Global Witness - Conflict Minerals Under AttackDocument Transcript
For immediate release: Tuesday 18th October, 2011 Law to curb conflict minerals under attack by the Chamber of Commerce Global Witness calls on the SEC to resist industry pressure and issue robust regulationsGlobal Witness is calling on the Securities and Exchange Commission (SEC) not to cave in toindustry pressure and to issue effective regulations to combat the trade in conflict minerals. Thecall comes on the day of a crucial SEC roundtable and in the face of aggressive industry lobbyingaimed at making the new rules weak and ineffective.The minerals trade in eastern Congo has been in the grip of different armed groups for over adecade. Illicit profits from the trade provide an incentive and a means for rebels and certain unitsof the Congolese army to maintain their operations and carry out attacks on the civilianpopulation.The SEC is finalizing rules to implement a provision contained in the Dodd-Frank Act passed byCongress last year. Section 1502 of the law aims to break the link between minerals and conflictin the eastern Congo by requiring companies to carry out ‘due diligence’ checks on their supplychains to determine whether their products contain conflict minerals.Section 1502 has already had positive impacts, including helping to end the Congolese army’sillegal control of the largest tin ore mine in the region earlier this year, and promoting miningsector reforms by the Congolese government. While serious challenges remain, the law presentsthe best chance in over a decade to establish a clean minerals trade that contributes todevelopment, rather than fuelling instability.“This law is already catalyzing some positive changes on the ground, including demilitarization ofsome mining areas in eastern Congo and laudable efforts by certain companies to clean upsupply chains,” said Mike Davis of Global Witness. “Despite these efforts, the US Chamber ofCommerce is working at all levels to derail the regulations and continue business as usual.”The Chamber of Commerce claims that it is too burdensome for companies to trace their supplychains and has argued for the rulemaking process to be re-started. However, Global Witnessresearch to map out the trade route from mine to manufacturer demonstrates that the supplychain is not nearly as complex as the corporate lobbyists would have us believe.Leading electronics manufacturers have already implemented the new law’s requirement to tracemetals in their products back to the smelters that refined them. Two industry associations aredeveloping systems for reviewing smelters’ own supply chain controls – another initiative that canhelp companies comply with Dodd Frank. Some businesses have begun investing in sourcingclean minerals directly from Congo.These positive moves are being undermined by delays in the SEC’s publication of the regulationsto complete Dodd Frank’s 1502 provision on conflict minerals, which were supposed to beannounced in April. The delay has already sown uncertainty in the minerals trade and deterredmany buyers from purchasing Congolese materials.The announcement of new rules was always likely to cause some short-term uncertainty anddisruption to the trade. Months of paralysis in the regulatory process have prolonged anddeepened these impacts and caused unnecessary suffering for those Congolese who rely onmining for a living. It is crucial that the SEC announces clear and robust rules as soon aspossible, so that companies can be in no doubt about what standards they have to meet and canbegin applying them, and so that any disruption caused to people on the ground is kept to aminimum.
/ EndsNotes to editors:Contact:UK: Mike Davis +44 7872 600 860US: Corinna Gilfillan +1 202 621 6665, cell: 202 725 8705UK: Annie Dunnebacke +44 7912 517127Notes to editors:1. The SEC is holding a roundtable on Section 1502 of the Dodd-Frank Financial Reform and Consumer Protection Act, the conflict minerals provision, as part of its rulemaking process. The roundtable will involve the participation of representatives from Global Witness, other civil society groups, companies and investors.2. For more information on the Chamber of Commerce’s arguments against Section 1502, see US Chamber of Commerce submission to the SEC on February 28th, 2011 http://www.sec.gov/comments/s7-40-10/s74010-87.pdf and US Chamber of Commerce’s Center for Capitol Market Competitiveness submission to the SEC on July 18th, 2011 http://www.sec.gov/comments/s7-40-10/s74010-276.pdf Global Witness investigates and campaigns to prevent natural resource-related conflict and corruption and associated environmental and human rights abuses