There has been a lot of coverage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, specifically Section 1502, which outlines the broad objective of controlling the trade of so-called conflict minerals. MetalMiner has taken the lead on explaining what the future may look like for companies that must go through an auditing process. (Check out our previous coverage beginning with this post. Also feel free to plug in “conflict minerals” into our site search!)
For a recap of the a conflict minerals and which ores and their derivative metals fall under the full definition:
|Conflict Mineral||Its Common Derivative(s)|
|Columbite-Tantalum (“coltan)||Columbium (Niobium) and Tantalum|
Only if the source of any of the above conflict minerals was determined to be located in the DRC or adjoining countries (Angola, Congo, Central African Republic, Sudan, Uganda, Rwanda, Burundi, Tanzania, and Zambia) would reporting to the SEC be required, along with the audited and certified due diligence report.
As we’ve written about before, it is also possible that cobalt might be considered a derivative of a conflict mineral in the future, as cobalt is produced as a byproduct of the mining of laterite ores, containing copper and nickel, from the copper deposits in the Katanga Province of the DRC. These deposits that stretch into Zambia are home to over 44 percent of the world’s cobalt production, and hold over half the global reserves of cobalt. It is widely feared that these deposits and their use could require reporting to the SEC.
The US may not import cobalt ores directly from the DRC, but as it produces no cobalt of its own, apart from recycled, it is dependent on imports, mostly from China. According to Richard Mills at Aheadoftheheard.com, China has little in the way of domestic naturally occurring cobalt resources and needs to import concentrates in large amounts every year. Following a US$9 billion investment in the DRC in return for copper and cobalt ores, China is the world’s largest producer of refined cobalt with 39 percent of global production, followed by Finland (15 percent) and Canada (8 percent).
Cobalt Investing News said human rights campaign The Enough Project estimates that 60 percent of the minerals in the DRC are mined illegally, in dangerous underground conditions, with long hours and often by child laborers. It’s also been documented that the profits from these illegal mining operations are being used to fund various conflicting armed groups.
The US is the world’s largest consumer of cobalt, considers cobalt a strategic metal and is 85-percent reliant on imports. This begs the question: if Chinese cobalt cannot be proved conflict-free to the satisfaction of the SEC, what is this going to do for supplies of the metal to the world’s largest consumer? Arguably the US has enough alternative sources of tantalum, tin, gold and tungsten — some of them even domestically — but is not so fortunate when it comes to cobalt.
*Please click here to download the MetalMiner Conflict Minerals Legislative Guide, covering the details of the new Dodd-Frank Wall Street Reform and Consumer Protection Act and how mandated audits will affect companies that purchase tin, tantalum, tungsten and gold.