The SEC disclosure rule has encouraged companies to improve reporting of conflict minerals’ sources by tracking the minerals’ chain of custody, according to experts and industry stakeholders. In addition, though many factors contribute to conflict, stakeholders and experts said the rule has raised international awareness about the risks that minerals will benefit armed groups and thus support violence. Yet efforts to trace the origin of conflict minerals, especially gold, face obstacles such as smuggling.

The number of companies filing conflict minerals disclosures in 2023 increased for the first time since 2014, but many companies continued to report being unable to determine their minerals’ origins. Companies comply with the SEC rule by submitting a disclosure describing their “reasonable country-of-origin inquiries” about the origin of conflict minerals in their products. In certain circumstances, companies must then conduct due diligence to determine their conflict minerals’ source and custody. In 2023, an estimated 63 percent of companies made preliminary determinations, based on their inquiries, about their conflict minerals’ origins. Of those that then performed due diligence, an estimated 62 percent reported being unable to determine the minerals’ source...

Our statistical analyses found that the SEC conflict minerals disclosure rule has not reduced the occurrence or number of violent events in eastern DRC and was associated with a spread of violence in certain territories containing artisanal and small-scale mining (ASM) sites for gold.[45] Further, the rule likely had no effect on violence in the countries adjoining the DRC. Armed groups in the DRC fund their violent activities through various sources besides conflict minerals, and a number of interdependent factors, such as influence from neighboring countries and weakness in governance, contribute to conflict in the east, according to experts. The rule has encouraged companies to improve their due diligence and transparency regarding conflict minerals’ origins, according to industry stakeholders. Nevertheless, obstacles associated with smuggling and cost may limit the efficacy of efforts to trace conflict minerals’ origins, according to experts and reports by nongovernmental organizations...

Our statistical analysis of ACLED data on violent events, data on ASM locations and mineral prices, and other data found no evidence that the SEC disclosure rule has decreased violence in eastern DRC.[46] Specifically, our analysis of data from July 2004 through December 2022 showed that the disclosure rule was not linked to a decrease in either the occurrence or number of violent events in eastern DRC...

Our analysis of ACLED and other data showed that the SEC disclosure rule was associated with a spread of violence in eastern DRC, particularly in territories with ASM sites for gold that were likely to be most affected by the SEC rule.[52] We found that violence spread primarily to these territories; we did not find a similar effect in territories containing ASM sites for tantalum, tin, or tungsten.[53] Figure 4 shows territories where violent events occurred around ASM sites for gold in eastern DRC in 2010 and 2022...

SEC Disclosure Rule Has Encouraged Transparency, but Efforts to Trace Minerals’ Origins Face Significant Obstacles...