Progress and Transparency in Conflict Minerals Reporting

Question: How have regulations and laws improved the transparency of conflict minerals reporting? What progress has been made in determining material point of origin, and how have these regulations affected the Democractic Republic of the Congo (DRC)?

Answer: There are two sides to due diligence on this issue. On one side, most conflict minerals programs focus on the downstream collection of smelter source information from suppliers and the assessment of tier 1 supplier programs. This is primarily what Assent’s Corporate Social Responsibility Suite supports. We’ll refer to this as the “downstream” side of due diligence.

The “upstream” aspect of due diligence focuses on the smelter and the mine. While upstream due diligence differs from typical corporate social responsibility efforts, it addresses the source of nearly all questions concerning supply chain transparency in the DRC.

Prior to the passage of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act,  the only concerns smelters had were about the amount, purity and price of minerals. While smelters knew where minerals were mined, few downstream companies concerned themselves with the origin of resources.

Today, however, smelters have to demonstrate greater transparency to pass conflict minerals audits. Smelters also require greater levels of verification from the mines supplying their minerals. Smelters are more concerned with the legitimacy and condition of the mine, as well as details concerning material transportation and the exchange of money.

What does this mean for the DRC? For one, more stringent mineral point of origin requirements make it harder for illicit materials to enter the legitimate trade. While illicit trade still occurs, companies (upstream and down) tracking mineral sourcing makes it harder for illicit trade to continue.

Within the DRC, there is now more legitimate traceable material sourced from small villages than ever before thanks to the influx of organizations supporting legitimate trade. The impact on larger industrial cities in the DRC has been minimal, however, because of existing obligations to monitor sources.

This article is current as of 2019-08-02.

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