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Conflict minerals provision of Dodd-Frank contains loophole for electronics companies

Coltan

Coltan

The controversial conflict minerals provision of Dodd-Frank, which aims to curb violence and corruption in resource-rich areas, may not achieve its goal due to a loophole in the provision.

The provision requires U.S. firms using gold, tin, tungsten and tantalum in products to make “reasonable” efforts to determine whether the minerals come from the Congo, Forbes reports.

The Eastern Congo has been rife with human rights abuses as militias and gangs ravage the landscape, though the area is rich in mineral and resource wealth.

Approximately eight percent of the world’s supply of coltan, which is used to make tantalum, comes from the Congo, and a portion of the coltan extracted comes from slave mines.

Only a few factories in the world, including Cabot and Starck in Germany and Ulba in Kazakhstan, can process coltan into tantalum, which is used in a number of electronics. While it is possible to determine at the time of processing whether shipments contain “conflict minerals,” Dodd-Frank rules require firms to check their entire supply lines for the materials, according to Forbes.

Additionally, a loophole exists in the provision. A company is considered to be “contracting to manufacture” a product if it has some input over the manufacturing of the product. A company is not deemed to have influence over manufacturing if it simply puts its brand on a product manufactured by a third party.

If, by the definition, a firm is not manufacturing a product, then it is not required to disclose whether it uses conflict minerals. Electronics firms like Apple and Ericsson that purchase individual parts and then assemble the product will not be covered under Dodd-Frank, Forbes reports.

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