As mandated by Dodd Frank Section 1502(d)(3), the US Department of Commerce has published “the most comprehensive list to date of all known [conflict minerals] processing facilities in the world.”
Commerce aggregated existing lists from OECD, CFSI, the US Geologic Survey (USGS), the London Bullion Market Association (LBMA), the Dubai Multi Commodities Centre (DMCC)and the World Gold Council (WGC). Additional research from the US Government Accountability Office (GAO) is incorporated as well. In all, more than 400 locations are listed. As a comparison, the list of “verified SORs” contained in the CFSI Conflict Minerals Reporting Template (CMRT v 3.01) lists 213 facilities*.
Commerce went on the clarify that
The list includes all known processing facilities that process the minerals tin, tantalum, tungsten, or gold, but does not indicate whether a specific facility processes minerals that are used to finance conflict in the Democratic Republic of the Congo or an adjoining country. We do not have the ability to distinguish such facilities.
In developing this list, Commerce acknowledged major limitations to the study:
- Given the informal and transient nature of artisanal mining in eastern Congo “it is very difficult to trace exactly where these small amounts of materials are smelted.”
- Makeshift 3T smelters throughout Africa are producing intermediates, shipping them to scrap traders and informal traders/exchanges through another country where it is “flaked or shaved prior to being sent to a smelter.” Our friends at MetalMiner.com wrote about this all the way back in 2011. Although market pricing has dropped dramatically since then, it appears the concept remains economically viable three years later.
- As much as 20% of the gold used for commercial purposes is purchased from the Shanghai Gold Exchange, which does not keep sourcing records.
This list should be incorporated into issuers’ smelter/refiner due diligence processes. As the report itself states, the list can’t be used to determine if the facilities finance or otherwise benefit armed groups, but it is useful in confirming that a facility is a conflict minerals processor or another type of operation.
* The CFSI has attempted to make it clear for some time that their list is NOT exhaustive, but is focused on processing facilities that appear within the electronics supply chain.