GAO: Less than Half of Companies Know Source of Conflict Minerals

A new Government Accountability Office report has found that most companies don’t know the origin of their so-called conflict minerals — tantalum, tin, tungsten and gold — meaning they could be acquiring them from countries rife with humanitarian abuses.

According to a sampling of firm filings examined by the GAO, 94 percent of companies report doing their due diligence in tracking the chain of custody of conflict minerals. However, 67 percent could not determine whether the minerals came from the Democratic Republic of Congo, or neighboring countries that fund armed insurgents that practice human rights abuses within the DRC.

Devicemakers are among those that have had trouble sourcing these minerals. In filings covering 2013, both Medtronic and Integra LifeSciences confirmed they could not identify the country of origin. Both said the complexity of the supply chain makes doing so difficult.

The report comes as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires the Securities & Exchange Commission to collect data on companies’ use of these minerals from the DRC, Central African Republic, South Sudan, Zambia and Angola. Only 1,321 companies filed the forms, far fewer than the SEC estimate of 6,000 that could be affected by the rule.

Even as the SEC collects this information, the U.S. Court of Appeals for the D.C. Circuit ruled Aug. 18 that forcing companies to state on their websites that products have “not been found to be ‘DRC conflict free’” violates the First Amendment, covering corporate speech. The ruling puts the future of the rule in doubt.

In May, European lawmakers voted 402 to 118, with 171 abstentions, to require devicemakers that use conflict minerals to certify that the minerals aren’t sourced from certain zones (IDDM, May 22). Parliament also voted to enter into talks with member states to agree on a final version. No date has been set for final adoption.

To read the GAO report, visit www.fdanews.com/082415-SEC-minerals.pdf. The appeal court ruling is at www.fdanews.com/082415-decision.pdf. — Elizabeth Hollis