Implementing the Conflict Minerals Provision - The cost of business as usual

Read a briefing document which discusses the cost of implementing Section 1502 of the Dodd Frank Act.

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The cost to US industry of implementing Section 1502 of the Dodd Frank Act has been hotly debated since the bill was signed into law in July 2010. The law seeks to cut off the flow of funds to armed groups in the eastern Democratic Republic of Congo (DRC) by requiring companies to carry out due diligence on their supply chains to determine whether their products contain conflict minerals. Some industry bodies have been working to derail the regulations, claiming that it is too burdensome and costly for American companies to trace their supply chains. However, independent research into the costs of implementation has shown that the figures put forward by some industry players are seriously flawed. Moreover, the material costs of doing due diligence need to be considered in the context of the massive human costs of the continued conflict.

For over a decade the trade in minerals has fueled a war in DRC that has cost over 5.4 million lives. The country’s natural resource wealth is not the root cause of the violence, but competition over the lucrative minerals trade in its eastern Kivu provinces has become an incentive for all warring parties to continue fighting. The metals mined in eastern DRC enter global markets and make their way into products such as mobile phones, cars, airplanes and jewelry. Meanwhile the population in Congo’s east bear the brunt of a conflict characterized by murder, pillage, mass rape and displacement.