A recent U.S. regulation requiring companies to disclose whether they are acquiring minerals from war zones seems like a good idea, especially for the tech industry, which sees itself as socially consciencious and environmentally responsible. But in practice, it may be very difficult to enforce.
What is clear is that certain minerals -- tantalum, tin, gold and tungsten -- that originate in the Democratic Republic of Congo (DRC) and adjoining countries help fund various regional conflicts and a catalog of horrors.
The U.S. Securities and Exchange Commission (SEC) in 2012 adopted the reporting rule, which was mandated by the 2010 Dodd-Frank financial reform law. It requires businesses to make a good faith effort to determine the country of origin of the so-called conflict minerals. It means determining the materials' source and the chain of custody and then presenting the findings online.
But the Government Accountability Office, after reviewing a sample of these reports, said in a report this week, that "most companies were unable to determine the source of their conflict minerals." The firms reported "exercising due diligence" in determining where the minerals they were buying came from, but had difficulty obtaining information from suppliers.
The GAO said 67% of the firms were unable to determine whether the minerals came from nations covered by the SEC regulation. Those companies that did disclose the use of conflict minerals, about 4%, indicated they would be taking action. One company, reported the GAO, "indicated that it would notify suppliers that it intends to cease doing business with suppliers who continue to source conflict minerals from smelters that are not certified as conflict-free."
Along with the DRC, the list of countries covered by the SEC rule includes Angola, Burundi, Central African Republic, the Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda and Zambia.
The DRC, with a population of 75 million and a land area roughly one quarter the size of the U.S., is ground zero for the problem. One conflict mineral, tantalum, is used in the manufacture of capacitors that are used in cell phones and computers.
Although the GAO reported problems with verifying the source of the minerals, it also pointed out that officials at various firms are working to improve their ability to do so.