American Action Forum: SEC Conflict Minerals Cost U.S. Companies $4.7 Billion
As readers of Connecting the Dots know, the Metals Service Center Institute strongly opposes the U.S. Securities and Exchange Commission’s “conflict minerals” rule, which was mandated by the 2010 Dodd-Frank Wall Street reform bill.
Recently, the American Action Forum, a nonpartisan, non-profit think tank, examined the effects of this rule. The AAF found the regulation cost the companies that must comply with it $4.7 billion and 2.2 million in paperwork hours.
The regulation also harmed the country—Congo—that it was meant to help. The AAF explains: “Where possible, firms moved their purchases to other countries’ mines to free themselves of the disclosure requirements, thereby reducing to almost zero the demand from Congo’s mines. In turn, Congo’s government shut down its entire mining industry for six months before proposing a certification process to assure the U.S. that the country’s minerals do not come from “conflict zones.” The delays and politics of the process have all but ended the country’s mining industry. As of October 2011, only 11 of more than 900 mines in South Kivu, Congo, met Dodd-Frank’s standards. Before the law was passed, a kilogram of tin sold for $7, now it sells for $4 even in the certified mines. The Congolese artisanal mining industry employed around 11 million people, most of whom are now being forced to find work elsewhere, which, more often than not, ends up being with an armed militia – the very groups Dodd-Frank’s authors aimed to curtail.”