What’s in Your Product? Understanding Conflict Minerals

By Rosemarie Szostak, Ph.D., Nerac Analyst

Originally Published July 23, 2014

Share this article!


The Conflict Minerals

The conflict minerals—tin, tungsten, tantalum and gold – can be found in products ranging from smart phones and warheads to textiles and toothpaste. These elements are now regulated by the SEC, and US companies must be in compliance with the new regulations starting May 2014. Manufacturers are required to identify and track whether the source of these four elements originated in the Democratic Republic of the Congo (DRC) or the adjoining countries, regardless of whether the company acquired material directly from the DRC or through their supply chain.

The Regulations

The Dodd–Frank Wall Street Reform and Consumer Protection Act (referred to as Dodd-Frank) became law on July 21, 2010. Deep within the 2300+ pages of this Act is Section 1502, a section covering the tracking of conflict minerals. The law cites ten countries whose mineral export would be considered as conflict minerals. These are the Democratic Republic of Congo (DRC) and the adjoining countries of Angola, Burundi, Central African Republic, the Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda, and Zambia. SEC finalized the rules on this section in August 2012. The basics of the regulation are shown in Table 1.

Conflict Minerals Regulations
Table 1: DODD-FRANK Section 1502—Regulations for Conflict Minerals: tin, tungsten, tantalum, gold

The SEC estimates almost 6,000 companies, public and private, will fall within the scope of this rule. Retailers who repackage products for sale will not be required to comply with these regulations unless they influence the manufacture of their product to suit their particular needs (excluding packaging). It is interesting to note that investment houses holding physical gold are excluded. Government and defense contractors are not.

According to data from the United States Geological Survey (USGS, 2009), the DRC accounted for 4% of tin mined worldwide, 9% of the tantalum and 1.6% of the gold. Additionally, the DRC has a 40% share of the world’s cobalt production, 31% of industrial diamond, 6%; gem-quality diamond, and 2% copper. These latter minerals are not presently regulated under Dodd-Frank.

The Origin of Conflict Mineral Rule

The DRC is the site of the worst humanitarian atrocities in decades. Since 1998, over 5 million of its citizens have died in conflicts in the mineral-rich eastern part of the DRC. Illegal armed groups as well as units of the Congolese military have been involved in half of the mass murders, rapes and other egregious human rights abuses. The Congolese military in the area is primarily made up of many of the ex-rebel groups from past conflicts, consistently underpaid, untrained and have access to weapons. Military units maintain economic relationships with the illegal armed groups as well as foreign interests. The eastern region is remote lacking both transportation and communications making oversight by the central government impossible. Corruption among local officials is rampant.

All these groups extract money from economic activities in the area, including mining. This is accomplished by levying illicit taxes on the minerals extracted at the mine site, illegal tolls levied on the transportation routes and circumventing legal taxed trading activities. It is estimated that 20-40% of the financing of these armed groups comes from illegal taxes on mining. Other revenue streams include cattle, agricultural crops, sugar, lumber, charcoal and oil.

Mining in the DRC

Since the eastern DRC is remote and nearly inaccessible to modern mining methods, mining activities are artisanal and simple subsistence mining is done by the local populations. The population has gravitated to this profession as it is more profitable than their historical agricultural production. Mining activities in this region rely on basic hand tools of picks and shovels. Some even dig with their hands to extract the minerals. Safe mining practices are unknown and the conditions under which the miners work are harsh and dangerous. Child labor is not unheard of in the mines. It is estimated that there are over 2 million artisanal miners in the DRC. Each miner toils to support around 5 dependents.

The Supply Chain: From the Mines to Where?

Tantalum, tin and tungsten are mined as the ores cassiterite (tin), columbite-tantalite (tantalum), and wolframite (tungsten). In many mines tin and tantalum containing ores are co-located. Tantalum and tungsten ores can also be extracted from the same location. Once mined, these minerals are then sold to small-scale traders at the mine sites. The traders hire porters to carry 100 pounds sacks of the minerals out of the area by foot to consolidation points. It is here they are mixed with loads from other mines and transported by truck or airplane to the border. At the border the loads are sold to trading houses. These trading houses may do some preliminary processing to ready them for transport in lots of 25 tons. From these border points, the trading houses export the minerals both legally (declared to the DRC authorities) and illegally (not declared) to mineral trading houses in neighboring countries. The DRC-origin minerals are mixed with those received from other mines in the region before they finally leave the African continent for the smelters (mostly in Asia). The smelters receive the shipments and mix it with mineral stock from other countries. After smelting, it is impossible to technically determine the origin of the material.

Conflict MineralsSupply Chain

The fourth member of the conflict mineral family is gold. Most gold smuggled out of the country uses clandestine ad hoc networks. Artisanally mined gold is in the form of small nuggets, flakes or dust. These can easily be concealed in clothing or possessions or hidden in other goods of commerce.

Dodd-Frank Impact on Human Rights Violations in the DRC

According to the GAO report “While cutting the illicit incomes (sic. from conflict minerals) of certain illegal armed groups and some Congolese military units would reduce the incentive for their members to remain in the area, it is difficult to determine the extent to which their numbers or involvement in human rights violations would be reduced.” Recent research indicates that it is the breakdown of the rule of law in the area that is the primary contributor to the violence in the region.

Conflict in this area is deeply imbedded. Inter-ethnic hatred involves many different ethnic groups not only indigenous tribes but also refugees from other countries who have settled in the area. Prior civil wars and invasions by adjoining countries have led to ongoing land clashes.

It is the consensus of U.S. and foreign officials that the major impediment to eliminating the illegal mineral trade is the lack of security, weakness in the government and lack of infrastructure in the area.

US Agency Responsibilities in Dodd-Frank

Both Dodd-Frank and the National Defense Authorization Act, Fiscal Year 2010 have required the Secretary of State to map the mining sites and trade routes that are occupied by armed groups in the DRC. The map produced based on 2008/2009 data is admitted to be incomplete. The State Department acknowledges that it is not possible to locate all the mines or establish which ones are active or involved in illicit activities. The ad hoc nature of artisanal mines in the area makes the situation very fluid. To date, no updated map has been published.

The Secretary of State is also tasked with providing a strategy to deal with conflict minerals in the DRC. According to the GAO, the State Department has not yet developed an adequate action plan to fulfill the Dodd-Frank requirement.

Sunset Provision

According to Dodd-Frank, companies must continue providing annual updates of their conflict mineral sources “for at least 5 years or until the President decides that no armed groups are benefiting from the minerals trade.”

Industry Reaction

Industrial representatives have registered their concerns in working to comply with the new SEC regulations. The National Association of Manufacturers (NAM) believes that the proposed rule “will cost U.S. industry between $9-16 billion to implement.” Some of the concerns include:

  • The necessity of a product-based or materials declaration approach instead of a more realistic risk-based approach
  • Harm to company brands because product source designations posted on company websites cannot be exactly determined
  • Inability to gain cooperation from each entity in the supply-chain in a timely manner or even at all
  • The open ended nature of the conflict mineral list as the State Department is allowed to add an unlimited number of additional materials to the list further burdening the company with compliance requirements.

Though the SEC estimates that 6,000 manufacturing companies will be impacted, according to the NAM, there are 278,000 small and medium-sized manufacturers who must comply at the same level as the larger industries.

What the Future Holds

The issue of compliance with the conflict mineral requirements of Dodd-Frank has been taken to court. The first ruling, issued in July 2013 upheld the SEC regulations in this matter. This means that companies still have until May 2014 to report. According to a PriceWaterhouseCooper survey “almost half of the nearly 900 executives surveyed are still in the initial stages of their compliance efforts, while 16 percent have not yet begun gathering information, and 32 percent are still determining if the rule even applies to them… Of the companies that have at least started gathering information on their conflict minerals status, 72 percent are in the industrial products & manufacturing, technology and automotive industries.”

Many groups who have looked at this regulation are concerned about the unintended consequences of the ruling and have recently testified in Washington DC voicing their concerns about the potential for companies to embargo products from the region. An embargo of these minerals suspected to originate from the region, whether from illegal activities or not, may not change the violence or human rights violations in the area and may ultimately hurt the legitimate miners and their families by taking away their sole source of income. Major technology advances may be hindered, delayed or abandoned as researchers might be pressured not to explore the use of tin, tungsten, tantalum and gold in innovative new products or processes due to the future cost of compliance with the conflict minerals rule. Additionally, the costs associated with complying with Dodd-Frank may prove to be excessive for companies both large and small and potentially devastating to the small manufacturers in the supply chain. In a weak economy this may further delay recovery.


Until the objections by manufacturing associations work their way through the court system, Congress amends or overturns this part of the law, or the SEC relaxes some of the rules, companies have less than a year to determine whether their activities fall under the conflict mineral rules, identify and gain cooperation from their supply chain and fulfill the SEC reporting requirements. The law does not provide a lower limit on the quantity of these conflict minerals present in products. This means that any manufacturer must careful deconstruct their product and process to make it in order to determine whether any trace of these metals has been involved. A short piece of wire, soldered point or nanodot is all that is presently required to trigger the compliance requirement. A two year grace period to move from unconfirmed source to identified source is allowed for most companies. Small companies will have four years to move between the two declarations. All must still report by May 2014. If you fall into any of these categories, it is important to stay abreast of what is going on in the courts, the State Department, SEC and Congress.

About the Analyst

Rosemarie Szostak, Ph.D.

Rosemarie Szostak, Ph.D., advises companies on technology, patents, innovation and disruptive technology. She has 20 plus years of experience as a thought leader and analyst with broad technical knowledge in chemistry, materials and chemical engineering.

Academic Credentials

  • Post Doctoral Fellow, Chemical Engineering Department, Worcester Polytechnic Institute
  • Ph.D., Chemistry, University of California Los Angeles
  • M.S., Chemistry/Physics, Georgetown University


Conflict Minerals Rules SEC 17 CFR PARTS 240 and 249b

Conflict Minerals Legislation Assessment GAO

The Mineral Industry of Congo (Kinshasa) USGS

Conflict minerals: Frequently asked questions PriceWaterhouseCooper

Conflict minerals: Frequently asked questions Automotive Industry Action Group AIAG

Democratic Republic of the Congo Mineral Exploitation by Armed Groups & Other Entities Map Humanitarian Information Unit

National Association of Manufactures Letter to the SEC March 2, 2011

Conflict Minerals Law Squires and Sanders

Conflict Minerals Survey PriceWaterhouseCoopersummary on Manufacturing Net

Hearing entitled “The Unintended Consequences of Dodd-Frank’s Conflict Minerals Provision” House Committee on Financial Services May 21, 2013

Get Our Newsletter

Sign up for monthly digest articles to keep up to date with Nerac

Select Your Area(s) of Interest *

Topics of Interest

you might also like

  • A box or carton or even an aluminum can does not represent a subtle change in protective packaging but rather a potential disruptive shift as the wine industry looks to improve its environmental footprint.

  • Social media mining of consumer trends is not just for your marketing department anymore. It should be part of your overall corporate R&D/innovation toolkit.

    The world is awash in data ranging from e-commerce, in-store data, and the supply chain. Today, big data has gotten even more significant due to the rise in social media. There are over 3 billion users of social media. While you read this sentence, hundreds of thousands of tweets, comments, pictures, and videos have posted. An astonishing 73% of marketers believe companies that fail to use social data analysis effectively won’t survive in the long run. Social data has the potential to inform every aspect of a business.