GAO Tells State, USAID to Create Performance Indicators for Conflict Minerals Strategy

The Department of States (State) says armed groups in the Democratic Republic of the Congo (DRC) continue to commit severe human rights abuses and to profit from the mining and trading of “conflict minerals”. These minerals include tin, gold, and others that are used to finance conflict in the area.

The United Nations (UN) reported in 2019 that state and nonstate armed groups, as well as criminal networks, continued to tax or control mining activities in eastern DRC.15 Armed groups use revenue from the illegal taxation and sale of conflict minerals to survive and to purchase arms and ammunition. The UN also reported that armed groups traffic minerals to neighboring countries, including Burundi, Rwanda, and Uganda. Some of the nonstate armed groups continue to grow, sometimes recruiting from and expanding to neighboring countries, according to the UN.

State and the U.S. Agency for International Development (USAID) created a conflict minerals strategy in 2011 to try to stop the exploitation. However, a new Government Accountability Office (GAO) review has found that the agencies have not established ways to measure progress toward objectives such as promoting responsible trade through public outreach. 

The Securities and Exchange Commission (SEC) disclosure rule broadly requires that certain companies submit a filing that describes their efforts to conduct a reasonable country-of-origin inquiry (RCOI), and depending on the preliminary determination, perform due diligence to determine the source and chain of custody of their conflict minerals—gold and specific ores for tantalum, tin, and tungsten. 

After conducting RCOI, an estimated 50 percent of companies filing in 2019 reported preliminary determinations as to whether the conflict minerals came from DRC or adjoining countries (covered countries) or from scrap or recycled sources. The percentage of companies able to make such preliminary determinations increased significantly between 2014 and 2015, and has since leveled off.

However, fewer companies reported such determinations after conducting due diligence. In 2019, an estimated 85 percent of companies made preliminary determinations that required them to then perform due diligence. Of those companies, an estimated 17 percent determined that the minerals came from covered countries—a significantly lower percentage of companies making that determination than the 37 percent reported in 2017 or the 35 percent in 2018. Since 2014, companies have noted various challenges they face in making such determinations; however, SEC staff told GAO that they did not know what factors contributed to the decrease in 2019. GAO said it will examine this issue in a future review.

GAO said State and USAID have no indicators for the objectives of strengthening regional and international efforts and promoting due diligence and responsible trade through public outreach. Without performance indicators, the agencies will struggle to comprehensively assess their progress toward achieving these objectives or the overall goal of addressing armed groups’ exploitation of conflict minerals. State has concurred with GAO’s recommendation that it develop performance indicators. 

Read the full report at GAO

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