It seems workers, companies — essentially all parties except the warlords — are getting screwed over by the conflict minerals law in the US Dodd-Frank Wall Street Reform and Consumer Protection Act.
The latest lament on behalf of Congolese mine workers comes from where else? The New York Times. We’ll get to this in a second; first some context.
Current Legislation Landscape
MetalMiner has thoroughly covered the conflict minerals section of the Dodd-Frank legislation in these virtual pages (click here for the latest installment, which explores the potentially confusing jurisdiction overlap between the SEC, the OECD and the State Department, to catch up.)
According to Lawrence Heim of Elm Consulting Group International, the consensus seems to be that companies should not wait to at least decide if the OECD rules outlined in the post referenced above are an appropriate reference point. “Basic planning, assessment and program development can and should begin now, he said.
Damned If You Do, Damned If You Don’t
As US companies scramble to have a compliance plan, a recent NYT piece contends that the “de facto embargo levied on tin, tungsten and tantalum mining in eastern Congo has already begun, “devastating the daily lives of hundreds of workers. Citizens can’t pay for food or health care without the paltry wages earned from digging ore out of mountainsides, while militia leader Gen. Bosco Ntaganda profits.
Certainly, while the Times is more concerned with the human element than with the business case (understandably so; no one should needlessly suffer), it begs questions about the overall feasibility of this law if “local miners, high-level traders, mining companies and civil society leadersÂ¦are unanimous in condemning Dodd-Frank. (Even though the article is in the Op-Ed pagesÂ¦)
Now that Dodd-Frank is forcing companies to jump through a confusing audit process via faulty OECD guidelines to achieve compliance in their supply chains, we’re essentially hearing that the people (for whom the law was ostensibly, if only partially, put in place to protect) are now being harmed just as badly as in years past, if not worse. And the warlords are still profiting. Fittingly, China, an economy with far fewer scruples, is on the receiving end they reportedly opened a trading post in South Kivu province to procure these minerals at a “steep discount, according to the article.
Is this all a waste of time? In other words, has the political intent to “punish African warlords (if that’s entirely what it was about in the first place anyway) completely shrouded the business sense of all this? Is the legislation misguided, simply forcing US companies to divest valuable resources just to comply for moot reasons? We’ll just have to wait and see.
Check back for coverage on the SEC’s final rules announcement and what it will mean for company audits.