34% of companies can't determine country of origin for conflict minerals

Dive Brief:

About one-third (34%) of companies were unable to determine the country of origin for the conflict minerals used in their products in 2017, according to a report from the Government Accountability Office (GAO). The figure is an improvement over 41% of companies unable to determine in 2016, and significantly better than 67% in 2014.
In 2017, 32% of companies reported they sourced 3TG minerals — tin, tungsten, tantalum and gold — from the Democratic Republic of the Congo (DRC) or adjoining nations.
The minerals industry in eastern DRC faces three major challenges: insecurity because of illegal armed groups, weak governance and poor infrastructure, Kimberly Gianopoulos, director of international affairs and trade at GAO, told Supply Chain Dive in an email.

Countries determining country of origin — Shefali Kapadia / Supply Chain Dive, data from GAO

Dive Insight:

Starting in 2012, the Securities and Exchange Commission (SEC) required companies to disclose sourcing of 3TG minerals used in their products. Enforcement of the rule was suspended in April 2017, removing the mandatory requirement for companies to file conflict mineral reports. By and large, however, "companies plan to continue to report similar conflict minerals disclosure information," GAO said in its report.

Reporting on conflict minerals helps to bring visibility into the companies' sourcing process, which often is the first step to reducing conflict materials in the supply chain.

In surveys and interviews with businesses, GAO said companies had taken steps to collect additional sourcing data, including "gathering missing information about their supply chains and working with suppliers to encourage conflict-free sourcing."

Through those steps, data collection has became more routine, Gianopoulos said, and "there has been continued increase in awareness of the use of conflict minerals among suppliers, reportedly over the period that the conflict minerals legislation and its implementation has been in effect."

But businesses still noted challenges in determining countries of origin due to "complex supply chains involving many suppliers and processing facilities," the report said.

Only four companies in GAO's sample of 1,165 companies declared their products as "DRC conflict-free." In 2017, 32% of companies said their products contained materials sourced from the DRC or its neighbors. In 2016, the figure was 25%, and in 2015, it was 29%.

While the numbers appear to be rise, they don't necessarily indicate an increase in DRC sourcing, but could simply be a factor of more companies being able to determine origin and realizing their products stem from the region.