How US Dodd-Frank Act Shapes Responsible Sourcing in Mining

Although a US law, the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act has had far-reaching consequences for the global mining industry.

While directly applicable to US-listed companies, the law's impact extends well beyond American borders, because mining operations worldwide have had to reassess ESG practices in order to meet the demands of their US-based customers.

It is Section 1502 of the Act that applies specifically to mining. This requires companies to disclose their use of so-called ‘conflict minerals’ from the Democratic Republic of Congo (DRC) and neighbouring countries.

The term ‘conflict minerals’ typically refers to four metals: tin, tantalum, tungsten and gold, known collectively as 3TG. These minerals are essential components in various industries, including electronics, automotive, and construction.

The mining of conflict minerals often involves severe ESG transgressions, including forced labour, child labour and dangerous working conditions. Environmental damage is also common, with unregulated mining leading to deforestation, water pollution and soil degradation. The profits from these mines frequently fund armed groups, perpetuating cycles of violence and instability.

Global impact on mineral sourcing practices

Mining companies operating in the DRC and adjoining countries face increased scrutiny. Many have had to implement rigorous traceability systems to prove their minerals are not funding armed conflicts.

But companies outside the conflict-affected regions have also felt the law's effects, as they must provide detailed information about their supply chains to US customers seeking to comply with the legislation.

The Organisation for Economic Co-operation and Development (OECD) has developed due diligence guidance for responsible mineral supply chains. This framework has become a global standard, influencing mining practices far beyond the scope of the US law.

Apple's conflict minerals programme demonstrates the global reach of the Act.

The technology giant’s global supply chain is shaped by a comprehensive conflict minerals programme. In 2019, all of Apple's identified 3TG smelters and refiners participated in independent third-party audits.

Apple's efforts have cascaded down to mining operations worldwide. Suppliers, including those outside the DRC region, must now meet stringent requirements to maintain their business relationships with the tech giant.

The Securities and Exchange Commission (SEC), the US financial regulator, oversees the implementation of Section 1502. Companies must file annual reports detailing their due diligence efforts to trace the origin of 3TG minerals used in their products.

According to a Conflict Minerals Report Apple filed with the Security and Exchange Commission in early 2024, the company had axed 14 suppliers from its list in 2023 because they failed to meet its responsible sourcing standards. 

Apple said that the non-compliant smelters and refiners were either not willing to participate in, or complete, a third-party audit, stopped participating or did not meet its requirements.

Yet in May 2024, Reuters were among the news organisations to report that international lawyers representing the DRC government said they had evidence – gathered from whistleblowers – that Apple could be sourcing minerals from conflict areas in eastern Congo. Lawyers acting for the DRC wrote to Apple CEO Tim Cook, asking for proof the company is not using minerals mined from areas that profit militant groups. Apple has previously stated that it does not, but DRC lawyers said these claims were "inadequate".

Responsible Minerals Initiative shapes industry standards

For mining companies – and businesses like Apple that rely on conflict minerals – ensuring responsible sourcing  compliance can be complex, which is where the Responsible Minerals Initiative (RMI) comes in. The RMIU is an industry-led organisation that provides resources to address these challenges, and its Responsible Minerals Assurance Process (RMAP) assesses smelters and refiners to determine if they have systems in place to source minerals responsibly.

Companies can use the RMI's list of RMAP-conformant smelters and refiners as a starting point for their due diligence efforts. By prioritising suppliers who source from these certified facilities, businesses can reduce the risk of inadvertently supporting conflict through their mineral purchases.

The RMI, founded in 2008, has gained prominence due to the Dodd-Frank Act, with mining companies worldwide now seeking RMAP certification to remain competitive in the global market. This certification has become a de facto requirement for many supply chains, regardless of the mineral's origin.

EU follows suit with conflict minerals regulation

The European Union introduced its own Conflict Minerals Regulation in 2021, drawing inspiration from the Dodd-Frank Act. This regulation applies to EU importers of 3TG minerals, further expanding the global reach of conflict minerals legislation.

The EU regulation has also influenced other countries to consider similar legislation, and this trend suggests that responsible sourcing requirements will continue to shape the global mining landscape.

Challenges and opportunities for global mining sector

The implementation of Section 1502 has presented challenges for the mining industry; some argue it has led to a de facto embargo on DRC minerals, and that this has harmed local economies.

Yet the law has also created opportunities for responsible mining operations, because companies that can demonstrate ethical sourcing practices can gain a competitive advantage in the global market.
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