Gold Hardest Conflict Mineral to Tackle, Research Shows

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By Andrea Vittorio

It’s especially hard to clean up the supply chain for gold mined in a country facing one of the world’s worst humanitarian crises, federal research released Aug. 23 shows.

Armed groups frequently exploit gold from artisanal and small-scale mining in the Democratic Republic of the Congo. Almost all of that gold is produced and traded unofficially and smuggled from the country, according to reports reviewed and stakeholders interviewed by the U.S. Government Accountability Office.

Gold is one of four conflict minerals that U.S.-listed companies such as Tiffany & Co. and Signet Jewelers Ltd. must trace and report on each year to the Securities and Exchange Commission. These minerals have been linked to direct or indirect financing of conflict and human rights abuses in the region.

Reports from the United Nations and others have shown progress in reducing armed groups’ exploitation of the three other conflict minerals: tin, tantalum, and tungsten. But armed groups are still common in the gold sector, which GAO said is a significant driver of the Congolese economy.

‘Few Incentives’

Efforts by international organizations and the U.S. and DRC governments to encourage sourcing of artisanal and small-scale gold that is conflict-free remain mostly in the early stages, GAO said. There are also “few incentives” for responsible gold sourcing due to the limited number of mines validated as conflict-free and the relatively high mining-related taxes in the DRC compared to neighboring countries, it said.

The report, part of GAO’s annual look at corporate reporting on conflict minerals, was sent to members of Congress, the SEC, and other federal agencies.

Conflict minerals disclosures, in their fourth year, may be in for a regulatory rollback now that the commission is taking a second look at its requirement. The State Department is also looking into how best to support responsible sourcing of conflict minerals.

The reporting rule spent years in a legal battle with industry groups, which didn’t want companies to be forced to say if their computer chips, jewelry, and other products aren’t conflict-free. Human rights groups have defended the disclosure requirement, saying it gives insight into how companies address risk in their supply chains.

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com

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