening statement at the SEC meeting, Chairman Mary L. Schapiro said the new regulations impose stricter reporting requirements on mineral use, which might help curb the violence in the African nation. They also say the rules will make companies more accountable to their shareholders.
Reactions to the announcement were mixed. The National Retail Federation (NRF) said in an e-mailed statement that it is “generally pleased” with the direction of the final conflict minerals rules.
Spokesperson Stephen Schatz said that while the group believes the SEC worked to address many of the retail industry’s specific recommendations and proposals, they are still analyzing the final rule and discussing its potential impact with its members.
“These regulations limit the impact on retailers compared with what was originally proposed but there are some gray areas and we are still assessing what will actually be required,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said.
“It’s very important that a distinction be made between a retailer who is acting as a manufacturer and has control over what is in a product and the vast majority who do not. While retailers abhor the violence in the Congo, compliance with these regulations could still be extremely difficult and there is considerable debate on whether filing reports with the SEC will make any difference,” Gold added.
Industry groups interviewed by Bloomberg, meanwhile, say that the guidelines will create a costly new compliance regime. They also mentioned that high-tech firms have already been making a voluntary effort to cut these ‘conflict minerals’ from their supply chains.
The SEC had been under pressure from Democrats to act on the measures, as shows a June 22 letter to the SEC from House representatives:
Conflict minerals and non-transparent payments for natural resource extraction continue to be a weight on developing nations’ growth and are a risk to investors and the public. Worse, continued delay undermines efforts in the DRC to make the mining industry more transparent and to diminish the link between minerals and the funding of brutal violence carried out by warlords.
Groups including the National Association of Manufacturers, the U.S. Chamber of Commerce and the Retail Industry Leaders Association have expressed concern about the rules. They believe they would accumulate burdens on companies trying to meet the requirements, while doing little to actually lessen woes in the DRC.
International watchdog Oxfam even sued the SEC in May over the delay in implementing the rule. The so-called Dodd-Frank Act said the decision should have be completed by April 16, 2011.
Congo supplies roughly 80% of the world's coltan and holds significant gold reserves.
The polemic rules are available here