The Congolese government has reached out the SEC urging them to follow guidance developed by the UN and the Organization for Economic Cooperation and Development, which would involve defining “due diligence as a continuous process, proactive and reactive, by which companies take reasonable measures in good faith.”The Chamber of Commerce's also reminded the SEC that it is legally obligated to consider the impact any rule may have have on competition. According to the Chamber, the cost-benefit analysis of the proposed measures fails to show any benefit to investors, increased efficiencies for the marketplace, or capital formulation. The agency points to the SEC's estimate that compliance costs could total over $71,000,000 and impact over 5,000 companies. A measure the Chamber therefore describes as “economically significant.” The SEC rules could also prove disadvantageous in other ways. China has a reputation for playing by its own rules and the industry took notice when it appeared that the Chinese too seemed to support the sourcing of conflict-free tantalum. However, reports continue to surface that China, unlike its western counterparts, is still getting tantalum from the DRC and at deeply discounted prices. Further, it must be remembered that China has some domestic supply and the Chinese have secured a contract for the bulk of the conflict-free tantalum from Fluminense in Brazil. In addition, Chinese consumers can continue to compete in the open market with ther consumers who have far less, if any, guaranteed supply. The competitive advantage the Chinese could gain if western consumers hold steadfast to austere sourcing practices should not be ignored. China has already announced plans to develop strategic stockpiles of metals including tantalum, thereby making themselves less susceptible to international pricing. With adequate supply, the nation could become a powerful force in the tantalum industry. Complicating matters more is that this metal is believed to be subject to severe shortfalls. There is only a limited amount of tantalum available and the portion which is clearly conflict-free is even smaller.
While consumers are largely acting on their social responsibility now, it is inconceivable that in a market struck by deficits, all will have the ability to turn their noses up at supplies that cannot be deemed beyond a shadow of a doubt as conflict free.The issue of conflict-free tantalum as it has been approached thus far comes dangerously close to pitting business interests against ethical concerns. The Chamber of Commerce warned that there is a possibility that among other things it will lead to false reporting. The agency outlined several “bold steps” the SEC could take to get a better grasp on the situation. Acting on at least one of them, the SEC announced that on October 18 it will host a roundtable on conflict minerals. This forum will provide the various stakeholders an opportunity to exchange views and provide input. After which, the SEC hopes to be in a better position to write effective rules. Conflict Free Tantalum and Unintended Effects from Tin Investing News