Amid the news that the requisite 60 votes had been secured to pass the financial reform bill yesterday, we also got word that some industries that benefit from the unregulated trade in minerals from eastern Congo had undertaken a last-ditch lobbying effort to have the conflict minerals provision removed from the legislation. Put simply, a claim made publicly by Jewelers of America that conflict minerals are “too hard to trace” is misleading and contradicts the actions and statements of jewelers and electronics companies. Jewelers of America, or JA, is the leading U.S. jewelry retail association.
An alert sent around by JA warned jewelry retailers that the conflict minerals provision in the financial reform bill would be a “nightmare” to the industry because it would require companies to hire third party firms to audit their supply chain. The Jewelers of America pressed members of the industry to contact their senators and urge them to strike the minerals trade provision.
The real nightmare is in eastern Congo, where the conflict has led to the deaths of six million people – making it the deadliest war in the world since the Holocaust. The war is being fueled by a trade in four minerals: tin, tantalum, gold, and tungsten. Armed groups in Congo continue to massacre villages and rape women in large numbers, sustaining themselves by controlling minerals mines and trading routes. Seeing the urgency of this situation, thousands of Americans wrote to their senators through Facebook last month urging support for a strong conflict minerals amendment.
The bill provision would help stop this deadly trade by enacting supply chain disclosure requirements for publicly traded companies and ensure that consumers in the U.S. would be protected from purchasing products that contain conflict minerals. Section 1502 of the financial reform bill would require companies for which columbite-tantalite, cassiterite, gold, or wolframite is necessary to the functionality or production of their products to disclose in their annual report to the Securities and Exchange Commission whether: (1) the minerals originated or may have originated in the Congo or an adjoining country; and (2) provide a description of measures taken by the company, which shall include an independent audit, to exercise due diligence on the source and chain of custody of activities involving such minerals to ensure they did not directly or indirectly finance or benefit armed groups in the Congo.
This legislation has been in discussion for the past two years, and Congress is taking a landmark step to protect American consumers from unwittingly perpetuating the violence in eastern Congo. They have a right to know whether their purchases are funding groups responsible for killing and rape. This provision in the bill will enable consumers to make decisions about which products to buy based on the companies’ track record in Africa’s Great Lakes region.
Jewelers and electronics companies can trace and audit their minerals back to smelters and mines. We have been to the mines, and traders showed us exactly whom they were selling to. With the new requirements in the Wall Street reform bill, companies will finally be forced to disclose where they are getting these minerals from, and if they are paying off armed militias in the process.
Contrary to some jewelers’ stated inability to trace their gold supply chains, traceability is, in fact, possible and reasonable, as evidenced by actions taken by some leaders in the industry. Tiffany & Co. is already able to trace its jewelry supply back to its mines of origin, and Walmart has a “Love Earth” jewelry line that is fully traceable back to mines in Utah and Nevada. Electronics companies are also already starting to trace and audit their tantalum suppliers. Interestingly, Jewelers of America’s own CEO Matt Runci had this exchange on CBS’ “60 Minutes” last year:
"What effect would it have if Walmart simply declared that it would demand traceability all the way to the mine for all the gold that it sells?" asked Scott Pelley of “60 Minutes.”
"There’s no question in my mind that commercial pressure can and should and must be brought to bear," Runci said.
The provision is relevant and germane to financial reform. Investors have been concerned about the conflict minerals trade, and a cumulative group of investment firms worth $200 billion issued a public statement in April 2010 about the need for supply chain reform. Read their statement here.
We’re reaching out to the large, bipartisan group of senators who have long stood on the side of American consumers and civilians in eastern Congo, and we are encouraging them to see through the claims of those who would like to see the conflict minerals provision killed. The latest word is that final vote on the financial reform bill will take place Thursday, and we hope to soon bring you news that this crucial legislation is headed to President Obama’s desk. Please stay tuned.
Photo: Child mining gold in eastern Congo (Sasha Lezhnev)