SEC CONFLICT 

MINERALS RULE

Information on 

Responsible Sourcing 

and Companies 

Affected

Report to Congressional Committees

July 2013

GAO-13-689

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-689, a report to 

congressional committees

July 2013

SEC CONFLICT MINERALS RULE

Information on Responsible Sourcing and Companies 

Affected

Why GAO Did This Study

The eastern part of the DRC has 

experienced recurring conflicts 

involving armed groups that have 

resulted in severe human rights 

abuses. In addition, armed groups 

have profited from the exploitation of 

minerals. In 2010, Congress enacted 

Section 1502(b) of the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act to address the 

exploitation of conflict minerals, which 

include tin, tantalum, tungsten, and 

gold, and the extreme levels of 

violence in the DRC. As required by 

Section 1502(b), the SEC issued a rule 

in August 2012 that requires 

companies to disclose their use of 

conflict minerals and the origin of those

minerals. The act requires GAO to 

report on the rule’s effectiveness, 

among other issues, beginning in 2012 

and annually thereafter.

Initial company disclosure reports to 

SEC that would enable GAO to assess 

the effectiveness of the rule will not be 

due until May 2014. This report 

describes, among other issues, (1) 

factors that may impact whether SEC’s 

rule denies armed groups in the DRC 

benefits from conflict minerals and (2) 

information about companies that use 

conflict minerals and are not required 

to report to SEC under the rule. 

GAO reviewed and analyzed 

documents and interviewed 

representatives from SEC, the 

Department of State, the U.S. Agency 

for International Development, industry 

associations, NGOs, consulting firms, 

and international organizations. GAO 

also analyzed smelter and refiner 

information. This report does not 

contain recommendations.

What GAO Found

Stakeholder-developed initiatives may facilitate companies’ compliance with the 

Securities and Exchange Commission’s (SEC) final conflict minerals rule, but 

other factors may affect the rule’s impact on reducing benefits to armed groups in 

the Democratic Republic of the Congo (DRC) and neighboring countries. Agency 

and industry officials as well as representatives from international organizations 

and nongovernmental organizations (NGO) stated that adoption of the rule as 

well as stakeholder-developed initiatives—which include the development of 

guidance documents, audit protocols, and in-region sourcing of conflict 

minerals—can support companies’ efforts to conduct due diligence and to identify 

and responsibly source conflict minerals. For example, officials GAO interviewed 

explained that the Conflict-Free Smelter Program enables suppliers to source 

conflict minerals from smelters (companies that refine the ore of the conflict 

minerals into metals) that have been certified by an independent third-party 

auditor as obtaining their minerals from sources that did not benefit armed 

groups. However, officials GAO interviewed cited constraining factors such as 

lack of security, lack of infrastructure, and lack of capacity in the DRC that could 

affect the ability to expand on efforts to achieve conflict-free sourcing of minerals 

from eastern DRC and thereby potentially contribute to armed groups’ benefiting 

from the conflict minerals trade. For example, officials GAO interviewed noted 

that there is a lack of infrastructure in place that would enable companies to set 

up or expand operations in the DRC. Limited transportation and poor roads in 

eastern DRC also make it difficult to get to mine sites. Moreover, according to 

officials, the remoteness of mines also makes it difficult for DRC officials to 

validate mines and ensure that the mines have not been compromised by illegal 

armed groups. 

Companies that are not required to file disclosures under SEC’s conflict minerals 

rule may be affected by the rule. These companies may supply components or 

parts that contain conflict minerals to companies that report to SEC under the 

rule, many of which could be original equipment manufacturers and component 

parts manufacturers. Estimates provided by public commentators responding to 

the rule indicate that roughly 280,000 suppliers could provide products to roughly 

6,000 companies that report to the SEC under the rule and may be asked to 

provide information on their use of conflict minerals and the origin of the minerals 

as part of the rule’s due diligence requirements. GAO found little available 

aggregated information about companies that do not report to SEC under the 

rule. However, GAO found that for smelters and refiners there is some 

aggregated information, such as the types of conflict minerals they use and their 

location. For example, GAO found that over half of the 278 smelters and refiners 

of conflict minerals it identified were located in Asia, many processed tin, and 

most did not have a conflict minerals policy publicly available.

View GAO-13-689. For more information, 

contact Lawrance L. Evans, Jr. at (202) 512-

4802 or evansl@gao.gov. 
Page i GAO-13-689 SEC Conflict Minerals Rule

Letter 1 

Background 4

Stakeholder-Developed Initiatives May Facilitate Compliance with 

Conflict Minerals Rule, but Other Factors May Affect the Rule’s 

Impact on Reducing Benefits to Armed Groups 12

Many Companies Not Required to Report to SEC under the 

Conflict Minerals Rule Will Likely Be Affected; Limited 

Aggregated Information about Them Exists 20

Little Additional Information on the Rate of Sexual Violence in 

Eastern DRC and Neighboring Countries Has Become Available 

since GAO’s 2012 Report 31

Agency Comments and Our Evaluation 34

Appendix I Objectives, Scope, and Methodology 37

Appendix II SEC’s Flowchart Summary of the Disclosure Process for 

the Final Conflict Minerals Rule 41

Appendix III Updates of Global and In-Region Sourcing Initiatives 43

Global Sourcing Initiatives 43

In-Region Sourcing Initiatives 45

Appendix IV GAO Contacts and Staff Acknowledgments 47

Figures

Figure 1: Map of DRC with Provinces and Neighboring Countries 5

Figure 2: Timeline for SEC-Reporting Companies to Submit 

Conflict Minerals Disclosures to SEC 9

Figure 3: Simplified Conflict Minerals Supply Chain 11

Figure 4: Simplified Conflict Minerals Supply Chain Showing 

Supplier Tiers 23

Figure 5: Flow of Supply Chain Inquiries from the Original 

Equipment Manufacturers to the Mine 24

Figure 6: Number of Smelters and Refiners of Conflict Minerals We 

Identified, by Country 28

Figure 7: Population-Based Surveys That Estimate the Rate of 

Sexual Violence in Eastern DRC, Rwanda, and Uganda 32

Figure 8: SEC’s Flowchart Summary of the Final Conflict Minerals 

Rule 42

Contents 
Page ii GAO-13-689 SEC Conflict Minerals Rule

Abbreviations

DHS Demographic and Health Survey

Dodd-Frank Act Dodd-Frank Wall Street Reform and 

Consumer Protection Act

DRC Democratic Republic of the Congo

EICC Electronic Industry Citizenship Coalition

GeSI Global e-Sustainability Initiative

ICGLR International Conference of the Great Lakes Region

iTSCi ITRI Tin Supply Chain Initiative

LBMA London Bullion Market Association

M23 March 23 Movement

MONUSCO United Nations Organization Stabilization Mission in 

the Democratic

Republic of the Congo

NGO nongovernmental organization

OECD Organisation for Economic Co-operation 

and Development

PPA Public-Private Alliance for Responsible 

Minerals Trade

SEC Securities and Exchange Commission

State United States Department of State

UN United Nations

UNGoE United Nations Group of Experts

USAID United States Agency for International 

Development

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-13-689 SEC Conflict Minerals Rule

441 G St. N.W.

Washington, DC 20548

July 18, 2013

Congressional Committees

The Democratic Republic of the Congo (DRC) has long been the site of 

one of the world’s worst humanitarian crises. Since 1998, over 5.4 million 

people have died as a result of the conflict which has also destabilized 

the eastern part of the country, created insecurity, displaced people, and 

perpetuated the cycle of poverty, according to estimates by the 

International Rescue Committee. In 2010 we reported that illegal armed 

groups, as well as some units of the Congolese national military, had 

continued to commit severe human rights abuses, including mass 

killings.1 In 2013 the United Nations (UN) reported continuing violence by 

illegal armed groups, including violence by the group known as M23.2

Sexual violence has also been a feature of the conflict in the DRC at least 

since the Congolese civil war of the mid-1990s. The illegal armed groups 

and units of the Congolese national military committing these atrocities 

also profit from the illegal mining of minerals. In response to the 

humanitarian situation in the DRC, Congress included in the Dodd-Frank 

Wall Street Reform and Consumer Protection Act (hereafter referred to as 

the Dodd-Frank Act, or the Act) provisions pertaining to the trade of DRC 

conflict minerals—tantalum, tin, tungsten, and gold.3

 

1

GAO, The Democratic Republic of the Congo: U.S. Agencies Should Take Further 

Actions to Contribute to the Effective Regulation and Control of the Minerals Trade in 

Eastern Democratic Republic of the Congo, 

Specifically, section 

1502(a) of the Act states that “It is the sense of the Congress that the 

exploitation and trade of conflict minerals originating in the [DRC] is 

helping to finance conflict characterized by extreme levels of violence in 

the eastern [DRC], particularly sexual- and gender-based violence, and 

contributing to an emergency humanitarian situation therein.” Section 

1502(b) of the Act required the Securities and Exchange Commission 

(SEC) to issue a conflict minerals disclosure rule that requires issuers 

GAO-10-1030 (Washington, D.C.: Sept. 30, 

2010).

2

According to the UN, M23, for March 23 Movement, is an armed group that formed in 

May 2012 in eastern DRC.

3

The Dodd-Frank Act defines conflict minerals as columbite-tantalite (coltan), cassiterite, 

gold, wolframite, or their derivatives, and any other mineral or its derivatives determined 

by the Secretary of State. Columbite-tantalite (coltan), cassiterite, and wolframite ores are 

ores from which tantalum, tin, and tungsten, respectively, are processed.

 
 

Page 2 GAO-13-689 SEC Conflict Minerals Rule

with conflict minerals that are necessary to the functionality or production 

of a product manufactured by such persons to file reports annually with 

SEC to disclose whether any of those minerals originated in the DRC or 

an adjoining country, and if so, to provide an additional report.4 In 

response to section 1502 of the Act, SEC adopted the final conflict 

minerals rule on August 22, 2012.5 The Act also required us to report, 

beginning in 2012 and annually thereafter, on the effectiveness of the rule 

in promoting peace and security in the DRC and adjoining countries; to 

describe information that may be publicly available about entities that use 

conflict minerals but are not required to report to SEC under the rule; and 

report, annually beginning in 2011, on the rate of sexual violence in wartorn areas of the DRC and neighboring countries. To address the 

mandate, in July 2011 we issued our first report on sexual violence6 and 

in July 2012 we issued our second report, which focused on SEC’s 

actions and stakeholder-developed initiatives involving conflict minerals 

and updated information on the rate of sexual violence.7

As in our 2012 report, we did not address the effectiveness of SEC’s 

conflict minerals disclosure rule, as required under the legislation, 

because the first disclosures of companies’ use of conflict minerals will 

not be due to SEC until May 2014 and sufficient time must elapse to allow 

the full impact of the rule to materialize. However, the effectiveness of the 

rule in promoting peace and security in the DRC will depend in part on its 

ability to limit funding by restricting the use of conflict minerals to illegal 

armed groups in the region to which those groups have access. As a 

result, this report describes (1) factors that may impact whether SEC’s 

conflict minerals rule denies armed groups in the DRC and adjoining 

countries benefits from conflict minerals; (2) available information about 

entities that use conflict minerals and are not required to report to SEC 

 

4

The countries adjoining the DRC are Angola, Zambia, Tanzania, Burundi, Rwanda, 

Uganda, South Sudan, Central African Republic, and the Republic of the Congo.

5

77 Federal Register at 56274 (Sept. 12, 2012).

6

GAO, The Democratic Republic of the Congo: Information on the Rate of Sexual 

Violence in War-Torn Eastern DRC and Adjoining Countries, GAO-11-702 (Washington, 

D.C.: July 13, 2011).

7

GAO, Conflict Minerals Disclosure Rule: SEC’s Actions and Stakeholder-Developed 

Initiatives, GAO-12-763 (Washington, D.C.: July 16, 2012). In the report, we addressed 

the mandate requiring us to describe any issues that SEC encountered in promulgating a 

conflict minerals disclosure rule.
 

Page 3 GAO-13-689 SEC Conflict Minerals Rule

under the rule;8 and (3) any additional information available on the rate of 

sexual violence in eastern DRC and neighboring countries since our 2012 

report.9

To address these objectives, we reviewed and analyzed reports and other 

documents from relevant U.S. agencies; multilateral organizations, such 

as the Organisation for Economic Co-operation and Development 

(OECD); nongovernmental organizations (NGO); and industry 

associations. We also analyzed information on tin, tantalum, tungsten, 

and gold smelters and refiners to ascertain the location of these entities 

as well as whether they had posted any conflict-free sourcing policies on 

their companies’ websites. We interviewed officials, who are cognizant of 

conflict minerals issues, from SEC, the Department of State (State), and 

the United States Agency for International Development (USAID), as well 

as representatives from international organizations, NGOs, industry 

associations, consulting firms, and smelters and refiners of tin, tantalum, 

tungsten, and gold.10

 

8

We did not have access to information about specific entities or companies so we 

described what we learned about entities that are not required to report to the SEC under 

the conflict minerals rule.

We chose the experts and stakeholders we 

interviewed to capture a range of perspectives about the types of 

minerals traded and because we had established contacts with these 

entities on our last review. These experts and stakeholders constitute a 

nongeneralizable sample. The information gathered cannot be 

generalized and cannot be used to infer views of other experts or 

stakeholders cognizant of conflict minerals issues. In the interviews, we 

asked the experts and stakeholders to provide factors that they believe 

may impact whether SEC’s conflict minerals rule denies armed groups in 

the DRC benefits from conflict minerals. We identified 278 smelters and 

refiners of tin, tantalum, tungsten, and gold, and analyzed publicly 

available information on their practices and policies for sourcing conflict 

minerals, including any due diligence guidance the smelters or refiners 

reportedly followed for sourcing conflict minerals. We identified 278 

smelters and refiners in our analysis; the total number of smelters and 

9

As we reported in 2012, the neighboring countries of eastern DRC are Burundi, Rwanda, 

and Uganda. 

10For our review, we selected smelters to interview based on the types of minerals the 

smelters processed and their willingness to speak with us. We sought to speak with 

officials of at least one smelter or refiner for each of the conflict minerals—tin, tantalum, 

tungsten, and gold. 
 

Page 4 GAO-13-689 SEC Conflict Minerals Rule

refiners is believed to be nearly 500, worldwide. The number of gold 

refiners could potentially be larger, considering that little equipment and 

space is required to refine gold, and it can be refined at the mine site. The 

278 smelters and refiners we were able to identify may not be 

representative of others, and the information we report about these 278 

cannot be generalized to other smelters and refiners of tin, tantalum, 

tungsten, and gold. See appendix I for a complete description of our 

scope and methodology.

We conducted this performance audit from November 2012 to July 2013 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

The mineral-rich DRC, Africa’s second-largest country, has been plagued 

by cycles of violence and instability. Since 1998, violent conflicts, poverty, 

and disease have killed more than 5.4 million people in the country, 

according to estimates by the International Rescue Committee. The DRC 

was colonized as a personal possession of Belgian King Leopold II in 

1885 and administered by the Belgian government starting in 1907. It

achieved independence from Belgium in 1960. For almost 30 years of the 

post-independence period, the DRC, then known as Zaire, was ruled by 

an authoritarian regime under Mobutu Sese Seko. Following the 1994 

genocide in Rwanda and the establishment of a new government there, 

some perpetrators of the genocide and refugees fled to the neighboring 

Kivu provinces of eastern DRC. A rebellion began there in 1996, pitting 

the forces led by Laurent Kabila against the army of President Mobutu 

Sese Seko. Kabila’s forces, aided by Rwanda and Uganda, took the 

capital city of Kinshasa in 1997 and renamed the country the Democratic 

Republic of the Congo. See figure 1 for a map of the DRC’s provinces 

and neighboring countries.

Background 

History of the DRC: 

Conflict and Instability
 

Page 5 GAO-13-689 SEC Conflict Minerals Rule

Figure 1: Map of DRC with Provinces and Neighboring Countries

A period of civil war among rival rebel groups ensued. In 2001 Laurent 

Kabila was assassinated and leadership shifted to his son Joseph Kabila, 

while the civil war continued. Starting in 1999 the UN Security Council 
 

Page 6 GAO-13-689 SEC Conflict Minerals Rule

authorized peacekeeping operations in the DRC which have been 

operating as the United Nations Organization Stabilization Mission in the 

Democratic Republic of the Congo (MONUSCO).11

 

11MONUSCO took over from an earlier UN peacekeeping operation—the United Nations 

Organization Mission in Democratic Republic of the Congo—on July 1, 2010.

Initially, the 

operation’s focus was on the ceasefire and disengagement of forces and 

maintenance of liaison with all parties involved with the civil war but then 

expanded to include the effective protection of civilians, humanitarian 

personnel and human rights defenders under imminent threat of physical 

violence. The presence of illegal armed groups, such as M23, has 

continued to be an issue that MONUSCO has monitored in recent years. 

In November 2012, M23 occupied the city of Goma, a provincial capital in 

eastern DRC in the North Kivu province, and other cities in eastern DRC 

and clashed with the Congolese national army. During this time, the UN 

reported cases of sexual violence perpetrated by armed groups and 

members of the Congolese national army against women and children. 

While M23 eventually withdrew from the cities, the group’s presence in 

the region continues. In February 2013, the UN reported that eastern 

DRC continues to be plagued by recurrent waves of conflict, chronic 

humanitarian crises, and serious human rights violations, including sexual 

and gender-based violence. The report added that contributing factors to 

the cycles of violence have been the continuing presence of Congolese 

and foreign armed groups taking advantage of security vacuums in the 

eastern part of the country, the illegal exploitation of resources, 

interference by neighboring countries, and the weak capacity of the 

national army and police to effectively protect civilians and the national 

territory and ensure law and order. In March 2013, the UN SecretaryGeneral appointed a Special Envoy to the Great Lakes Region of Africa to 

support the implementation of the 11-nation “Peace, Security and 

Cooperation Framework for the Democratic Republic of the Congo and 

the Region” adopted in February 2013. According to the UN, the 

agreement seeks to end the recurring cycle of conflicts and crisis in the 

eastern DRC and to build peace. Additionally, on March 28, 2013, the UN 

Security Council authorized the deployment of an intervention brigade 

within the current peacekeeping operations in DRC to address imminent 

threats to peace and security. The objectives of the new force based in 

North Kivu province are to neutralize armed groups, reduce the threat 

they pose to state authority and civilian security, and make space for 

stabilization activities.
 

Page 7 GAO-13-689 SEC Conflict Minerals Rule

Congress has focused on issues related to the DRC for almost a decade. 

In 2006, Congress passed the Democratic Republic of Congo Relief, 

Security, and Democracy Promotion Act of 2006.12 The act stated that it is 

the policy of the United States, among other things, to engage with 

governments working for peace and security throughout the DRC and 

hold accountable individuals, entities, and countries working to destabilize 

the government. In July 2010, Congress included several provisions in 

section 1502 of the Dodd-Frank Act related to conflict minerals in the 

DRC and adjoining countries.13 Specifically, section 1502(a) of the Act 

states that “it is the sense of Congress that the exploitation and trade of 

conflict minerals originating in the [DRC] is helping to finance conflict 

characterized by extreme levels of violence in the eastern Democratic 

Republic of the Congo, particularly sexual- and gender-based violence, 

and contributing to an emergency humanitarian situation therein,” 

warranting the provisions of Section 1502(b) of the Act. Section 1502(b) 

requires SEC, in consultation with State, to promulgate disclosure and 

reporting regulations regarding the use of conflict minerals from the DRC

and adjoining countries. In November 2011, State and USAID, in 

collaboration with NGOs, industry, and other governments, launched the 

Public-Private Alliance for Responsible Minerals Trade (PPA) to support 

responsible supply chain solutions regarding conflict minerals from the 

DRC and neighboring countries. The PPA supports pilot programs, with 

the ultimate goal of producing scalable, self-sustaining systems, to 

demonstrate a fully traced and validated conflict-mineral supply chain in a 

way that is credible to companies, civil society, and government. 

According to USAID, in addition to the PPA, the U.S. government’s 

contribution to the Responsible Minerals Trade Program in the DRC 

region has amounted to almost $19 million and includes activities focused 

on the protection of artisanal mining communities, institutional and human 

capacity building for responsible minerals trade, and capacity building in 

mining sector security, among other issues. 

 

12Pub. L. No. 109-456, sec 102(14).

13Pub. L. No.111-203, sec 1502. According to an expert in conflict minerals that we 

interviewed, Canada and the European Union have taken steps to propose conflict 

minerals initiatives: Canada has a proposed conflict minerals rule that is currently in its 

comment period, and the European Union currently is having consultations on a potential 

conflicts minerals rule.

U.S. Government 

Response to Situation 

in the DRC
 

Page 8 GAO-13-689 SEC Conflict Minerals Rule

The SEC Commissioners adopted14 the final conflict minerals rule on 

August 22, 2012, after a number of delays during the drafting process.15

SEC reported that during its rule-making process it received more than 

400 letters commenting on the draft rule.16 As adopted, the final rule 

applies to any issuer that files reports with SEC under Section 13(a) or 

Section 15(d) of the Securities Exchange Act of 193417 (Securities 

Exchange Act) and uses conflict minerals that are necessary to the 

functionality or production of a product manufactured or contracted by 

that issuer to be manufactured. According to SEC, issuers that have a 

reporting obligation are domestic and foreign companies that offer shares 

publicly and file forms 10-K, 20-F, or 40-F with SEC. For the purposes of 

our report, we refer to those issuing companies affected by the rule as 

“SEC-reporting companies under the rule.” (See app. II for more 

information on the steps a company needs to take to fulfill its reporting 

requirements.) Under the rule, such companies must file a disclosure 

report and conduct a “reasonable country of origin inquiry” to determine 

whether they must also file a conflict minerals report.18

 

14According to SEC, when SEC proposes or adopts a set of rules, often those rules are 

contained in a single document, called a proposing release or adopting release.

Companies that 

are required to file a conflict minerals report must exercise due diligence 

on the source and chain of custody of their conflict minerals. The due 

diligence measures used by companies must conform to a nationally or 

internationally recognized due diligence framework, such as the due 

diligence guidance approved by OECD. If a company determines that its 

products are “DRC conflict-free” because they may have originated from 

the covered countries but did not finance or benefit armed groups, then 

the company must obtain an independent private sector audit and provide 

certification that it conducted an audit. If a company’s products have not 

been found to be “DRC conflict-free,” then the company must provide 

additional information in its conflict minerals report. For a temporary 

period—4 years for smaller reporting companies or 2 years for all other 

15In 2012 we reported on some of the factors that caused delays in developing, modifying, 

and finalizing the rule. GAO-12-763. 

16SEC reported that commentary came from corporations, professional associations, 

human rights and public policy groups, bar associations, auditors, institutional investors, 

investment firms, U.S. and foreign government officials, consumers, and other interested 

parties and stakeholders.

1715 U.S.C. § 78m(a) and 78o(d).

18According to SEC, the report will be filed on Form SD.

SEC’s Final Conflict 

Minerals Rule
 

Page 9 GAO-13-689 SEC Conflict Minerals Rule

reporting companies—if a company is unable to determine whether the 

minerals in its products originated in the DRC or the adjoining countries or 

financed or benefited armed groups in those countries, then those 

products are considered “DRC conflict undeterminable” and no audit is 

required.19

Figure 2: Timeline for SEC-Reporting Companies to Submit Conflict Minerals Disclosures to SEC

Under the rule, all companies will need to file their first 

disclosure report to SEC on May 31, 2014, which covers the 2013 

calendar year, and on May 31 annually thereafter. Figure 2 shows the 

reporting time frames for SEC-reporting companies under the rule.

 

19According to the SEC rule, SEC-reporting companies may describe their products as 

“DRC conflict undeterminable” if, following their exercise of due diligence, they are unable 

to determine that their minerals meet the statutory definition of “DRC conflict-free” 

because they have conflict minerals from the DRC or the adjoining countries but were 

unable to determine if their conflict minerals financed or benefited armed groups; or they 

had reason to believe that their conflict minerals may have originated in the DRC and 

adjoining countries and may not have come from recycled or scrap sources and the 

information gathered failed to clarify the conflict minerals’ country of origin, benefits to 

armed groups, or whether it came from scrap or recycled sources.
 

Page 10 GAO-13-689 SEC Conflict Minerals Rule

In October 2012, the U.S. Chamber of Commerce, the National

Association of Manufacturers, and the Business Roundtable filed a 

lawsuit against SEC regarding the final conflict minerals rule.20 In their 

petition, the two industry associations asked that the rule “be modified or 

set aside in whole or in part.” The petitioners have asked the court to 

review, among other things, whether SEC’s economic analysis is 

inadequate and whether SEC’s interpretations of certain key terms in 

section 1502 of the Act are consistent with congressional intent.

The four conflict minerals covered by section 1502(b) of the Dodd-Frank 

Act are mined in various locations around the world. For example, tin is 

predominantly mined in China, Indonesia, Peru, and Bolivia, as well as in 

the DRC, while tantalum is reportedly predominantly mined in areas such 

as Australia, Brazil, and Canada. From 2006 through 2011, the majority of 

tungsten production—reportedly 77 to 87 percent of global production—

was mined in China. Gold, however, is mined in many different countries, 

including the DRC. Our review of United States Geological Survey data 

on tantalum, tin, tungsten, and gold mined in the DRC showed that about 

12 percent of the global tantalum supply and less than 1 percent of the

global tungsten supply was mined in the DRC in 2011. About 3 percent of 

the global tin supply, and less than 1 percent of the global gold supply, 

was mined in the DRC in 2010. As we reported in our 2012 report, 

various industries, particularly in manufacturing, use these minerals in a 

wide variety of products and in varying amounts. For example, many 

industries use tin in the form of tin solder, which is used to join metal 

pieces together.21

 

20National Association of Manufacturers, Chamber of Commerce of the United States of 

America, and Business Roundtable v. U.S. Securities and Exchange Commission, 12-

1422, U.S. Court of Appeals for the District of Columbia Circuit. In May 2013, the U.S. 

Court of Appeals transferred the case to the U.S. District Court for the District of Columbia 

citing a recent jurisdictional decision based on a similar case.

According to company representatives, tin is also found 

in food packaging, in steel coatings on automobile parts, and in some 

plastics. According to industry association and company representatives, 

the majority of tantalum is used to manufacture tantalum capacitors, 

which enable energy storage in electronic products such as cell phones 

21See GAO-12-763. For example, tin solder is used to attach individual components on 

circuit boards. 

Conflict Minerals 

Description and 

Supply Chain
 

Page 11 GAO-13-689 SEC Conflict Minerals Rule

and computers.22

A company’s supply chain for products containing tin, tantalum, tungsten, 

and gold can be complex and can vary considerably in the way it 

operates, according to industry association and company representatives. 

Generally, however, the supply chain for companies using conflict 

minerals begins at the mine site, where tin, tantalum, and tungsten ore 

are extracted from the ground using mechanized or artisanal mining 

techniques.

Tungsten is used in automobile manufacturing, drill bits 

and cutting tools, and other industrial manufacturing tools. It is also the 

primary component of filaments in light bulbs. In addition to its use as 

currency and in jewelry, gold is also used by other industries, such as the 

electronics industry.

23

Figure 3: Simplified Conflict Minerals Supply Chain

Figure 3 provides additional information on a simplified 

supply chain for all four conflict minerals.

For artisanal mining, the local processor or trader (which may be an 

individual or company) purchases minerals directly from the mine sites 

and typically processes or upgrades them before selling them to an 

exporter. The exporter may also purchase minerals directly from mine 

 

22Tantalum is also used to produce alloy additives, which can be found in turbines in jet 

engines; mill and chemical products; thin films, which are used in semiconductors; and 

other products. 

23Artisanal mining is a form of mining that is characterized by a lack of mechanization or 

capital investment.
 

Page 12 GAO-13-689 SEC Conflict Minerals Rule

sites rather than going through a local processor or trader. Exporters may 

carry out further processing or upgrading before exporting materials to a 

smelter or refiner, where they are either converted into metals or purified 

into a higher-purity metal. Smelters primarily provide high-purity tin, 

tantalum, and tungsten directly to component parts manufacturers, 

although some sell high-purity metals through traders or exchanges.24

Gold refiners typically sell high-purity gold to banks, for use as a store of 

value, or to international exchanges, where gold is bought and sold.25

SEC’s adoption of the final conflict minerals rule on August 22, 2012, has 

raised companies’ awareness regarding conflict minerals and the due 

diligence necessary to identify whether conflict minerals may have 

benefited armed groups. Specifically, officials representing industry 

associations stated that the final conflict minerals rule has acted as an 

impetus for some of their members to start thinking about whether the 

rule impacts them and some have also started collecting information to 

comply with the rule. Officials stated that stakeholder-developed 

initiatives, such as in-region and global sourcing initiatives, may increase 

companies’ assurance that conflict minerals they are using are not 

benefiting armed groups in the DRC and neighboring countries. However, 

constraining factors such as the lack of security, lack of infrastructure, 

and capacity constraints could undermine companies’ ability to ensure 

conflict-free sourcing from the region.

However, some gold refiners sell gold directly to manufacturers as well. 

Banks and traders may sell gold to manufacturers, including jewelry and 

component parts manufacturers. The component parts manufacturers 

construct individual parts—such as capacitors, engine parts, or clasps for 

necklaces—that they sell to original equipment manufacturers. The 

original equipment manufacturers complete the final assembly of a 

product and sell the final product to the consumer.

 

24According to OECD, in many instances smelters and refiners do not actually take 

ownership of the mineral but provide a service and charge a fee based on the amount of 

minerals smelted. Ownership of the minerals may remain with the mineral trader, bank, or 

component parts manufacturer. 

25According to a World Gold Council representative, in most cases refiners are paid a fee 

to refine gold and the transaction is conducted between the miner, trader, and the bank. 

StakeholderDeveloped Initiatives 

May Facilitate 

Compliance with 

Conflict Minerals 

Rule, but Other 

Factors May Affect 

the Rule’s Impact on 

Reducing Benefits to 

Armed Groups
 

Page 13 GAO-13-689 SEC Conflict Minerals Rule

Since SEC issued the final conflict minerals rule pursuant to the Dodd 

Frank Act, companies have become more aware of the issues 

surrounding conflict minerals and have started to consider the source of 

materials used in products, given the requirement in the final rule for a 

company that uses tin, tantalum, tungsten, or gold to exercise due

diligence on the source and chain of custody of its conflict minerals, if 

there is reason to believe that they may have originated in the DRC or an 

adjoining country.

26 According to some industry officials we interviewed, 

the final rule has helped resolve some uncertainties, such as the breadth 

of the industries covered, that existed before the promulgation of the rule. 

Numerous industry officials and representatives from international 

organizations and NGOs we interviewed have indicated that the creation 

and promulgation of the SEC rule has increased visibility into the issue of 

conflict minerals and raised awareness of the due diligence process, 

particularly for those companies that are not required to report under the 

rule but that may still be impacted indirectly by the rule.27

 

26OECD defines “due diligence” as an ongoing, proactive, and reactive process through 

which companies can ensure that they respect human rights and do not contribute to 

conflict. Due diligence can also help companies ensure that they observe international law 

and comply with domestic laws, including those governing the illicit trade in minerals and 

UN sanctions. Risk-based due diligence refers to the steps companies should take to 

identify and address actual or potential risks in order to prevent or mitigate adverse 

impacts associated with their activities or sourcing decisions. 

Specifically, 

officials of industry associations representing member companies that 

use tin, tantalum, tungsten, or gold in their products stated that many 

companies are aware of the SEC rule, especially the larger companies 

that may file a disclosure report with SEC, and are working to start 

complying with the rule. Some smaller companies, which may not be 

required to report under the rule, may not be as aware of or familiar with 

the rule but are receiving information from industry associations on how 

the rule may impact them. For example, some officials from industry 

associations stated that they were putting together guidance documents 

that break down the SEC rule and had also sent questions to SEC 

seeking to clarify points in the rule. Agency officials stated that the SEC 

rule has raised visibility globally of conflict minerals. For example, State 

reported in February 2013 that the issuance of the SEC rule was a vital 

step in establishing a clear and harmonized global framework for

responsible minerals trade from the DRC region. Furthermore, State 

27Some agency officials and NGOs mentioned that the uncertainty of the SEC rule’s 

outcome due to it being challenged may make it harder for companies to move forward in 

implementing their due diligence process to address the SEC reporting requirements. 

Adoption of the Final Rule 

Has Raised Companies’ 

Awareness Regarding 

Sourcing of Conflict 

Minerals
 

Page 14 GAO-13-689 SEC Conflict Minerals Rule

indicated that the SEC rule has also shaped and influenced initiatives to 

create a conflict-free supply chain by the International Conference of the 

Great Lakes Region (ICGLR) and the governments of the DRC and 

Rwanda. We provide a more detailed discussion later in this report on the 

ways in which companies required to report under the rule, in order to 

comply, are interacting with companies not required to report under the 

rule.

Some agency officials we interviewed stated that stakeholder-developed 

initiatives focused on sourcing of minerals may enhance companies’ 

ability to achieve the SEC rule’s desired outcome of denying armed 

groups in the DRC benefits from conflict minerals. As mentioned in our 

2012 report, stakeholder-developed initiatives—which include the 

development of guidance documents, audit protocols, and in-region 

sourcing—support efforts by companies reporting to SEC under the rule 

to (1) conduct due diligence of their conflict minerals supply chain, (2) 

identify the source of conflict minerals within their supply chain, and (3) 

responsibly source conflict minerals. These initiatives can be classified as 

in-region or global, and some are now being expanded.

In-region sourcing initiatives, as we reported in 2012, may support 

responsible sourcing of conflict minerals from Central Africa and the 

identification of specific mines of origin for those minerals. Regional 

sourcing initiatives in the DRC and neighboring countries focus on tracing 

minerals from the mine to the mineral smelter or refiner by supporting a 

bagging and tagging program or some type of traceability scheme. 

Examples of such initiatives include the ITRI Tin Supply Chain Initiative 

(iTSCi) and the Conflict-Free Tin Initiative (CFTI). (See app. III for more 

detailed information on these and selected other in-region sourcing 

initiatives). The iTSCi initiative was developed by a tin industry 

association known as ITRI. The initiative supports responsible sourcing of 

tin, tantalum, and tungsten from Central Africa and was launched in 

Stakeholder-Developed 

Initiatives May Increase 

Companies’ Assurance 

That Conflict Minerals 

They Use Are Not 

Benefiting DRC Armed 

Groups 

Stakeholder-Developed 

Initiatives May Aid Companies’ 

Due Diligence Efforts 

In-Region Sourcing 

Initiatives Focus on 

Tracing of Conflict Minerals
 

Page 15 GAO-13-689 SEC Conflict Minerals Rule

Rwanda in December 2010 and in the Katanga province of the DRC in 

March 2011. iTSCi expanded its activities in the Maniema province of the 

DRC in December 2012. We reported in 2012 that iTSCi is a traceability 

and due diligence program that creates auditable and verifiable chains of 

custody for tin, tantalum, and tungsten through (1) tagging and bagging of 

materials and the collection of tagging data and (2) regular incident 

reporting and continuous monitoring of mines and companies 

participating in the program. In October 2012, the Dutch government, with 

industry partners such as iTSCi, started the Conflict-Free Tin Initiative 

focused on conflict-free tin sourcing from South Kivu in the DRC, a region 

that is prone to insecurity and violence by illegal armed groups. This 

initiative is a traceability and due diligence mechanism that brings 

partners along the supply chain together, from mine to smelter to enduser. This also includes consumers as well as the DRC government and 

civil society28

While the in-region sourcing initiatives have focused on tin, tantalum, and 

tungsten to date, one of the most recent in-region initiatives in the DRC is 

through the Public-Private Alliance for Responsible Minerals Trade (PPA) 

and is focused on a pilot gold traceability scheme. In fall of 2012, 

Partnership Africa Canada began work on establishing an in-region gold 

traceability project partially funded by PPA. According to information from 

PPA, the project aims to create a traceable conflict-free mineral chain for 

artisanal gold from the eastern DRC, in the Orientale province, thus 

demonstrating the feasibility of creating artisanal gold chains with full 

traceability from mine site to gold refiner.

and uses the OECD due diligence guidance. According to 

an implementer, the progress of the initiative will depend on how the 

security situation in South Kivu develops.

According to industry and agency officials, in-region sourcing programs 

can provide better economic incentive for miners to sell minerals that do 

not benefit armed groups. For example, iTSCi reported in February 2013 

that the tin initiative in South Kivu had led to a number of immediate 

benefits for the local population, which depends on mining as its source of 

income. Specifically, the price paid to the miners for conflict-free minerals 

mined at the site had more than doubled. iTSCi further reported that the 

 

28The World Bank defines the term “civil society” to refer to the wide array of 

nongovernmental and not-for-profit organizations that have a presence in public life, 

expressing the interests and values of their members or others, based on ethical, cultural, 

political, scientific, religious, or philanthropic considerations.
 

Page 16 GAO-13-689 SEC Conflict Minerals Rule

additional income had allowed the mining cooperatives to invest in basic 

equipment such as electricity generators and to improve productivity and 

working conditions. Additionally, some agency officials stated that inregion initiatives can help develop capacity in the DRC.

We reported in 2012 that global sourcing initiatives may minimize the risk 

of minerals that have been exploited by illegal armed groups from 

entering the supply chain and support companies’ efforts to identify the 

source of the conflict minerals across the supply chain around the world. 

(See app. III for more detailed information on selected global sourcing 

initiatives.) One such global initiative is the Conflict-Free Smelter 

Program, co-developed by the Global e-Sustainability Initiative (GeSI) 

and the Electronics Industry Citizenship Coalition (EICC). The ConflictFree Smelter Program is a voluntary initiative in which an independent 

third party audits smelters’ procurement activities—–among other 

activities—–and determines if the smelters demonstrated that the 

minerals they processed originated from conflict-free sources. Companies 

that can trace their conflict minerals supply chain back to compliant 

smelters or refiners can claim that the minerals in their products are from 

a smelter29 whose processes reasonably assure conflict-free 

production.30

Industry experts we interviewed explained that if initiatives such as the 

Conflict-Free Smelter Program can result in smelters refining minerals 

that did not benefit armed groups, then companies can comply better with 

the SEC rule requirements and have more confidence in their supply 

chain sources. Specifically, one expert stated that companies that are 

conducting due diligence under the rule would not have to audit the 

smelter themselves, if the smelter has already been audited under the 

Conflict-Free Smelter Program. Agency officials, both in Washington, 

D.C., and in the DRC, reported that the Conflict Free Smelter Program 

seems to be a positive initiative since the more smelters are certified as 

conflict-free, the more beneficial this will be for companies reporting under 

the SEC rule.

 

29Smelters are the natural choke point in the supply chain—meaning that there are 

numerous sources of raw materials (ore) that flow into a smelter and numerous uses for

the refined metals that leave the smelter.

30According to industry representatives, independent third-party audits for the ConflictFree Smelter Program are lagging and thus cannot assure that minerals are conflict-free 

on future purchasing actions. 

Global Sourcing Initiatives 

Affect Companies throughout 

the Supply Chain
 

Page 17 GAO-13-689 SEC Conflict Minerals Rule

Overall, agency officials we interviewed stated that existing initiatives and 

traceability schemes on the ground in the DRC and neighboring countries 

have been yielding benefits of producing conflict-free minerals; however, 

according to these officials, more progress could be made in the 

responsible sourcing of conflict minerals from the region. Some industry 

experts also indicated that while progress has been made and the 

initiation or expansion of in-region sourcing initiatives is possible, factors 

such as the ones described below remain a concern.

Some agency officials as well as representatives we interviewed from 

NGOs, industry, and international organizations cited lack of security, 

inadequate infrastructure, and capacity constraints as factors that could 

affect the ability to expand on efforts to achieve conflict-free sourcing of 

minerals from the eastern DRC and thereby potentially contribute to 

armed groups benefiting from the conflict minerals trade. We also cited 

these same factors in our 2010 report and pointed out that these factors 

posed challenges to tracking the mines of origin for minerals artisanally 

mined in eastern DRC.31 While officials we spoke to for this report 

discussed these factors in the context of the SEC rule, these factors are 

pre-existing regional challenges that pre-date both the Dodd Frank Act 

and the SEC conflict minerals rule.32

Officials cited the lack of security, including weak governance, as a factor 

that could impact responsible sourcing from the DRC. The UN reported 

that the DRC government has been unable to exercise authority in 

eastern DRC, which has become more evident as illegal armed groups 

clashed in the Kivu provinces late in 2012. State also reported that lack of 

security has prevented the export of conflict-free minerals from certain 

areas in eastern DRC. Industry and NGO officials who work on the 

ground in the DRC pointed out that the threat from illegal armed groups 

poses a challenge to the conflict-free minerals initiatives operating in 

eastern DRC and the neighboring provinces. Although the mining sites 

are constantly monitored, the monitoring activities could be suspended at 

 

31GAO-10-1030. 

32The list of factors is not intended to be exhaustive and is based on views of experts and 

stakeholders. Additional factors may exist once the SEC rule has been in place for a 

longer period of time. We did not address how the challenges raised by the factors 

discussed can be mitigated or what progress the DRC government has made to address 

them because it was outside the scope of our review. 

Lack of Security, 

Inadequate Infrastructure, 

and Capacity Constraints 

in the DRC Could Affect 

Companies’ Ability to 

Ensure Conflict-Free 

Sourcing of Minerals

Lack of Security in 

Eastern DRC Could Hamper 

Sourcing Initiatives 
 

Page 18 GAO-13-689 SEC Conflict Minerals Rule

any time as the security situation evolves. For example, an NGO reported 

that tagging was suspended for days in July 2012 at an iTSCi site in the 

Katanga province because of the movement of armed groups in the 

vicinity of the mine sites; however, there were no reported cases of armed 

groups successfully taking control of the sites or directly exploiting 

minerals to fund activities.

In-region sourcing initiatives have operated in areas that have been 

vetted by various stakeholders and have the support of government and 

civil society actors. According to the UN Group of Experts on the 

Democratic Republic of the Congo (UNGoE), the security situation at tin, 

tantalum, and tungsten mining sites has improved and the trade of these 

minerals has become a much less important source of financing for 

armed groups. However, the UNGoE reported a “genuine risk that military 

actors would move their rackets to mining activities that were not closely 

supervised.” They further reported that the gold trade is linked to armed 

groups and criminal networks in the Congolese armed forces. According 

to the UNGoE, lack of security at gold mining sites throughout eastern 

DRC remained widespread. Agency officials emphasized that armed 

groups still existed in the DRC despite the initiatives in place and would 

seek control of any significant revenue-producing activity in the region.

Some industry officials cited concerns about sourcing from the DRC, even 

through the in-region sourcing initiatives, because of the potential impact 

on brand reputation and financial risk. For example, a representative of a 

smelter indicated that if the company purchased minerals from a mine 

that is part of a traceability scheme that is deemed conflict-free but then 

illegal armed groups infiltrated and compromised the mine in the future, 

the company would not be able to say with certainty that the minerals it 

had purchased were conflict-free.

Officials cited limited infrastructure as a factor that could affect the 

creation or expansion of in-region sourcing initiatives. Officials from 

UNGoE and industry representatives we interviewed noted a lack of 

infrastructure in place that would enable companies to set up or expand 

operations in the DRC. Limited transportation and poor roads in eastern 

DRC also make it difficult to get to mine sites. For example, an agency 

official in the DRC commented that mines may be a day’s walk from a 

main road. Also, an NGO reported that in selecting a potential pilot site for 

a traceability scheme, accessibility to the site by road was a key criterion 

and would involve using off-road vehicles due to the significant 

deterioration of roads leading to the mine. Moreover, according to an 

NGO representative, the remoteness of mines also makes it difficult for 

Limited Infrastructure Could 

Hamper Access to Mines 
 

Page 19 GAO-13-689 SEC Conflict Minerals Rule

DRC mine officials to validate mines and ensure that the mines have not 

been compromised by armed groups. Furthermore, State officials 

indicated that the lack of infrastructure prevents trade initiatives from 

developing economies of scale and expanding.

Officials we interviewed cited the lack of technical, economic, and political 

capacity as another factor that may affect the creation or expansion of inregion sourcing initiatives focused on responsible sourcing in the DRC 

and neighboring countries. In 2013, the OECD reported that while the 

understanding of responsible sourcing is “high for those actors in the 

DRC and Rwanda who have participated in such initiatives, the same is 

not true for state agents” in the country.33

Some agency officials and officials we interviewed from industry, NGOs, 

and international organizations also commented that the DRC 

government lacks capacity to mitigate corruption and smuggling. The lack 

of capacity can impact due diligence and can contribute to illegal minerals 

trade and cross-border smuggling. For example, the UN reported that 

illegal trade of minerals undermines the exercise of due diligence in the 

DRC and affects the credibility of due diligence-based certification and 

traceability systems.

The OECD report also pointed 

out that Ugandan and Burundian government officials and other entities 

lack technical understanding of due diligence requirements. Some NGO 

officials stated that lack of capacity can impact the due diligence process 

in the supply chain, especially if the numbers of trained mining agents is 

insufficient. For example, some agency officials and an NGO reported 

that the DRC does not have enough mine agents to certify the mines, of 

which there may be over 2,000 in eastern DRC alone, or even to 

negotiate and manage mining contracts. Moreover, an NGO official stated 

that mines need to be reinspected every 6 to 12 months in order to 

ensure proper due diligence in accordance with OECD and ICGLR 

guidance; however, the NGO official stated that the DRC government 

does not have the capacity to inspect at such frequency.

34

 

33Organisation for Economic Co-operation and Development, Upstream Implementation of 

the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from 

Conflict-Affected and High-Risk Areas: Final Report on One-Year Pilot Implementation of 

the Supplement on Tin, Tantalum, and Tungsten (OECD: January 2013). 

According to some industry experts, mining agents 

34Letter dated 12 November 2012 from the Chair of the Security Council to resolution 

1533 (2004) concerning the Democratic Republic of the Congo addressed to the President 

of the Security Council (S/2012/843), the United Nations Security Council (Nov. 15, 2012).

Lack of Capacity Could 

Impact Due Diligence 
 

Page 20 GAO-13-689 SEC Conflict Minerals Rule

may not be properly compensated, due to the lack of governance in 

eastern DRC, and may look for other ways to earn money, which could 

involve colluding with illegal armed groups.

With regard to smuggling, the OECD reported that as long as there are no 

traceability or certification schemes in place that cover the whole region, 

and most notably, the Kivu provinces, Uganda, and Burundi, smuggling 

and contamination of clean materials will continue to pose a threat to 

formalization of the artisanal mining sector and due diligence initiatives. 

According to a 2012 UNGoE report, several tons of gold worth hundreds 

of millions of dollars are smuggled from the eastern DRC through 

neighboring countries, where it is ultimately smelted and sold to jewelers 

in markets, such as the United Arab Emirates. Representatives from 

some industry associations that we interviewed stated that armed groups 

and criminal elements have shifted efforts to gold mines because it is 

relatively easy to smuggle gold because of its size. Furthermore, gold’s 

high value in the market makes it more viable for smuggling than tin, 

tantalum, and tungsten.

Even companies that are not required to file disclosures under SEC’s 

conflict minerals rule will likely be affected by the rule. These companies 

may supply components or parts that contain conflict minerals to 

companies reporting to SEC under the rule and may be asked by such 

companies to provide information specifying the origin of the minerals. 

Aside from the supply chain relationship, while information is publicly 

available about some smelters and refiners, there is little aggregated 

information available about companies that do not report to SEC under 

the rule but may trade in conflict minerals.

Many Companies 

Not Required to 

Report to SEC under 

the Conflict Minerals 

Rule Will Likely Be 

Affected; Limited 

Aggregated 

Information about 

Them Exists
 

Page 21 GAO-13-689 SEC Conflict Minerals Rule

Companies that are not required to report to SEC under the rule may 

supply products that contain conflict minerals to SEC-reporting 

companies under the rule. SEC relied on estimates provided by a 

commentator indicating that 278,000 suppliers—most of which would be 

companies that would not report to SEC under the rule—could be 

indirectly impacted by the rule. Moreover, the release contains an 

estimate that each of the nearly 6,000 companies that could be directly

impacted by the rule has roughly 1,000 first-tier suppliers, on average.35

 

35The actual number of first-tier suppliers is unknown, and organizations that commented 

on the release provided varying estimates on the number of first-tier suppliers that could 

potentially be affected by the SEC rule. As cited in the SEC release, commentators 

provided estimates indicating that SEC-reporting companies under the rule averaged 

nearly 160 to 10,000 first-tier suppliers, each. In addition, another commentator estimated 

that SEC-reporting companies averaged 1,060 first-tier suppliers each. After accounting 

for redundancies, because a supplier may be in more than one supply chain, SEC revised 

the number of potentially affected suppliers, provided by one commentator, to 278,000 

suppliers. 

These suppliers, including first-tier suppliers, could provide products that 

contain conflict minerals to companies required to report to SEC under 

the rule. Examples of these products include tin solder for joining metal, 

tantalum capacitors for storing energy in cellular phones, tungsten 

carbide for hardened cutting tools, or gold plating for wires to increase 

durability and resistance to corrosion. The first-tier supplier has a direct 

commercial relationship with the original equipment manufacturer, 

meaning the first-tier supplier sells materials or component parts, which 

have been aggregated by suppliers throughout the supply chain, to the 

original equipment manufacturer for final assembly. According to an 

industry official, in general, component parts manufacturers construct 

Companies Not Required 

to Report to SEC under the 

Rule May Provide 

Information on the Origin 

of Conflict Minerals in 

Their Products to 

Companies That Will 

Report to SEC under the 

Rule 

Companies Not Required to 

Report to SEC under the Rule 

May Supply Products That May 

Contain Conflict Minerals to 

SEC-Reporting Companies 

under the Rule
 

Page 22 GAO-13-689 SEC Conflict Minerals Rule

individual parts—such as capacitors, engine parts, circuit boards, and 

other components—and assemble them into more complex components. 

Using an electronics company as a model, processed metals move 

through several suppliers that manufacture component parts after the 

smelter—first to circuit board and computer chip manufacturers, then to 

cellular phone and other electronics manufacturers, and finally to the 

brand-name electronics company, which is the original equipment 

manufacturer that manufactures products recognizable to the consumer, 

such as cellular phones, tablets, and laptop computers. Beyond the firsttier supplier, there are tier 2-, 3-, 4-, or higher-tiered suppliers that, 

beginning with the raw materials from the smelter or refiner, manufacture 

component parts that are assembled into more complex component parts 

as they move from higher- to lower-tiered suppliers in the supply chain, to 

the first-tier supplier, and finally to the original equipment manufacturer.37

See figure 4 for a simplified version of the supply chain, and the tiered 

structure of suppliers.

 

36For the purpose of the estimate, SEC estimated that the rule would affect 5,551 of 

13,545 domestic issuers that file form 10-K, 377 of 942 foreign private issuers that file 

form 20-F, and 66 of 205 Canadian issuers that file form 40-F, annually. According to the 

adopting release for the rule, SEC based its estimate of 5,994 affected companies on the 

number of issuers that fall under all Standard Industrial Classification (SIC) codes that 

SEC staff believed were most likely to manufacture or contract to manufacture products 

with necessary conflict minerals.

37SEC estimates that a number of SEC-reporting companies under the rule may be 

original equipment manufacturers and first-tier suppliers, although SEC-reporting 

companies under the rule could exist anywhere on the supply chain. 

Estimate of the Number of Companies 

Required to Report to SEC under the Rule

SEC estimates that 5,994 reporting issuers 

(primarily companies that issue stock publicly 

and are required to report to SEC) will be 

affected by the rule and will need to determine 

if their products contain conflict minerals. 

According to SEC, reporting issuers are 

domestic and foreign companies that file 

forms 10-K, 20-F, and 40-F under the 

Securities Exchange Act.36

Source: GAO analysis of SEC information.

According to SEC 

and industry officials, these companies vary in 

size and revenue, but in general, tend to be 

larger, mature companies that can have a 

diverse product line; their revenues can range 

from the millions of dollars to hundreds of 

billions; they are domestic and foreign 

companies; and they may have operations in 

several countries. According to SEC and 

industry officials, some reporting issuers may

sell products to consumers.
 

Page 23 GAO-13-689 SEC Conflict Minerals Rule

Figure 4: Simplified Conflict Minerals Supply Chain Showing Supplier Tiers

While many companies will likely be directly or indirectly impacted by the 

rule, some companies that use conflict minerals may not be, partly 

because (1) the companies are not issuers that are required to file with 

SEC under the Securities Exchange Act, and (2) these same companies 

potentially do not sell components or parts to a company that will be 

required to report to SEC under the rule. Industry and consulting firm 

representatives have differing views on the number of companies that 

purchase conflict minerals from the DRC and adjoining countries but may 

not be impacted by the rule.

Suppliers that provide products that may contain conflict minerals to 

companies required to report to SEC under the rule may provide 

information on the minerals’ origins to those reporting companies that 

request it. The SEC release does not specify the steps and outcomes for 

the reasonable country of origin inquiry, and indicates that such a 

determination depends on each issuer’s facts and circumstances. 

However, in conducting a country of origin inquiry, issuers may inquire of 

their suppliers the origin of any conflict minerals in the products. 

According to the release, the issuer’s inquiry must be reasonably 

designed to determine whether any of its conflict minerals originated in 

the DRC and adjoining countries, and must be performed in good faith. If, 

after this inquiry, the issuer has a reason to believe that its conflict 

minerals may have originated in the DRC and adjoining countries, the 

issuer proceeds to exercising due diligence. Industry associations such 

as the EICC and GeSI have created templates for companies to use 

SEC-Reporting Companies

under the Rule May Request 

Information on the Origin of 

Conflict Minerals in Products 

They Receive from Their 

Suppliers
 

Page 24 GAO-13-689 SEC Conflict Minerals Rule

when contacting suppliers to inquire about the types and origins of conflict 

minerals in a given product.38

Figure 5: Flow of Supply Chain Inquiries from the Original Equipment 

Manufacturers to the Mine

For example, companies required to report 

under the rule could submit the inquiries to their first-tier suppliers. Those 

suppliers could either provide the reporting company with sufficient 

information or initiate the inquiry process up the supply chain, such as by 

distributing the inquiries to suppliers at the next tier—tier 2 suppliers. The 

tier 2 suppliers could inquire up the supply chain to additional suppliers, 

until the inquiries arrive at the smelter. Smelters then could provide the 

suppliers with information about the origin of the conflict minerals. Figure 

5 illustrates the flow of information up the supply chain.

As discussed earlier, smelters have various means to preclude untraced 

minerals from entering their supply, such as participation in the iTSCi 

initiative and the Conflict Free Smelters Program. According to smelting 

industry representatives, these initiatives and certifications have reduced 

the burden of responding to the multiple amounts of inquiries many 

smelters have already received from suppliers.

 

38According to EICC and GeSI, as of April 30, 2013, the EICC and GeSI activities are now 

under the Conflict Free Sourcing Initiative, which is an expanded initiative of the EICC and 

GeSI Extractives Work Group that includes more stakeholders and a wider range of 

industry sectors supporting the sourcing of conflict-free minerals.
 

Page 25 GAO-13-689 SEC Conflict Minerals Rule

Officials from consulting firms and industry associations that we spoke 

with told us that many companies that will respond under the rule have 

started contacting their first-tier suppliers and providing them with country 

of origin inquiries. According to these officials, several of these 

companies that have submitted inquiries to their suppliers have 

experienced challenges, which include identifying suppliers beyond the 

first-tier suppliers, because for original equipment manufacturers, 

suppliers beyond the first tier are less visible. As discussed earlier, 

original equipment manufacturers purchase component parts primarily 

from their first-tier suppliers and do not have direct commercial 

relationships with suppliers in higher tiers of the supply chain. According 

to industry representatives and agency officials, these challenges may 

impact how companies file under the rule. For example, as previously 

discussed, the SEC rule allows companies to disclose their products as 

“DRC conflict undeterminable.” This provision allows companies to state 

that the source of the conflict minerals in their products, and the likelihood 

that the conflict minerals benefited or financed armed groups from the 

DRC and adjoining countries, could not be determined after having 

conducted due diligence to obtain that information from their suppliers. 

For the reporting period beginning January 1, 2013, companies may use 

this provision for 4 years for smaller reporting companies or 2 years for all 

other reporting companies. Although the number of companies required 

to report under the rule that may utilize the “DRC conflict undeterminable” 

provision is unknown, SEC officials and representatives of industry 

associations and consulting firms anticipate that many companies 

required to report under the rule will utilize the provision based on the 

results of their due diligence efforts.

Representatives from industry and consulting firms that we interviewed 

stated that the purchasing power of issuing companies under the rule 

may influence their suppliers to provide information on the source of any 

conflict minerals in their products when requested. According to an 

industry representative, since companies that report to SEC under the 

rule tend to be large, mature corporations with great purchasing power in 

their respective industries, it would be difficult for suppliers to ignore their 

request for information on the origin of conflict minerals in products the 

suppliers provide to them. For example, jewelry industry representatives

told us that they have advised their members, which are primarily small, 

independent jewelry companies not required to report to SEC under the 

rule, to respond to any requests from customers seeking information on 

the origin of conflict minerals in products they supply, because the risk of 

not responding could result in a loss of business for those companies.
 

Page 26 GAO-13-689 SEC Conflict Minerals Rule

Some information is publicly available about smelters and refiners, and 

their involvement in the conflict minerals supply chain. According to SEC 

officials, while smelters and refiners are not exempted from the SEC rule, 

most of these suppliers will likely not be required to report to SEC under 

the rule because of their filing status.39 Smelter and refiners are 

considered the choke-point of the conflict minerals supply chain, as 

previously discussed, and comprise a small portion of the overall number 

of suppliers in the conflict minerals supply chain that may be impacted by 

the SEC rule. While it is not possible to determine the universe of 

suppliers that would not be required to report under the rule, smelters and 

refiners are a more identifiable population for which there is some 

aggregated information, such as the types of conflict minerals they use, 

and their location.40

• Smelters and refiners constitute a small but important portion of 

suppliers that likely will not file a conflict minerals report under the 

SEC rule. Organizations have estimated the number of smelters and 

refiners around the world to be nearly 500; however, the actual 

number of smelters and refiners of conflict minerals is unknown. We 

aggregated publicly available information on smelters and refiners 

from lists compiled by the EICC and GeSI, the OECD, and the London 

Bullion Market Association (LBMA), which provided information on 

278 smelters and refiners. As we have previously discussed, roughly 

278,000 suppliers could be affected by the rule, based on the 

estimate provided to SEC. Of the 278 smelters of tin, tantalum, 

tungsten, and refiners of gold that we were able to identify, the 

majority (271) of these companies would likely not be required to 

report under the rule.

We found the following information on smelters and 

refiners:

• Over half of the smelters and refiners of the conflict minerals we 

identified were located in three countries. Of the 278 smelters and 

refiners of tin, tantalum, tungsten, and gold that we were able to 

identify, more than half (156) were located in three countries: China 

(82), Japan (39), and Indonesia (35). According to industry 

 

39According to SEC officials, since most of these companies do not file reports with SEC 

under Section 13(a) or 15(d) of the Securities Exchange Act, they would not be required to 

report under the rule. 

40We are reporting information we found and analyzed on smelters and refiners to 

address the mandated question concerning available information about entities that use 

conflict minerals and do not report to SEC under the rule. 

Information Is Publicly 

Available about Smelters and 

Refiners, and the Types of 

Conflict Minerals They Use 
 

Page 27 GAO-13-689 SEC Conflict Minerals Rule

representatives, participation in due diligence efforts of smelters and 

refiners from these countries, particularly China and Indonesia, is 

critical in assisting companies with fulfilling the reporting requirements 

of the SEC rule. Several organizations, including an NGO, and 

representatives from government and industry, are conducting 

outreach to smelters to provide information on the SEC rule in an 

effort to increase participation from smelters and refiners from these 

countries. For more information on the location of smelters and 

refiners we identified in our analysis, see figure 6.
 

Page 28 GAO-13-689 SEC Conflict Minerals Rule

Figure 6: Number of Smelters and Refiners of Conflict Minerals We Identified, by Country

Note: Eight smelters and refiners in our analysis processed more than one conflict mineral, resulting 

in duplicative counting in 21 cases. In addition, some smelters and refiners have operations in several 

countries.
 

Page 29 GAO-13-689 SEC Conflict Minerals Rule

• Many smelters and refiners of conflict minerals in our analysis 

processed tin. Of the 278 smelters and refiners in our analysis, we 

were able to identify 113 that processed tin, followed by gold (78), 

tungsten (54), and tantalum (33). Furthermore, over half (64 of 113) of 

the tin smelters in our analysis were located in China (30) or 

Indonesia (34). In addition, over 67 percent of global production 

comes from mines in China and Indonesia, according to U.S. 

Geological Survey data. Tin and its derivatives have wide applications 

and are used in manufacturing a variety of products, including tin 

soldering for joining pipes, coatings for steel containers, and a wide 

range of tin chemical applications, according to the U.S. Geological 

Survey. According to industry and consulting firm representatives, 

around 12 to 15 smelters process nearly 80 percent of the world’s tin.

• Most smelters and refiners in our analysis did not have a conflict 

minerals policy publicly available. Of the 278 smelters and refiners we 

were able to identify, 63 had a conflict minerals policy publicly 

available on their website. Of the 63 smelters with a conflict minerals 

policy publicly available, 26 smelters had successfully completed a 

Conflict Free Smelter Program audit and were designated as “conflictfree” by the EICC and GeSI,41 while several had reportedly followed 

some sort of due diligence, such as the OECD Due Diligence 

Guidance or the LMBA Responsible Gold Guidance.42

 

41Five additional tin smelters have successfully completed a Conflict Free Smelter 

Program audit, bringing the number of certified “conflict-free” smelters to 35; however, the 

EICC and GeSI has yet to identify these smelters publicly, including the location of the 

smelters, due to binding non-disclosure agreements with the smelters.

Other smelters 

in our analysis had posted policies on their website stating that the 

company only sources conflict minerals outside of the conflict areas of 

the DRC and adjoining countries. We were unable to identify a 

website for 86 of the 278 smelters in our analysis, and 129 of the 278 

42LMBA created the Responsible Gold Guidance for Good Delivery Refiners to combat 

systematic or widespread abuses of human rights, and to avoid contributing to conflict, 

among other abuses, according to the guidance. In addition, the guidance follows the five 

steps framework for risk-based due diligence of the OECD Due Diligence Guidance for 

Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas 

adopted on December 15, 2010 and follows the requirements detailed in the OECD Gold 

Supplement adopted on July 17, 2012. Since January 2012, the LBMA has required all 

Good Delivery Gold Refiners to comply with the Responsible Gold Guidance.
 

Page 30 GAO-13-689 SEC Conflict Minerals Rule

smelters had no conflict minerals policy publicly available on their 

website.43

Some information is publicly available on companies that use conflict 

minerals but are not required to report under the rule, as in the case of 

many smelters and refiners we were able to identify. However, data for 

the universe of these companies are limited. Specifically, based on our 

analysis, aggregated data on the types of conflict minerals in the products 

manufactured by these companies as well as information on how such 

companies source their conflict minerals are not available, except for a 

few companies. For example, several of these companies provide 

information publicly about their continued participation in initiatives that 

source conflict minerals from the DRC, and have agreed to purchase 

conflict minerals, such as tin and tantalum, from closely monitored 

sources through initiatives such as iTSCi and the Solutions for Hope, as 

previously mentioned.44 However, according to agency and international 

organization officials, in some instances buyers from small firms, mainly 

from East Asia, are on the ground in the DRC and adjoining countries, 

and continue to purchase untraced minerals as well as minerals that have 

been smuggled out of the DRC into adjoining countries. In addition, 

according to an industry representative, it may be difficult to identify 

information on these companies because they tend to be small and serve 

very specific markets.

 

43We were unable to identify a website for 86 of the 278 smelters in our analysis, and 

therefore were unable to determine whether these companies have policies regarding 

procuring conflict minerals from the DRC and adjoining countries. The inability to locate 

some websites of smelters in our analysis could be linked to factors such as language as 

well as company names and websites that may contain characters not found in the 

Roman alphabet. According to an official with the EICC and GeSI, some smelters may 

have such small operations at the mine site in remote locations that they do not create 

websites. 

44Solutions for Hope is a “closed-pipeline” initiative to trace the flow of tantalum from the 

mine to the end-use company. 
 

Page 31 GAO-13-689 SEC Conflict Minerals Rule

Since our 2012 report, one population-based survey providing data on the 

rate of sexual violence has been published in Uganda, and one is under 

way in the DRC; during the same period, no similar surveys have been 

conducted in Rwanda or Burundi. We also found some additional case file 

data available on sexual violence for all four countries. However, as we 

reported in 2011, case file data on sexual violence are not suitable for 

estimating a rate of sexual violence.

We found that one new population-based survey on the rate of sexual 

violence has been conducted since our 2012 report45

 

45

—the 2011 Uganda 

Demographic and Health Survey (DHS), published in August 2012. 

According to the survey, “28 percent of women and 9 percent of men age 

15-49 report that they have experienced sexual violence at least once in 

their lifetime.” These national estimates are based on a random sample. 

Since we first reported on sexual violence in our 2011 report, we have 

identified six other population-based surveys that provided data on the

rate of sexual violence in these countries.

GAO-12-763. 

Little Additional 

Information on the 

Rate of Sexual 

Violence in Eastern 

DRC and Neighboring 

Countries Has 

Become Available 

since GAO’s 2012 

Report 

Since GAO’s 2012 Report, 

One Population-Based 

Survey on the Rate of 

Sexual Violence Has Been 

Published in Uganda and 

One Is Planned for DRC
 

Page 32 GAO-13-689 SEC Conflict Minerals Rule

In reviewing whether there had been updates to any of the previous 

surveys conducted, we found that the authors of the McGill study, a 

population-based survey conducted in eastern DRC that was highlighted 

in our 2011 report, had no plans to conduct a follow-up survey. We found 

that fieldwork for a DHS for the DRC is expected to launch in August 

2013, with data expected around September 2014.

Figure 7: Population-Based Surveys That Estimate the Rate of Sexual Violence in Eastern DRC, Rwanda, and Uganda

Notes: For our analysis of the quality of the surveys, refer to our 2011 report (GAO-11-702). For DHS 

surveys covered after our 2011 report, we found that these surveys are weighted, present confidence 

intervals, and adhere to other survey standards. During our search for studies published since our 

2012 report, we discovered the IMAGES survey, which we had not previously reported on in either 

our 2011 or 2012 report.

Surveys Are More Appropriate for 

Estimating a Rate of Sexual Violence

In our 2011 report on sexual violence, we 

discussed two sources of data on sexual 

violence in eastern DRC and neighboring 

countries—population-based surveys and 

case files—and concluded that populationbased surveys are more appropriate for 

estimating a rate of sexual violence. Case file 

data have shortcomings and biases that 

significantly limit their utility for estimating the 

rate of sexual violence. For example, case file 

data are not generated from a random 

sample; are reliant on victims seeking 

services to be counted, although some 

victims may lack access to service; and allow 

for the potential double counting of the same 

sexual violence incident in the case file data 

collected. 

Source: GAO. 
 

Page 33 GAO-13-689 SEC Conflict Minerals Rule

We also found a team of two organizations that released estimates in 

2010 based on survey data of sexual violence in Rwanda. Sonke Gender 

Justice Network and Promundo-US conducted a probability cluster 

sample in 2010 as part of its IMAGES survey and found that “57 percent 

of women reported having experienced gender-based violence committed 

by a partner” and “17 percent of men experienced sexual violence when 

they were a child.” However, this survey was not weighted to reflect 

unequal probabilities of selection, and it does not contain confidence 

intervals. Therefore, we are not able to assess the accuracy or precision 

of the estimates.

Following up on our 2011 and 2012 reports, we asked U.S. and UN 

agencies as well as researchers and NGOs if they had any updated case 

file data. In April 2013, State submitted its annual country reports on 

human rights practices to Congress, which provided case file information 

pertaining to sexual violence in the DRC and neighboring countries. The 

2012 Department of State Human Rights Reports reported the following:

• In DRC, the Ministry of Gender reported 10,037 cases of sexual- and 

gender-based violence in 2011 in eastern DRC.

• In Rwanda, prosecutors reported that they investigated 351 cases of 

rape in 2012. Of those 351 cases, 109 were filed in courts, 143 were 

dropped, and 99 were pending investigation.

• In Uganda, 520 cases of rape were reported in 2011, of which 269 

were tried.

• In Burundi, Centre Seruka, a clinic for rape victims averaged 121 rape 

cases per month between January and September 2012.

Various UN entities reported other case file data. In March 2013, the UN 

Secretary-General reported that 764 people had become victims of 

sexual violence in eastern DRC from December 2011 and through 

November 2012.46

 

46United Nations Security Council, Sexual Violence in Conflict: Report of the SecretaryGeneral, A/67/792-S/2013/149 (New York, NY: Mar 14, 2013).

In May 2013, the UN Joint Human Rights Office 

reported that an armed group committed 135 cases of sexual violence 

from November 20, 2012 through November 30, 2012. Furthermore, in 

December 2012, the UN Office for the Coordination of Humanitarian 

Affairs reported 70 rapes in Minova, a town in eastern DRC, from 

November 30 through December 4, 2012. Because case file data are not 

Some Additional Case 

File Data Has Become 

Available on Sexual 

Violence since 

GAO’s 2012 Report
 

Page 34 GAO-13-689 SEC Conflict Minerals Rule

aggregated across various sources and the extent to which various 

reports overlap is unclear, it is difficult to obtain complete data on case 

files or even a sense of magnitude. One shortcoming of both case file 

data and surveys is that time frames, locales, and definitions of sexual 

violence are not consistent across data collection operations. As we 

reported in 2011, case file data on sexual violence are not suitable for 

estimating a rate of sexual violence because case file data are not based 

on a random sample and the results of analyzing these data are not 

generalizable.

We provided a draft of this report to SEC, State, and USAID, for their 

review and comment. SEC, State, and USAID provided technical 

comments, which we incorporated in this report as appropriate. We also 

provided relevant portions of the draft of this report to relevant external 

stakeholders for their technical comment. We received technical 

comments from some of these stakeholders, which we incorporated 

throughout this report as appropriate.

We are sending copies of this report to appropriate congressional 

committees. The report is also available at no charge on the GAO website 

at http://www.gao.gov/. 

If you or your staffs have any questions about this report, please contact 

me at (202) 512-4802 or evansl@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made major contributions to this report 

are listed in appendix IV.

Lawrance L. Evans, Jr.

Director, International Affairs and Trade

Agency Comments 

and Our Evaluation
 

Page 35 GAO-13-689 SEC Conflict Minerals Rule

List of Addressees

The Honorable Barbara Mikulski

Chairwoman

The Honorable Richard Shelby

Ranking Member

Committee on Appropriations

United States Senate

The Honorable Tim Johnson

Chairman

The Honorable Mike Crapo

Ranking Member

Committee on Banking, Housing, and Urban Affairs

United States Senate

The Honorable Max Baucus

Chairman

The Honorable Orrin G. Hatch

Ranking Member

Committee on Finance

United States Senate

The Honorable Robert Menendez 

Chairman

The Honorable Bob Corker

Ranking Member

Committee on Foreign Relations

United States Senate

The Honorable Hal Rogers

Chairman

The Honorable Nita Lowey 

Ranking Member

Committee on Appropriations

House of Representatives
 

Page 36 GAO-13-689 SEC Conflict Minerals Rule

The Honorable Jeb Hensarling

Chairman

The Honorable Maxine Waters

Ranking Member

Committee on Financial Services

House of Representatives

The Honorable Ed Royce

Chairman

The Honorable Eliot Engel

Ranking Member

Committee on Foreign Affairs

House of Representatives

The Honorable Dave Camp

Chairman

The Honorable Sander Levin

Ranking Member

Committee on Ways and Means

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-13-689 SEC Conflict Minerals Rule

To describe factors that may impact whether the Securities and Exchange 

Commission’s (SEC) conflict minerals rule denies armed groups in the 

Democratic Republic of the Congo (DRC) and adjoining countries benefits 

from conflict minerals, we interviewed officials from SEC, the Department 

of State (State), and the United States Agency for International 

Development (USAID), as well as representatives from international 

organizations, nongovernmental organizations (NGO), industry 

associations, consulting firms, and smelters and refiners of tin, tantalum, 

tungsten, and gold to get their views on the final SEC rule as well as any 

impacting factors. We chose the experts and stakeholders we interviewed 

to capture a range of perspectives about the types of minerals traded and 

because we had established contacts with these entities on our last 

review. In addition, some of the stakeholders we talked to have been 

working on the ground in the DRC. These experts and stakeholders 

constitute a nongeneralizable sample. The information gathered cannot 

be generalized and cannot be used to infer views of other experts or 

stakeholders cognizant of conflict minerals issues. We reviewed Section 

1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act 

(Pub. L. No. 111-203); reports and other documents from relevant U.S. 

agencies, such as SEC’s final conflict minerals rule, press releases, and 

statements; reports issued by the UN Group of Experts on the Democratic 

Republic of the Congo (UNGoE) and the Organisation for Economic Cooperation and Development (OECD); as well as documents and reports 

from industry associations and NGOs. We did not travel to the DRC or 

speak with government officials in the DRC but obtained perspectives on 

issues from some stakeholders who operate in the DRC.

To identify and describe available information about entities that use 

conflict minerals and do not report to SEC under the rule, we interviewed 

officials from SEC, State, and USAID, as well as representatives from 

international organizations, NGOs, industry associations, consulting firms, 

and smelters and refiners of tin, tantalum, tungsten, and gold to get their 

views on the extent to which information is publicly available on 

companies that are not required to report under the rule that may use 

conflict minerals in their products, and the source of the conflict minerals. 

We reviewed and analyzed reports and other documents from 

organizations such as the OECD, London Bullion Market Association 

(LBMA), and the Electronics Industry Citizenship Coalition and the Global 

e-Sustainability Initiative (EICC and GeSI), as well as documents and 

reports from industry associations and NGOs. In addition, we conducted 

searches in the Nexis database using selected Standard Industrial 

Classification (SIC) codes listed under the Manufacturing division. 

Overall, there were 20 subcategories under the Manufacturing division of 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 38 GAO-13-689 SEC Conflict Minerals Rule

SIC codes, which include subcategories such as Tobacco Products; 

Paper and Allied Products; and Electronic and Other Electrical Equipment 

and Components, Except Computer Equipment. We selected SIC codes 

under the Manufacturing division for industries that have a higher 

likelihood of using conflict minerals in their product, such as Electronic 

and Other Electrical Equipment and Components, Except Computer 

Equipment. Through the database analysis, we were able to determine 

the filing status, location, revenue, and industry classification of the 

companies. We were unable to determine the types of products the 

companies produced, and the types of conflict minerals potentially used in 

the manufacturing process of their products. Because SIC codes do not 

indicate specific products, we were unable to use the Nexis data to 

develop an aggregate description of entities that use conflict minerals but 

do not report to SEC under the rule.

We compiled a list of smelters and refiners—which are a smaller universe 

of companies that are primarily not required to report under the rule—

from the EICC and GeSI’s Conflict Minerals Reporting Template and 

Dashboard, OECD’s Final Downstream Report On One-Year Pilot 

Implementation of the Supplement on Tin, Tantalum, and Tungsten, and 

the LBMA’s Good Delivery List. The data were current as of March 15, 

2013. We selected these smelters and refiners because information is 

publicly available on the types of minerals these smelters and refiners 

process; however, we did not conduct an audit to verify how these entities 

sourced materials for processing. To compile our list of smelters and 

refiners, we reviewed and compared the lists from each source to identify 

and delete duplicate smelters and refiners. Additional duplicates were 

identified and deleted as a result of Internet searches using the names of 

the smelters and refiners. While we made efforts to eliminate duplicate 

information where possible, smelters and refiners may be listed under 

different names, and therefore, some duplicate information may exist in 

the data. Information included in the list of smelters from the EICC and 

GeSI, OECD, and LMBA included (1) the location of the smelter or 

refiner, (2) the types of minerals smelted or refined, and (3) the due 

diligence guidance reportedly followed, in some cases. We identified 278 

smelters and refiners of tin, tantalum, tungsten, and gold, and analyzed 

any publicly available information—mainly information posted on the 

companies’ websites or information provided on the websites of

organizations such as the EICC and GeSI or the LBMA—on their 

practices and policies for sourcing conflict minerals. This analysis 

included examining websites of 192 of 278 smelters and refiners to 

identify the types of due diligence guidance they reported to use to 

determine the country of origin of their conflict minerals sources. We were 
Appendix I: Objectives, Scope, and 

Methodology

Page 39 GAO-13-689 SEC Conflict Minerals Rule

unable to identify the websites for 86 smelters or refiners on our list, 

which could have been the result of a smelter not possessing a website, 

or differing translations of company names from foreign characters—such 

as Chinese script or the Cyrillic alphabet—to the Roman alphabet. 

Additional limitations included our sample of 278 smelters and refiners, as 

organizations have estimated that the number of smelters and refiners is 

nearly 500, particularly if smaller smelters and refiners that process ores 

into metals at the mine site are included. These smelters and refiners, or 

secondary smelters, often have small operations and may not have a 

website, according to an industry representative. Furthermore, the 

number of gold refiners could potentially be much larger, considering that 

little equipment and space is required to refine gold, depending on the 

quality; and gold can be refined at the mine site. The 278 smelters and 

refiners we were able to identify may not be representative of others, and 

the information we report about these 278 cannot be generalized to other 

smelters and refiners of tin, tantalum, tungsten, and gold. 

In response to a mandate in the Dodd-Frank Wall Street Reform and 

Consumer Protection Act that GAO submit an annual report that 

assesses the rate of sexual violence in war-torn areas of the DRC and 

adjoining countries, we identified and assessed any additional published 

information available on sexual violence in war-torn eastern DRC, as well 

as three neighboring countries that border eastern DRC—Rwanda, 

Uganda, and Burundi—since our 2012 report on sexual violence in these 

areas.1

 

1

GAO, Conflict Minerals Disclosure Rule: SEC’s Actions and Stakeholder-Developed 

Initiatives, 

During the course of our review, we interviewed officials from 

State and USAID and interviewed NGO representatives and researchers 

to discuss the collection of sexual violence-related data—including 

population-based surveys and case file data—in the DRC and adjoining 

countries. Specifically, we followed up with researchers and 

representatives from those groups we interviewed for our prior review on 

sexual violence rates in eastern DRC and neighboring countries, 

including officials from the United Nations Population Fund, United 

Nations High Commissioner for Refugees, United Nations Special 

Representative to the Secretary-General on Sexual Violence in Conflict; 

and representatives from the Harvard Humanitarian Initiative and others. 

We also conducted Internet literature searches to identify new academic 

articles containing any additional data on sexual violence.

GAO-12-763 (Washington, D.C.: July 16, 2012). We did not include information 

on studies or reports that were preliminary. 
Appendix I: Objectives, Scope, and 

Methodology

Page 40 GAO-13-689 SEC Conflict Minerals Rule

We conducted this performance audit from November 2012 to July 2013 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: SEC’s Flowchart Summary of the 

Disclosure Process for the Final Conflict 

Minerals Rule

Page 41 GAO-13-689 SEC Conflict Minerals Rule

The Securities and Exchange Commission (SEC) issued a flowchart 

summary of the final rule to guide SEC-reporting companies affected by 

the rule through the disclosure process (see figure 8). In general, the 

process shows that an SEC-reporting company needs to (1) determine 

whether its manufactured products contain conflict minerals; (2) 

determine whether conflict minerals are necessary to the product and, if

so, whether the conflict minerals originated in the DRC or an adjoining 

country; and (3) possibly conduct due diligence and potentially provide a 

Conflict Minerals Report.

Appendix II: SEC’s Flowchart Summary of 

the Disclosure Process for the Final Conflict 

Minerals Rule
Appendix II: SEC’s Flowchart Summary of the 

Disclosure Process for the Final Conflict 

Minerals Rule

Page 42 GAO-13-689 SEC Conflict Minerals Rule

Figure 8: SEC’s Flowchart Summary of the Final Conflict Minerals Rule

Note: SEC indicated that the flowchart is intended to be used as a guide and that issuers should refer 

to the text in the rule for a more comprehensive description of the rule’s requirements.
Appendix III: Updates of Global and 

In-Region Sourcing Initiatives

Page 43 GAO-13-689 SEC Conflict Minerals Rule

In our 2012 report, we discussed a number of initiatives that various 

stakeholders developed and implemented that may help companies 

reporting to the Securities and Exchange Commission (SEC) and their 

suppliers comply with SEC’s conflict minerals disclosure rule. For this 

report, we updated information pertaining to some of these global and inregion sourcing initiatives.1

The Organisation for Economic Co-operation and Development (OECD) 

adopted the OECD Due Diligence Guidance for Responsible Supply 

Chains of Minerals from Conflict-Affected and High-Risk Areas (hereafter 

referred to as OECD Due Diligence Guidance) to promote accountability 

and transparency in conflict minerals supply chains.2

 

1

We did not conduct a comprehensive review of all the initiatives we identified in our 2012

report since that was not within the scope of this review. In the process of this review, we 

did obtain some new information pertaining to selected global and in-region sourcing 

initiatives, which is reflected in this appendix. However, we did not talk to or obtain 

information from the government of the DRC on in-region initiatives or legislation related to 

conflict minerals because this was outside of the scope of our current review.

The OECD Due 

Diligence Guidance and the corresponding supplements provide detailed 

guidance for companies operating in and sourcing minerals from conflict 

areas. In addition to the basic framework, OECD developed two 

supplements—one on tin, tantalum, and tungsten and the other on gold—

to provide companies with specific guidance relevant to the conflict 

minerals supply chains. To increase awareness of and to develop 

emerging practices for implementing the OECD Due Diligence Guidance 

and the supplement on tin, tantalum, and tungsten, OECD conducted 

implementation pilot projects. In January 2013, OECD issued the final 

downstream report, which focuses on how companies implement due 

diligence in the supply chains of tin, tantalum, and tungsten, and the final 

upstream report, which provides an overall assessment of the progress 

2

Organisation for Economic Co-operation and Development, OECD Due Diligence 

Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk 

Areas, second edition (OECD Publishing, 2011). Accessed July 2, 2013, 

http://dx.doi.org/10.1787/9789264185050-en. The guidance was adopted on May 25, 

2011.

Appendix III: Updates of Global and 

In-Region Sourcing Initiatives

Global Sourcing 

Initiatives 

OECD Due Diligence 

Guidance
Appendix III: Updates of Global and 

In-Region Sourcing Initiatives

Page 44 GAO-13-689 SEC Conflict Minerals Rule

and initial impact of due diligence in the tin, tantalum, and tungsten 

upstream supply chain.3

The Conflict-Free Smelter Program is a voluntary program in which 

smelters undergo an independent third party audit, in accordance with the 

OECD Due Diligence Guidance, to verify the origin of minerals processed 

at their facilities. The EICC and GeSI have also developed audit protocols 

for the program in consultation with a number of stakeholders—including 

NGOs, smelters, component manufacturers, original equipment 

manufacturers, and industry associations within and outside the 

electronics industry—to ensure wide-spread support for the program. In 

December 2010, the first tantalum smelter was certified conflict-free 

through the program after successfully undergoing an audit, and as of 

May 1, 2013, 18 of approximately 23 tantalum smelting companies had 

been certified as conflict-free. As of May 1, 2013, 5 tin smelting 

companies had been certified as conflict-free, 7 tungsten smelting 

companies had begun discussions with representatives of the program, 

and 12 gold refining companies had been certified as conflict-free through 

the program.

The World Gold Council developed and issued the Conflict-Free Gold 

Standard, an industry-led approach to combat the potential misuse of 

mined gold to fund armed conflict, in October 2012. The standard was 

developed with council member companies, which constituted the world’s 

leading gold producers, and with extensive input from stakeholders to 

establish a common approach by which gold producers can assess and 

provide assurance that their gold has been extracted in a manner that 

does not cause, support, or benefit unlawful armed conflict or contribute 

to serious human rights abuses or breaches of international humanitarian 

law. According to a World Gold Council official, the participating 

companies’ conformance to the Standard will be externally audited and 

 

3

Organisation for Economic Co-operation and Development, Downstream Implementation 

of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from 

Conflict-Affected and High-Risk Areas: Final Downstream Report on One-Year Pilot 

Implementation of the Supplement on Tin, Tantalum, and Tungsten (OECD: January 

2013); and Upstream Implementation of the OECD Due Diligence Guidance for 

Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas: Final 

Report on One-Year Pilot Implementation of the Supplement on Tin, Tantalum, and 

Tungsten (OECD: January 2013).

Conflict-Free 

Smelter Program

World Gold Council’s 

Conflict-Free Gold 

Standard and Tools
Appendix III: Updates of Global and 

In-Region Sourcing Initiatives

Page 45 GAO-13-689 SEC Conflict Minerals Rule

assured and will operationalize the requirements of OECD guidance. The 

results of the audit using the standard will be recognized across other 

stakeholder initiatives such as the London Bullion Market Association’s 

Responsible Gold Guidance. The Standard should also support refiners in 

meeting their due diligence requirements.

The Conflict-Free Tin Initiative (CFTI) is a pilot that was launched in 

September 2012 and aims to create demand for conflict-free tin from 

eastern DRC. The traceability and due diligence mechanism through the 

ITRI Tin Supply Chain Initiative is operated by Pact, an independent 

NGO, and is operated out of the Kalimbi mine in South Kivu. According to 

an NGO, the Netherlands Ministry of Foreign Affairs is a neutral broker 

that brought the partners along the supply chain together, from mine to 

smelter to end user. The DRC government and local civil society are 

closely involved in the initiative, which is structured within the framework 

of the International Conference of the Great Lakes Region (ICGLR) and 

will be consistent with the due diligence guidance of OECD. CFTI 

reported that between October 2012 and January 2013, 210 tons of 

materials were produced in the Kalimbi mine and the first container of 

conflict-free tin was transported to the trader in the DRC in December 

2012. In January 2013, the first two containers of conflict-free tin were 

shipped to the smelter in Malaysia. The CFTI reports that next steps will 

involve the conflict-free tin making its way from the smelter to soldering 

companies and eventually to end users as finished product.

The ICGLR started working with an NGO in 2010 to develop a regional 

certification mechanism to ensure that conflict minerals are fully 

traceable. ICGLR’s regional certification mechanism may enable member 

countries and their mining companies to demonstrate where and under 

what conditions minerals were produced; through the regional certification 

mechanism, individual member governments are to issue ICGLR regional 

certificates for those mineral shipments that are in compliance with the

standards of the mechanism. According to an official at a partnering 

NGO, the first two certificates out of the region were scheduled to come 

from sites in Rwanda and DRC in the late spring and from Uganda by 

December 2013. However, State indicated that the certificates from 

In-Region Sourcing 

Initiatives 

Conflict-Free Tin Initiative

ICGLR’s Regional 

Certification Mechanism

and Other Initiatives
Appendix III: Updates of Global and 

In-Region Sourcing Initiatives

Page 46 GAO-13-689 SEC Conflict Minerals Rule

Rwanda and DRC have been delayed and will likely not be issued until 

late summer 2013. Regional certificates from other ICGLR countries will 

take some time because of capacity issues.

According to USAID, in addition to the regional certification mechanism, 

ICGLR’s other initiatives focused on eliminating the illegal exploitation of 

natural resources include harmonization of national legislation, 

formalization of the artisanal mining sector, formalization of the 

extractives industries transparency initiative, a whistleblowing 

mechanism, and a regional database on the flow of minerals.
Appendix IV: GAO Contacts and Staff 

Acknowledgments

Page 47 GAO-13-689 SEC Conflict Minerals Rule

Lawrance L. Evans, Jr., (202) 512-4802 or evansl@gao.gov

In addition to the individual named above, Godwin Agbara, Assistant 

Director; Andrea Riba Miller; Kyerion Printup; Justin Fisher; Debbie 

Chung; Ernie Jackson; Russ Burnett; Etana Finkler; Brian Hackney; and 

Leah DeWolf made key contributions to this report.

Appendix IV: GAO Contacts and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(320951)
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s website (http://www.gao.gov). Each weekday 

afternoon, GAO posts on its website newly released reports, testimony, 

and correspondence. To have GAO e-mail you a list of newly posted 

products, go to http://www.gao.gov and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s website, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, Twitter, and YouTube. 

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts. 

Visit GAO on the web at www.gao.gov. 

Contact:

Website: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-

4400, U.S. Government Accountability Office, 441 G Street NW, Room 

7125, Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony 

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations 

Public Affairs

Please Print on Recycled Paper.