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For decades, the trade in tin, tantalum, tungsten and gold (also known as 3TG), along with various other minerals and resources, has played a central role in funding and fuelling some of the world’s most brutal conflicts.
According to international nongovern- mental organisation Global Witness, revenues from the extraction and sale of these natural resources, also known as ‘conflict minerals’, not only provide armed groups with the means to operate but also provide State security forces and corrupt officials with off-budget funding.
Section 1502 of the Dodd Frank Act – the US’s conflict minerals law – is the first piece of legislation that aims to break the links between the lucrative minerals trade in certain African regions and the abusive armed groups that prey on and profit from these regions’ minerals trade.
The Dodd Frank legislation was passed in July 2010 and the final rules for Section 1502 were released in 2012.
“The Dodd Frank Wall Street Reform and Consumer Protection Act came into effect in January last year, and Section 1502 on conflict minerals requires compliance from all public companies that are listed with the US Securities and Exchange Commission (SEC),” ENSAfrica mining and environmental law director Lloyd Christie tells Mining Weekly.
He explains that the law requires SEC-listed companies to examine their supply chains to determine if they manufacture or contract other companies to manufacture products that contain conflict minerals, which are necessary for the production of technological products, such as computers and cellphones.
If so, issuers must investigate whether those conflict minerals originated in any of the ten countries covered by the Dodd Frank Act, which include the Democratic Republic of Congo, the Central African Republic, South Sudan, the Republic of Congo, Tanzania, Zambia, Angola, Rwanda, Burundi and Uganda.
Global Witness DRC resource campaigner Sophia Pickles adds that companies affected by the Dodd Frank Act’s scope of law must conduct a “reasonable country of origin” inquiry to determine the origin of the minerals required for their products by surveying their direct 3TG suppliers. This will determine the smelters or refineries (SORs) from which the minerals are sourced.
Companies must then ask the identified SORs where they source their minerals. If one of the SORs sources its 3TG supplies from one of the ten countries covered by the legislation, the company must conduct due diligence on their supply chains and submit a “conflict minerals report”.
“The law requires them to adhere to the highest available international standards to do this. Currently, this is the Organisation for Economic Cooperation and Development’s (OECD’s) due diligence guidance, a detailed five-step framework which helps companies develop in-house management systems; develop a process to identify, mitigate and manage risks in their supply chains; and publicly report their findings,” says Pickles.
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