Key Findings of UN Group of Experts’ New Report on DRC, Conflict Minerals Due Diligence, Dodd-Frank, OECD

The UN Group of Experts (GoE) has released its updated study on the impact of conflict minerals due diligence in the DRC and adjoining countries.  The report, approximately 400 pages in English including supporting Annexes/photos, can be downloaded in its entirety here.

Among other important conclusions focused on the upstream supply chain, the report finds:

  • Awareness and uptake of due diligence mechanisms in upstream supply chains is limited and perhaps selective [paragraphs 337, 340, 343, 347, 348, 351, 371, 417];
  • Evidence appears to show that ore smuggling out of DRC is occurring [paragraphs 345, 371];
  • Demand for untagged ores from “red flag locations” continues from companies that are (1) not members of involved industry associations and/or (2) domiciled in non-OECD countries [paragraphs 339, 342, 347, 348, 351, 371, 400, 417, 419];
  • The gold supply chain has been far less impacted than that of 3Ts.  It appears that some miners in conflict areas have shifted to gold production, taking advantage of the lagging implementation of controls [paragraphs 336, 362, 369];
  • The dramatic drop in the demand for DRC-origin material, regardless of its conflict status, has increased unemployment and worsened poverty for tens of thousands of people, and has led to reincursions of armed groups and increased sophistication in their tactics [paragraphs 368, 422];
  • At the same time, there has been some shift in production of tin, tungsten and tantalum ores to non-conflict regions, resulting in a reduction of some conflict financing [paragraph 370]; and
  • There is no clarity on the scope or implementation of related audit mechanisms, nor agreement on paying for such costs [paragraphs 349, 418].

It remains to be seen how – or if – the report’s findings will influence any of the participants, regulators or stakeholders who have been active in conflict minerals program/policy development.

 

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