GAO Report: Conflict Minerals Law Hasn't Worked as Intended

The Government Accountability Office, in a report required by the Dodd-Frank Act to assess the effectiveness of tracing regimes for conflict minerals, found the law hasn't reduced violence in the Congo, and may have increased violence around some small gold mines.

The report said the requirement that companies disclose where they source tantalum, tin, tungsten and gold seems to have led to fewer workers in the tantalum, tin and tungsten mines of Eastern Congo, and that, paradoxically, may have driven violence. GAO wrote that a 2023 academic study suggested "that the ability of armed groups to perpetrate violence may have increased because the labor market shock caused by changes taken in reaction to the act reduced miners’ options for earning income from mining and thus increased their incentive to join armed groups."

Even though the effects of U.S. and European reporting regimes on conflict minerals led to more industrialized tantalum, tin and tungsten mining -- professionally managed mines are better protected from militias or gangs -- the report said fraud continues in all efforts to cut conflict minerals out of Western supply chains.

"The UN Group of Experts has reported evidence of smugglers’ fraudulently using documentation issued by traceability schemes to launder illicit material into the official supply," the report said, and added that in December, that same group said due diligence in tantalum, tin and tungsten in part of North Kivu Province collapsed.

Global Witness, a nongovernmental organization, issued a report in April 2022 that said tantalum, tin and tungsten from mines occupied by armed groups were "tagged as coming from validated mines in North Kivu and South Kivu Provinces."

GAO wrote that gold is more difficult to trace because it's not mixed with rocks that can be tested to show their origin, and is generally smuggled out of the Congo before being sold to buyers outside Africa.

The report said that companies are attempting to understand their mineral supply chains, either through questionnaires sent to suppliers, coordination and documentation from smelters, or audits of smelters and refiners. When GAO analyzed the Securities and Exchange Commission disclosures under Dodd-Frank for a representative sample of 100 firms from the 1,017 companies that made such filings last year, it found 33% couldn't determine if the minerals came from the countries covered by the law; 47% said they may have bought from those countries. None certified that the minerals they purchase are conflict-free.

Generally, multinational firms don't go back to the mine to see the conditions. "Experts we interviewed explained that validating mine sites as free of conflict or of interference from armed groups is time consuming and expensive. Many mines are located in remote, potentially insecure areas, and coordinating teams to visit and inspect them is difficult, according to experts," the report said.