By Matthew Clark
Published Nov. 23, 2015
Provisions of the federally enacted Dodd-Frank Act require companies to disclose whether they source minerals such as tin, tungsten, tantalum and gold, otherwise known as ‘conflict minerals,’ from the Democratic Republic of the Congo and surrounding nations.
Per Loof, CEO of Greenville-based Kemet Corp., recently testified in front of a House subcommittee charged with oversight of the Dodd-Frank Act about Kemet’s use of minerals from the Democratic Republic of the Congo for its various electronic components.
The House Financial Services Committee’s Monetary Policy and Trade Subcommittee heard testimony from Loof along with representatives of other countries using minerals from that region of Africa and government leaders representing the countries in the region.
In his testimony, Loof discussed Kemet’s sourcing model for conflict-free tantalum ore from the village of Kisengo in Congo. He said the company has invested in “a conflict-free mine, as well as a number of infrastructure improvements.” Loof said those improvements include a hospital, school, water wells and solar-powered street lighting.
“We have shown that is it possible to succeed in business while being economically and socially responsible,” Loof said in his testimony.
The subcommittee was focused on Section 1502 of the Dodd-Frank Act that requires public company disclosure of sourcing conflict minerals. Subcommittee chairman Rep. Bill Huizenga, a Michigan Republican, said he was concerned the section have not prevented companies in the U.S. from continuing to use conflict minerals from the region.
In April 2014, a U.S. Court of Appeals panel suggested the requirement of companies to describe the conflict-free status of products was a First Amendment violation. Huizenga said Section 1502 has potentially led to “a de facto embargo, further impoverishing Africans while leaving local militias unaffected.”
“Five years later, I am very concerned that this well-intended conflict minerals rule is actually harming the very people it was intended to help,” Huizenga said.
The subcommittee reported that, in August 2015, the Government Accountability Office reported 67% of companies were not able to determine whether minerals used came from the countries covered in the section and “no company was able to determine whether its minerals benefitted armed groups in those countries.”
Another issue suggested by Huizinga is that the provision “treats 233 million Africans living in 10 distinct countries as one undifferentiated group, an unthinking and patronizing view of the region.” Evode Imena, minister of state in charge of mining for the Republic of Rwanda, testified that each of the 10 countries, including the Congo, are unique and should be treated that way by American businesses.
“From economic development to border control, these countries are at all different levels of achievement,” Imena said in his testimony. “Putting them in one group and applying a ‘one-size-fits-all’ regulation is not only an impediment to efficient implementation of the regulations, but … such an approach fails to recognize efforts made and challenges faced by individual countries.”
Loof said the Dodd-Frank Act has helped companies like Kemet look at business opportunities in countries like the Congo and help develop secure supply chain routes for minerals like tantalum that benefits, not just Kemet, but the entire electronic component industry.
“Section 1502 has been very good for the tantalum industry, and there is now a clear road map on how to ethically source DRC tantalum,” Loof said.
He added Kemet will continue efforts to “have a positive and lasting impact” to the region.