GAO Study Finds Problems With Conflict Free Minerals Sourcing

The Government Accountability Office, or GAO, has published a study highlighting some issues with conflict-free minerals sourcing.  Agency and industry officials as well as representatives from international organizations and nongovernmental organizations stated that adoption of the SEC conflicts minerals rule as well as stakeholder-developed initiatives—which include the development of guidance documents, audit protocols, and in-region sourcing of conflict minerals—can support companies’ efforts to conduct due diligence and to identify and responsibly source conflict minerals. For example, officials GAO interviewed explained that the Conflict-Free Smelter Program enables suppliers to source conflict minerals from smelters (companies that refine the ore of the conflict minerals into metals) that have been certified by an independent third-party auditor as obtaining their minerals from sources that did not benefit armed groups.

GAO also cited:

  • Constraining factors such as lack of security, lack of infrastructure, and lack of capacity in the DRC that could affect the ability to expand on efforts to achieve conflict-free sourcing of minerals from eastern DRC and thereby potentially contribute to armed groups’ benefiting from the conflict minerals trade.
  • Officials GAO interviewed noted that there is a lack of infrastructure in place that would enable companies to set up or expand operations in the DRC. Limited transportation and poor roads in eastern DRC also make it difficult to get to mine sites.
  • Remoteness of mines also makes it difficult for DRC officials to validate mines and ensure that the mines have not been compromised by illegal armed groups.

Topics:  Conflict Mineral Rules, Due Diligence, GAO, Minerals, Natural Resources, Resource Extraction

Published In: General Business Updates, Energy & Utilities Updates, International Trade Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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