The new legislation on “conflict minerals” will have a major impact on the gold and tungsten markets, Jewelers Vigilance Committee president and CEO Cecilia Gardner said in a seminar on the topic at the JCK Las Vegas show June 2.
“A
provision on conflict gold was stuck into the Dodd-Frank bill
regulating Wall Street,” Gardner said. “It is here, it exists, and we
are going to have to grapple
with it.”
Gardner’s
guest, Brad Brooks-Rubin, special advisor on conflict diamonds for the
U.S. State Department, said that the fight for natural resources,
including gold and tungsten,
has been at the center of the ongoing conflict in the Democratic
Republic of Congo.
“Because
of the blood diamond campaign, we are all familiar with the kind of
atrocities that go on in these conflicts,” he said. “And Eastern DRC is
probably worse than
all of them.”
The
recently passed conflict minerals legislation requires manufacturers
that are publicly traded or file with the SEC a conflict
mineral report, which details
the due diligence they have performed on the origin of their minerals.
She said the law permits businesses to say they “don't know”
where their gold comes from.
But
she added: “I don’t know many companies who are comfortable with
saying I don't know. A publicly traded company that answers a question
‘I don’t know,’ exposes themselves
to objections from shareholders and NGOs. They will say, 'You are a
publicly traded company, you have an obligation to know if your gold
comes from the bad guys.'”
Gardner
noted the legislation could indirectly affect companies who supply one
or more of the impacted minerals to public companies, as they may have
to specify the origin
of their gold.
“I don’t know if that is possible,” Gardner said. “Forty percent of the gold used in jewelry is recycled. But recycled from where?”
Gardner
hopes that the SEC’s final rule will take recycled gold into account,
and eliminate the need for a “conflict mineral” report if a company uses
recycled minerals.
Still,
she said it remains difficult to determine the origin of any kind of
gold: “Our basic question to the SEC is: How can we build this system,
when the building blocks
to the system don’t exist?”
Brooks-Rubin
added: “The first conflict minerals report will probably be pretty
awkward. We at the State Dept. have said in our reports that this is
going to take time.”
He said that this issue is unfolding differently than the Kimberley Process.
“With
conflict diamonds, the entire industry got together and said: Let’s
deal with this,” he said. “That is not how this has evolved. This will
be an interesting experiment
to see if the public cares or not. Will they pay extra to buy something
that is conflict-free?”