GAO reports: US firms still not complying with conflict minerals regulations.
Some U.S. Companies Still Failing to Authenticate Conflict-Free Minerals
The U.S. Government Accountability Office (GAO) has reported that certain U.S. companies purchasing minerals from countries like the Democratic Republic of Congo and its neighboring regions are not adequately verifying that the metals are not sourced from conflict zones. The GAO analysis also revealed that several companies sourcing minerals such as tin, tungsten, tantalum, and gold are failing to meet disclosure requirements set by the U.S. Securities and Exchange Commission (SEC).
Under SEC regulations, companies listed in the U.S. must inform both the SEC and investors that the minerals they use in their global supply chains are not sourced from mines that employ child labor or fund armed groups.
To ensure compliance, companies can conduct due diligence by utilizing supplier surveys, smelter and refinery audits, and traceability methods. However, some companies are facing challenges in conducting thorough due diligence, and there are even cases where companies fail to file reports altogether, according to the GAO. These difficulties arise from limited access to suppliers and complex supply chains.
The GAO also highlighted that some companies may be providing incomplete information or not filing reports at all due to a perception that the SEC is unlikely to take enforcement action against non-compliance with conflict minerals disclosure requirements.
With increasing pressure on global manufacturers to demonstrate responsible sourcing of metals used in various products, such as laptops, video game consoles, and battery electric vehicles, the U.S. law mandates listed companies to disclose whether their products contain tantalum, tin, tungsten, or gold from Congo and its neighboring countries, given the role these minerals play in fueling conflicts in the region.
According to the GAO report, approximately 53% of companies that conducted due diligence last year were unable to determine if any conflict minerals were used in their products, while an estimated 35% reported that their minerals may have originated from covered countries.
(Reporting by David Lewis, writing by Felix Njini; Editing by Keith Weir)
