By Cydney Posner
In this editorial, the Bloomberg editorial board questions why the tungsten that fuels the decades-old war in Colombia is not covered under the Dodd-Frank conflict minerals provision and advocates that the provision be extended to cover conflict minerals wherever they are used to fund conflict and human-rights abuses.
Tungsten is one of the three T's covered by Dodd-Frank if it originated in the DRC or neighboring countries, but not if it originated in Colombia. According to the editorial, "Amazon Indians explore the rain forest for valuable rocks that contain tantalum and tungsten, both of which are used to manufacture smartphones and other mobile devices. While the Indians do the digging, they rely on another more powerful group to get the ore to market, the Revolutionary Armed Forces of Colombia (FARC)….[D]iamonds and African minerals are not the only resources in the world used to finance mayhem. [FARC] funds its insurgency against Colombia's elected government in part with revenue from tungsten. This rare metal has entered the supply chain of parts used to make cars and electronics worldwide." (For an investigative report describing the illegal mining for tungsten and tantalum in Colombia, see http://www.bloomberg.com/news/2013-08-08/terrorist-tungsten-in-colombia-taints-global-phone-to-car-sales.html.) While some companies have pledged to investigate this issue, "[b]eyond that, a new regulatory regime to block this trade -- and that of many other conflict minerals that don't fall under existing compacts -- is needed. Even in its absence, companies that use such materials in their products would be wise to become more vigilant about the problem…. The U.S. presumably could expand the Dodd-Frank provision to cover minerals outside central Africa. A proposal to do essentially the same thing is now before the European Union."
Bemoaning the lack of political will to expand these provisions, the editors suggest that manufacturers follow the example set by the diamond industry, which has developed policies to avoid "blood diamonds" even if mined outside countries covered by the Kimberley Process: at the very least, "car and electronics makers would be wise to follow the example of the diamond industry and scrutinize their supply chains -- if only to protect their profits. After all, consumers and shareholders increasingly demand that companies use only materials produced without labor and human-rights abuses, and whose profits do not fuel warfare. Consumers want cheap prices, but not unconditionally. After recent fires and accidents at apparel factories in Bangladesh, for instance, retailers, under pressure from protesters, agreed to improve factory conditions there. Shareholders, for their part, know that reputation affects revenue. For example, the American Federation of State, County and Municipal Employees Pension Plan has filed proposals with Caterpillar, Halliburton and McDonald's asking for reports on business risks arising from labor and human rights abuses in company operations…. [As many diamond sellers have learned in connection with human-rights violations in countries where diamonds are mined,] [w]hat matters isn't what the regulations say but what consumers care about: buying a product with a reasonably clean conscience. In other words, a conflict mineral is a conflict mineral. And it's bad for business."