MAC: Mines and Communities

Despite repeated industry efforts, Court upholds important conflict minerals law

Published by MAC on 2014-05-18
Source: Statement, Reuters

A U.S. appeals court on Wednesday denied a request by industry groups to delay the implementation of a new rule that requires companies to fully disclose if their products contain "conflict minerals" (from a specific war-torn part of Africa).

See previous article on MAC: Beyond “Conflict Minerals”: The Congo’s Resource Curse Lives On

Despite repeated industry efforts, Court upholds important conflict minerals law

Global Witness press release

16 May 2014

U.S. Court of Appeals denies industry's request to delay Section 1502 of Dodd-Frank in third consecutive ruling upholding the law

Global Witness applauds the swift decision by the U.S. Court of Appeals for the D.C. Circuit denying the emergency motion by the National Association of Manufacturers (NAM), the U.S. Chamber of Commerce, and Business Roundtable to stay the conflict minerals rule. Despite industry groups' best efforts to delay implementation, this decision reinforces the originally mandated June 2, 2014 reporting deadline, consistent with the new guidance issued by the Securities and Exchange Commission (SEC) that modifies the reporting requirements in accordance with the Court of Appeals' April 14th ruling.[1]

Section 1502 of the Dodd-Frank Act,known as the ‘conflict minerals provision,' is a landmark piece of legislation that aims to break the links between eastern Democratic Republic of the Congo's (DRC) vast mineral wealth and the abusive armed groups that prey on and profit from the region's mineral trade. The provision requires U.S.-listed companies that use tin, tantalum, tungsten or gold to conduct due diligence on their supply chains and determine if their purchases fund armed groups in the DRC or an adjoining country.Section 1502 has already changed the way that many companies scrutinize their supply chains and has catalyzed important reforms in eastern DRC and neighboring countries.[2]

The Court of Appeals' initial ruling, issued on April 14, 2014, upheld the majority of the SEC'srule to implement Section 1502. The court narrowly ruledthat the regulation's requirement for companies to describe products as ‘not been found to be DRC conflict free' is a violation of the First Amendment's right to free speech by compelling specific corporate speech;this decision may be subject to further review by the entire Court of Appeals. However, the court's ruling strongly upheld the law's other disclosure requirements, which were not challenged by the industry groups and which can move forward without companies having to describe their products as DRC conflict free or not.

"We are very encouraged by the Court's decision to keep the filing deadline for the conflict minerals provision in place based on the fact that the Court of Appeals upheld the vast majority of the SEC rule for Section 1502," said Corinna Gilfillan, Head of U.S. Office for Global Witness. "The First Amendment should not be used as an excuse to hide information that Congress has decided matters to regulators, consumers and investors. Public disclosures are an important means of informing regulators, investors and consumers about what companies are doing to source their minerals responsibly from the Great Lakes region."

Global Witness urges the SEC to seek further review of the ruling on the First Amendment question by the entire Court of Appeals to protect consumers' and investors' right to information and to hold companies accountable to their stakeholders. The SEC should alsopublicly commit to uphold the original intent of the law, which requires independent private sector audits for all companies, and shouldreinstate this requirement.It is inconsistent with the statute for the audit requirement to be removed altogether, regardless of whether the Court's First Amendment ruling stands. Companies can comply with the audit requirement without describing the conflict free status of their products. Congress has made clear that independent third party audits are important to guarantee the credibility of company due diligence reporting.

"The courtruled in favor of justice. Theattemptby NAM, Business Roundtable and the Chamber to delay the entire rule after the Court of Appeals issued its rulingwas shameless and desperate," saidGlobal Witness Director Simon Taylor. "Industry's request to stay the rules shows a callous disregard for the lives and wellbeing of the people in DRC and wasyet another endeavorto stall progress towards more transparent supply chains and global efforts to break the links between the minerals trade in the DRC and the operations of armed groups."

Immediate implementation of the rule as upheld by the courtsis crucial to ensure that U.S.-listed companies take responsibility for their supply chains. Companies have a legal reporting obligation to the SEC in this regard, as well as a moral responsibility to showthat the metals they usedo not fuel conflict in the DRC.With the June 2nd reporting deadline now two weeks away, Global Witness calls on companies to fully comply with Section 1502 and submit comprehensive reports that are audited. Global Witness plans to monitor the substance and quality of the reports with a view to assessing the extent of company efforts to source minerals responsibly.

For more information, please contact:
Corinna Gilfillan, Washington, DC
+1 202 621 6665, +1 202 725 8705

Sophia Pickles, London, UK
+44 (0)20 7492 5893

[1] SEC, Statement on the Effect of the Recent Court of Appeals Decision on the Conflict Minerals Rule, April 29, 2014. Accessed here:

[2]For more information on how Section 1502 has catalyzed important reforms, please see our briefing "Seeing the Light."

U.S. court denies request to delay conflict minerals rule

Sarah N. Lynch


15 May 2014

WASHINGTON - A U.S. appeals court on Wednesday denied a request by industry groups to delay the implementation of a new rule that requires companies to determine if their products may contain "conflict minerals" from a war-torn part of Africa.

Wednesday's decision means that companies will have to start complying with parts of the Securities and Exchange Commission's new rule on June 2.

It also marks a blow to the National Association of Manufacturers, the U.S. Chamber of Commerce and the Business Roundtable, the three groups that had challenged the rule and most recently sought to have it delayed.

The SEC's conflict minerals rule is a requirement from the 2010 Dodd-Frank Wall Street reform law.

It requires publicly traded manufacturers to determine if any tantalum, tin, gold or tungsten used in their products may have originated from the conflict-ridden Democratic Republic of Congo (DRC) and disclose the findings to investors.

In April, the U.S. Appeals Court for the District of Columbia struck down a narrow part of the rule on free speech grounds, saying companies should not be forced to say that their products are not "conflict free."

The rest of the rule, however, was left intact.

In recent guidance released by the SEC, the agency said it expects companies to continue to conduct the proper due diligence to determine the origin of the minerals and file the reports with the commission.

However, companies will be relieved from certain audit requirements in the rule and also will not be forced to state whether or not the products are conflict free.

The trade groups that challenged the rule had hoped the court would agree to stay the rule, and argued the SEC should not proceed with implementing part of the "costly" measure without first seeking public input. (Reporting by Sarah N. Lynch; Editing by Steve Orlofsky and Dan Grebler)

Congo mines no longer controlled by warlords and militia -report

Cecilia Jamasmie

11 June 2014

Latest research by the ENOUGH Project, an anti-genocide campaign group, shows that Congolese warlords have lost their grip on most of the country's mines, almost putting an end to a long-era of major abuses in the African country and surrounding areas.

According to the report, an US law that came into force last week demanding companies to disclose whether their products contain so-called "conflict minerals," and efforts by technology firms, have helped limit exports from Africa for consumer electronics.

Tin, tantalum and tungsten, used to make computers, smart phones, and tablets, used to generate $185m a year for armed groups. Now, about two-thirds of mines formerly controlled by warlords "are part of peaceful supply chains," says ENOUGH Project.

Tin, tantalum and tungsten, used to make computers, smart phones, and tablets, used to generate $185m a year for armed groups. Now, about two-thirds of mines formerly controlled by warlords "are part of peaceful supply chains," says ENOUGH Project.

"Our research found that electronics companies are expanding their responsible minerals sourcing from Congo, and Congolese miners are now able to earn 40% more from those mines," says senior policy analyst, Sasha Lezhnev.

Artisanal mining of gold, however, is believed to continue funding army commanders, it adds.

The ENOUGH Project's report said the results exposed in the study were the result of five months of field research.

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