As COVID-19 continues to make its mark on the world’s economies and take its toll on human life, the fight to reduce the amount of conflict minerals making their way into the electronics supply chain has also felt the burden of the coronavirus.
“As the COVID-19 business shut-downs continued in earnest, some companies were expressing concern that certain of their suppliers might not be able to provide responses to their conflict minerals inquiries in a timely manner,” Dynda A. Thomas writes in “Impact of COVID-19 Shut Downs on Conflict Minerals Reporting.”
“They worried that their disclosures could be less robust as a result, and they hoped that they would have more time to complete their filings,” Thomas adds. “But, no extension of the conflict minerals filing deadline has been given.”
Many Mentions
According to the National Law Review, of the 320 conflict minerals report filings that came in by May 27, 2020 (conflict minerals disclosures on Forms SD were required to be filed with the Securities and Exchange Commission [SEC] no later than June 1, 2020), 14 of the reports included references to “COVID-19,” “coronavirus” and/or the “pandemic.”
Four more reports mentioned “COVID-19” or “coronavirus” in their forward-looking statements disclaimers, National Law Review reports, and one report included a reference to the COVID-19 pandemic in the attached independent private sector audit letter.
“Of the 14 references included in the conflict minerals reports, 11 said that COVID-19 negatively impacted suppliers’ response rates or responsiveness,” the publication points out, “two indicated that their due diligence steps taken were limited by impacts of the COVID-19 pandemic on their businesses, and one explained that some Responsible Minerals Initiative audits of smelters and refiners were restricted by the COVID-19 outbreak.”
Put simply, the ability to report accurately on conflict minerals has—like many other facets of the business world—been negatively impacted by COVID-19. That means the activity that took place in 2019 and was reported on in 2020 will likely need an asterisk noting the global situation that was unfurling as companies attempted to collect accurate information about their supply chain partners, raw materials and components.
“Whether stated in the filings or not, the disclosures included in the conflict minerals reports for calendar year 2019 will, of course, be viewed against the backdrop of the COVID-19 pandemic and its effects on business and operations during the first five months of 2020,” National Law Review concludes.
OECD Speaks Up
As the COVID-19 pandemic has swept the globe, it continues to disrupt supply chains of mineral resources, depressing international prices and forcing mine sites and processing facilities to close or suspend operations. International shipping of mineral resources and metals is also significantly affected.
“This has come amid a backdrop of widespread international impacts on businesses of all sizes, and in every country and sector,” the Organisation for Economic Co-operation and Development (OECD) states in its recent “Call to Action for Responsible Mineral Supply Chains.”
“The crisis is having a disproportionate impact on the lives of artisanal and small-scale miners (ASM) and their communities, who together account for 83% of the world’s mining workforce or 40.5 million people,” OECD points out. “Mining communities were vulnerable before COVID-19 and are even more so now. Low commodity prices and government restrictions coupled with risk of spread to the most vulnerable puts livelihoods and wellbeing at risk.”
The OECD sees COVID-19 as a potentially major setback in the fight against conflict minerals. “We are deeply concerned that gains made over the past 10 years in supply chain due diligence could be lost as all stakeholders – companies, governments, and civil society – are impacted and their efforts weakened by the pandemic,” it says. Concurrently, illicit actors are positioning themselves to claim an even larger market share, and non-state armed groups are reported to be benefiting from the situation to regain territory and capitalize on the lack of formal avenues for production and trade in mining areas in Africa, as well as in Latin America.
“Significant reduction in mineral earnings can stimulate return to criminal behavior and armed groups,” OECD warns. “The risk of human rights violations and conflict are increasing by the day.” In response, the organization wants to activate humanitarian and emergency response networks to reduce the potentially devastating impacts of COVID-19; allocate funds for on-the-ground programs; foster the sustainable inclusion of responsible artisanal and small-scale gold (ASM) mining projects into global supply chains; and ensure the right balance of maintaining integrity and flexibility in due diligence efforts during this difficult period.
