Most people who watch the news already know of the 2010 Consumer Protection Act, also known as the Dodd-Frank Wall Street Reform. Congress passed this act as their response to the economic crisis which began in 2008. What many people do not know is how expansive this reform is. To this articles purpose we refer to section 1502 which now requires all publicly traded company’s to disclose their supply chain, detailing the use of potential conflict minerals derived from the Democratic Republic of Congo. These conflict minerals include tin, tungsten, tantalum, known as the 3T minerals, and gold. Keep in mind this does not stop any company from buying conflict minerals but it does essentially publicly embarrass any company which does. Considering this act covers company’s which are publicly traded, that, for all intensive purposes, sets those companies up for a massive public relations nightmare. Unfortunately, Congress did little to ensure those that mine these minerals were looked after, and as a result an industry ban on all 3T minerals from DRC was put in place. This meant that the nearly the entire electronics industry refused to buy the 3T minerals from a country which up to 20% of its population derives their principle income from mining, approximately 15 million people. While those mining the 3T minerals are only a fraction of that mining population, it still totaled over 1 million people.
Does this mean that Congress was wrong to implement section 1502? Absolutely not! This section was put in place specially to address the continued conflict in eastern Congo as the very first section states: “Sense of Congress on Exploitation and Trade of Conflict Minerals In the Democratic Republic of Congo”. These conflict minerals, especially gold, have long fueled the environment of war and subjugation of the Congolese people for decades. You would think that this type of law would already be in place, US companies not being able to purchase products that potentially fuel rape, enslavement and murder, right?
So what went wrong? Well, as it often happens, the best intentions have unintended consequences. Congress enacts a law, industry reacts by banning all 3T minerals, conflict or not, from the DRC, prices drop, miners working these deposits no longer have an income. Keep in mind these miners weren’t even making enough mining these minerals to be considered above the poverty line. So what does this lead to? More extreme poverty and smuggling. Mining of these conflict minerals didn’t stop, it only reduced. Now all of these ores were being smuggled across the border to neighboring countries and re-branded as “non-DRC”. Problem solved? Not really… Besides the local government no longer receiving any tax revenue from the exportation and sale of these minerals, the amount the miners would end up getting by selling these smuggled goods would be a small fraction of the market value. While many of the miners were no longer under the armed rule of bullies, they were still being exploited by “business men” willing to buy the smuggled minerals and export to China. Many of these “business men” have made vast sums of money by further exploiting the hard work and efforts of the Congolese miners.
However, the international community caught up to the mineral shuffle and imposed bans on those neighboring countries as well. Not bad, for once it seems foreign policy was really looking out for the general well being and interests of the Congolese people and monitoring the changes on the ground. Unfortunately, it took 5 to 6 million people dying for it to happen. Even many in private industry, including Apple, Intel and Motorola, knew it could not ignore the mineral wealth potential of DRC so it set to create initiatives to “certify” supply-chains, ensuring consumers that their mobile phones, laptops and other electronic devices did not contain conflict minerals. While many of these initiatives are still in their infancy, their potential, on the surface, really seems to be well placed.
So what’s next? As supply-chains are documented, armed influence at the local mines is stamped out, the rest is up to the integrity of the system to remain intact and consumers to demand conflict-free goods.
To be continued…