Conflict minerals law
The eastern Democratic Republic of the Congo (DRC) has a history of conflict, where various armies, rebel groups, and outside actors have profited from mining while contributing to violence and exploitation during wars in the region.
The four main end products of mining in the eastern DRC are tin, tungsten, tantalum, and gold, which are extracted and passed through a variety of intermediaries before being sold to international markets.
[3] In the United States, the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act[4] required manufacturers to audit their supply chains and report use of conflict minerals.
The country was characterized by extraordinarily violent treatment of natives, including mass killings, sex crimes, and torture for not meeting quotas because exploitation of resources was the first priority to secure profits for the Belgian colonial empire.
Racism, political subjugation, and forced labor remained prevalent and helped enforce a power dynamic to ensure continued economic production.
Independence movements, including the Alliance des Bakongo (ABAKO) and the Mouvement National Congolais (MNC), gained traction in the late 1950s, both supported partly by a strong nationalist wave.
Continued conflicting intervention from the UN, USA, Soviets, Chinese, Belgians, and others left the Congo politically unstable without a representational government and lacking basic social services.
[8] Such armed groups have continued to commit severe human rights abuses, and battles, fatalities, and attacks on civilians have increased steadily from 2017 to 2021.
[11] As of 2024, the Congo contains an estimated $24 trillion in raw mineral deposits, making it the world's richest country measured by wealth of natural resources.
These companies include well-known brands such as Apple, Google, and Samsung, which profit from the relatively lower prices associated with corruption and illicit trade.
Filings of Reasonable Country-of-Origin Inquiries (RCOI) to determine sources of conflict minerals decreased from 2014 to 2021, which is a concern, significantly as demand has increased.
[23] While these groups are the direct perpetrators of the violence, international power struggles mainly between the US and China ensure that demand remains high for conflict minerals, regardless of known human rights abuses taking place.
These battery manufacturers supply international electronics brands such as Apple, Microsoft, and Tesla, which claim "conflict-free" products despite widespread and documented human rights abuse cases.
However, Brownback added similar language as Section 1502 of the Dodd–Frank Wall Street Reform and Consumer Protection Act, which passed Congress and was signed into law by President Barack Obama on July 21, 2010.
[32] The U.S. Securities and Exchange Commission (SEC) draft regulations to implement the law would have required U.S. and certain foreign companies to report and make public their use of so-called "conflict minerals" from the Democratic Republic of the Congo or adjoining countries in their products.
Section 1502(c) of the Law mandates that the State Department work in conjunction with SEC on certain elements of conflict minerals policy development and support.
[42] This estimate does not account for the companies who supply materials to the "issuers" (but are not themselves SEC-regulated) but who will almost certainly be required to conduct conflict minerals audits to meet the demands of those customers.
[49] Additionally, neither the law nor the proposed regulation established a de minimis quantity or other form of materiality threshold that would preclude the applicability of the auditing/reporting requirements.
Where companies are unable to make such a determination for any reason, they would then be required to take the next step of the "due diligence", which is the independent private sector audit.
After concluding the pilot, one of the two firms involved in 2010 withdrew from the program specifically in response to the SEC's proposal and to reduce potential legal risks to the audited entities.
[54] Neither the law nor the proposed regulations provide guidance on what will be considered an acceptable audit scope or process, preferring to allow companies the flexibility meeting the requirement in a manner that is responsive to their own individual business and supply chain.
[61] Companies subject to the US law who implement the OECD Guidance without regard for the SEC auditing standards may face legal compliance risks.
[67] The law has been criticised for not addressing the root causes of the conflict, leaving to the Congolese government the responsibility for providing an environment in which companies can practice due diligence and legitimately purchase the minerals they need when the reality is that mechanisms for transparency do not exist.
[74] Technology manufacturers criticized a law which required them to label a product as not "DRC Conflict Free" as compelled speech, and in violation of the First Amendment.
[76] On 16 June 2016 the European Parliament confirmed that "mandatory due diligence" would be required for "all but the smallest EU firms importing tin, tungsten, tantalum, gold and their ores".
[78] The regulation took effect in January 2021, and directly applies to certain companies that mineral ores, concentrates and processed metals containing or consisting of 3TG into the EU from conflict-affected or high-risk areas.
In this sense, due diligence transcends conventional risk management approaches that usually focus on the prevention of direct impacts on the core business activities of companies.
However, besides the Dodd–Frank Wall Street Reform and Consumer Protection Act and the OECD Guidance, there is still a gap in due diligence practices as international norms are just emerging.
[83] The FairPhone Foundation raises awareness of conflict minerals in the mobile industry and is a company which tries to produce a smart phone with 'fair' conditions along the supply chain.
[88] In late March 2011, the UK government launched an informational section on its Foreign & Commonwealth Office website dedicated to conflict minerals.
