African Wars Restrict U.S. Retailers

“Top U.S. retailers including Wal-Mart Stores Inc. and Target Corp. are battling to limit a new federal law that could force them to report whether their store-brand goods contain minerals from war-torn Central Africa.

The requirement, part of the Dodd-Frank financial law passed in July, aims to pressure companies to spurn so-called conflict mineralstin, tantalum, tungsten or gold from parts of the Democratic Republic of Congo or neighboring countries.

Income from those minerals is blamed for fueling violence that has claimed millions of lives in eastern Congo, which a senior United Nations official recently branded the world’s rape capital.

Under the new law, public companies using any of the four minerals from Central Africa must report what steps they have taken to verify the minerals weren’t taxed or controlled by rebel groups. Products that don’t contain minerals that benefited such groups can bear the label “DRC conflict free.” Companies that fail to verify their sources can still sell their products, but could face embarrassment.

A broad array of U.S. companies, including makers of medical devices, cellphones, airplanes and machine tools, will be affected by the requirement because the minerals are in the products they manufacture.

Less clear is the status of retailers, such as Wal-Mart and Target, who carry private-label goods. The Securities and Exchange Commission has the power to decide who is considered a manufacturer under the law, and so must comply with it.

Some of the largest U.S. retailers argue they shouldn’t have to comply with the rule if they don’t exercise direct control over the manufacturing of goods carrying their own brands. The Retail Industry Leaders Association sent a letter making that case to the SEC.

Tracing the source of minerals is a tricky task, companies say, because many intermediaries stand between them and the mines. They add that control of territory and transit routes in eastern Congo is always in flux.”

See article at: WSJ 02Dec10: “Retailers Fight to Escape ‘Conflict Minerals’ Law”