Attempt to End Conflict Minerals Rule Draws Strong Input From Both Sides
This story appears in the April 24 print edition of Transport Topics.
A threat by the Trump administration to dump a U.S. Securities and Exchange Commission rule requiring public companies to search their supply chains for African “conflict minerals” has drawn more than 275 written comments, many of them passionate on both sides of the issue.
SEC, which issued the requirement calling on an estimated 6,000 public companies to do “country-of-origin inquiries” and report annually whether there is “reason to believe” that their products are made using tantalum, tin, tungsten or gold that originated in the Democratic Republic of the Congo.
The four minerals or their derivatives have been determined by the U.S. secretary of state to be financing hostilities and human rights abuses in the Congo and nine countries surrounding the Congo. The rule was adopted by the SEC in 2012 after President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, which contained a mandate for the rule.
In recent written comments to SEC, opponents of the rule almost unanimously have argued that it is not doing what it was intended to do and, at the same time, it is causing companies to burn through large piles of cash and dedicate countless employee hours for compliance.
The comments ranged from business and manufacturing trade organizations and corporate CEOs to human rights representatives, lawyers, university professors and church leaders. Each gave opinions on whether to stick with the rule or reconsider, revise and even eliminate it.
“While the humanitarian goals of the original legislation are laudable, the rule has instead led to job losses in legitimate mining operations in the region, failing to meet the goals,” the Motor & Equipment Manufacturers Association wrote. “At the same time, the rule also has placed unnecessary onerous cost on business with no benefit to the region the rule is attempting to help.”
“While we applaud the meaningful social ambitions behind the effort, compliance with the conflict minerals rule has been an onerous burden to our company,” wrote Erika Nielsen, director of global government affairs for BorgWarner Inc.
“The reports public companies are mandated to file, they also contribute to information overload and create further disincentives for businesses to go public or remain public companies,” wrote Tom Quaadman, executive vice president of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness. “Accordingly, the chamber strongly supports congressional repeal of [the rule] due to its ill-advised and fundamentally flawed approach to solving a geopolitical crisis, and the substantial burden it imposes upon public companies and their shareholders.”
“The general consensus of views of our listed companies is that the intent and humanitarian goal of Section 1502 of Dodd-Frank is meritorious,” wrote Thomas Farley, president of the New York Stock Exchange. “However, it is also the consensus that the implementation of the [SEC’s Conflict Minerals Rule] has resulted in complex and costly regulations that our listed companies do not believe are beneficial to their shareholders. More troubling is that the CMR may actually have unintended, negative impacts on the [Democratic Republic of Congo].”
But a considerable number of comments support the rule.
“As a native of Democratic Republic of Congo, I have seen firsthand what things are like on the ground — gang rape, modern child slavery and other flagrant human rights violations on a massive scale, affecting scores of victims, especially in eastern DRC,” wrote Janvier Murairi Bakihanaye of the nongovernmental organization Civil Society. “Since the Dodd-Frank Act was signed into law, armed groups have seen conflict mineral revenues plummet, leaving them with limited capacity to cause harm. The security situation has vastly improved, with many mines once flagged as red now classified as green or conflict-free.”
“The U.S. Conflict Minerals Rule has served significantly to reduce the incidence of armed groups taking control of mines to fund their wars,” wrote Kelly Johnson, an associate professor of religious studies at the University of Dayton in Ohio. “That is to say, it has dried up a source of income funding violent extremism, it has protected vulnerable citizens from abuse both as forced labor and as victims of that violence, and it has been a public sign that the U.S.’s role in the global economy will continue to testify to human dignity.”
Human rights advocate Corneille Semakuba said that, if the rule is repealed, it would represent “an implicit endorsement of the hotbeds of conflict in the world, in Africa and particularly in the African Great Lakes Region.”
