The US Securities and Exchange Commission (SEC) may soon change its “conflict minerals” rule, which requires companies to trace and report whether their products contain minerals from a war-torn part of Africa.
The regulation, issued in 2012 under the Dodd-Frank financial overhaul law, has mainly targeted the Democratic Republic of Congo, where several armed groups are said to still have mineral-rich areas under their control.
A change in such law, experts quoted by AP say, could either benefit the armed groups and escalate the potential for conflict in DRC or help regular citizens who have suffered the impact of companies choosing to do business somewhere else.
But the newly appointed chairman of the SEC, Michael Piwowar, has made it clear he thinks the best thing to do is to modify the rule. In his first official statement as acting SEC chair, he said this week the current guidelines were “misguided” and that its disclosure requirements have caused a de facto boycott of minerals from portions of Africa, with effects far beyond the Congo-adjacent region.
“Legitimate mining operators are facing such onerous costs to comply with the rule that they are being put out of business,” Piwowar said in the statement. “It is also unclear that the rule has in fact resulted in any reduction in the power and control of armed gangs or eased the human suffering of many innocent men, women, and children in the Congo and surrounding areas.”
His view echoes independent reports claiming that international regulations, such as the conflict mineral rule in question, have failed to prevent foreign firms and armed groups from profiting from illegal mining in African countries, particularly DRC.
UK-based Global Witness, which campaigns against natural resource-related conflict and corruption, says global regulations have been more successful in limiting the trade of the so-called conflict minerals than in actually curbing the illegal extraction of them.
But according to ENOUGH Project, an anti-genocide campaign group, the illicit mining of tin, tantalum, tungsten, and cobalt, which are key in the production of smart phones and other high tech devices, has been reduced to a minimum.
The organization says that while conflict minerals used to provide armed groups with about $185 million a year, by 2014 only one-third of those mines were still controlled by warlords.
However, contraband of gold remains a large source of income for those groups, they noted in a report update, adding that insurgents and elements of government forces in the DRC have their hands on 65% of the country’s gold mines. Such operations, they say, re the foundation for an international smuggling network worth an estimated $400 million a year.