Designing Products For Conflict Minerals Compliance

According to enoughproject.org: "Dodd-Frank
is not a solution to the social, historical,
political, and economic problems of the
DRC...but a stong and firm U.S. response to
the call from the Congolese people...to
end years of illicit plundering."

OHIO (SUPPLY CHAIN DIGEST) - Beginning in May 2014, companies will need to report to the SEC the presence of any conflict minerals from the Democratic Republic of the Congo (DRC). The Conflict Minerals law, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, specifies these new requirements for publicly traded companies that manufacture products containing tin, tantalum, tungsten, gold and their derivatives.

Manufacturers should begin implementing identification of critical minerals early in the product development cycle so that any potential issues can be resolved before they become costly problems. Additionally, by identifying minerals across the organization, manufacturers may be able to negotiate bulk purchase rates for the materials used across the company’s portfolio of products. This could have an enormous impact on reducing costs of goods sold while generating savings. Source: Designing Products For Conflict Minerals Compliance (Reliability: Medium)

Comment: While identifying any potential conflict minerals early in the design process is optimal, current products already in production are also affected by this law. It is likely manufacturers who do not monitor their supply chain from mine to product will have difficulty conforming with the law. Therefore, it is important for any manufacturer who uses tin, tantalum, tungsten, gold or their derivatives to begin addressing the use of conflict minerals now.

Soon Businesses Will Be Required To Disclose Where Their Minerals Come From

DEMOCRATIC REPUBLIC OF THE CONGO (LOS ANGELES TIMES) -- New regulations in the U.S. could see publicly traded companies have to state whether or not their mineral purchases are directly funding conflicts in the Democratic Republic of the Congo or neighboring countries. However, despite it's good intentions, there are activists and businesses that are questioning the effectiveness of the legislation.

Money from mineral exports is directly
 funding DRC militia groups

The law will require that publicly traded companies state whether they use minerals from the troubled region, as well as assessing whether their minerals are 'DRC conflict free'. Activists focused on the conflict believe that naming and shaming the bigger corporations using this law may lead to them ceasing in their activities. The U.S. Chamber of Commerce has questioned how costly and effective these laws will be, stating that cutting off one source of revenue won't stop militias from fighting.
There are also huge flaws in the currently proposed legislation. Whilst the DRC is synonymous with government troops and rebels involved in mass slayings and rape, some companies will be able to disassociate themselves with the minerals and legislation as they do not directly make/mine the product. This will let many big brands off the hook as they merely stick a label on a product and sell it, rather than mining it themselves and facing the legislation.
Legitimate US companies in Africa could be harshly affected by this. The SEC estimates that the overall cost of this legislation could escalate to as much as $4 billion. Many companies may cease to do business in Congolese minerals. The biggest question remaining is how will this new legislation affect businesses and the conflict itself, once it is put into place?
Source: New Regulations Seek To Expose Congo Conflict Minerals (Reliability: High)

Comment: Businesses in the US could suffer dramatically if this legislation is put in place. With the SEC estimating losses at $4 billion and the U.S. Chamber for Commerce putting that figure between $8 and $16 billion, this is a huge move that may punish businesses without necessarily fixing the bigger issue of militia and DRC conflict.