Conflict minerals ban in the Great Lakes region gets stronger despite resistance

A Union of Congolese Patriots fighter controls workers at the gold mine in Iga Barriere, Ituri region, northeast of Democratic Republic of Congo. Photo/AFP/Eric Feferberg 

By IPS

In Summary

• Intel, a leading computer hardware manufacturer, announced the world’s first product formally dubbed free of such materials, stating that its microprocessors would no longer use “conflict minerals”.
• US Chamber of Commerce, the National Association of Manufacturers (NAM) and the Business Roundtable, all major lobby groups, say the new rules impose an undue financial burden on companies and infringe on constitutional guarantees of free speech.
• The electronics industry has been one of the most significant users of the minerals that have been singled out for scrutiny, which include tin, gold, tungsten and others.

Major manufacturing and business groups this week urged a court in Washington to roll back a new US regulation that would soon require major manufacturers to ensure that their global supply chains are free of minerals used to fund violence in the Great Lakes region of central Africa.

Yet the previous day, Intel, a leading computer hardware manufacturer, announced the world’s first product formally dubbed free of such materials, stating that its microprocessors would no longer use “conflict minerals”.

The announcement highlights trends that advocates of greater supply chain accountability say are already well underway, and which they suggest belie parts of a legal case against the rule.

“This provision has already catalysed reforms of the minerals trade in the Great Lakes region and has prompted both (the US) and Congolese companies to carry out supply chain due diligence and source minerals more responsibly,” Carly Oboth, an assistant policy advisor with Global Witness, a watchdog group, told IPS.

“According to consulting firm Claigan, in September 2013, 2,946 companies were identified as having conflict minerals compliance programmes… Despite the appeal, many companies have already publically demonstrated the feasibility of the rule as they begin implementation to meet the May 31, 2014 reporting deadline.”

The US Chamber of Commerce, the National Association of Manufacturers (NAM) and the Business Roundtable, all major lobby groups, say the new rules impose an undue financial burden on companies and infringe on constitutional guarantees of free speech.

The groups say they are supportive of the aims of the regulation, known as Section 1502, but want significant tweaks and the inclusion of certain exemptions.

But supporters counter that the Securities and Exchange Committee (SEC), the country’s lead regulator of publicly listed companies, has already thoroughly weighed these issues.

“Generally, we’ve been supportive of the SEC’s position and think they did extensive analysis before adopting the conflict minerals rule,” Julie Murray, an attorney currently acting as counsel for Amnesty International, a rights group that has joined the lawsuit in support of Section 1502, told IPS.

“The SEC received some 13,000 letters urging it to promptly adopt this rule, and we think the commission did an exhaustive job of looking at the issues — taking into account the concerns that were raised by these groups, and trying to make the rule cheaper and easier to comply with.”

The appeal follows a detailed and strongly worded legal decision in July that upheld Section 1502, which was mandated by Congress in 2010 but only finalised last year.

As the regulation currently stands, by June large companies will need to certify the sourcing of a handful of minerals sourced from central Africa, while smaller companies will have a longer timetable.

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In the appeal, a central issue in the court’s decision-making will be the estimates the SEC used to figure out the financial burden that Section 1502 would place on companies, upwards of $4 billion in initial compliance costs followed by annual costs of $200 to $600 million.

Yet Murray suggests that companies will be able to bring these costs down as they learn how to comply with the new regulations.