EARTHWORKS

As corporations lobby for "Blood Gold" disclosure loopholes, will the SEC stand strong?

Scott Cardiff's avatar
By Scott Cardiff

March 9, 2011

UPDATED with EARTHWORKS' comments to the SEC

Yesterday was the deadline for comments on the rules of the Securities and Exchange Commission (SEC) that would require companies to disclose their use of probable "Blood Gold" from the Democratic Republic of Congo.

Additional rules stemming from last year's Dodd-Frank Act will also require mining, oil, and gas companies to report on their payments to governments, and require mining companies to report on health and safety violations in annual reports.

Earthworks has requested the SEC to fully implement the law passed by Congress last year and finalize strong rules on these topics. A broad array of groups are supporting efforts to ensure that the rules are up to the task. These include Earthworks, the Electronics Take Back Coalition, the Extractive Industries Working Group, Global Witness, the Enough Project, Catholic Relief Services, the Publish What You Pay Coalition, World Resources Institute, the United Mine Workers, Calvert Asset Management and other investor groups, George Soros, and many others. A number of jewelers like the Ethical Metalsmiths, Fair Jewelry Action, and Toby Pomeroy weighed in in favor of strong rules on "Blood Gold" as well.

Meanwhile, dozens of companies and industry associations are weighing in to push for various loopholes in the rules. These range from mining companies (Anglogold Ashanti, Barrick Gold, Freeport McMoran, Newmont, Rio Tinto, and Vale) to gold miner associations (the National Mining Association and the World Gold Council), from oil companies (Anadarko, Chevron, Exxon Mobil, BP, Shell) and associations (American Petroleum Institute) to the U.S. Chamber of Commerce.

The rules on Blood Gold have the potential to help create an incentive for more peaceful, more responsible small-scale mining and other livelihoods in Eastern Democratic Republic of Congo (DRC). They also have the potential to help increase transparency in the gold supply chain and allow jewelers and others to avoid "Blood Gold" from DRC and be more careful in where they get their gold from. The SEC rules need to make sure recycled gold doesn't become a loophole and that gold and mining companies are fully included in order to best help the DRC and help stop the financing of conflict in that country.

The rules on payments that companies make to governments should shed light on the arrangements that mining companies get into to gain access to ore deposits in different countries. Once required to disclose those payments, mining companies will presumably be more hesitant to make payments that are inappropriate, that facilitate and allow mining where it wouldn't otherwise be allowed, and that lead to more unfair distribution of revenue from mining. These rules also need to block loopholes that industry is strongly advocating for.

The rules on mine safety should also increase transparency of mining companies' records on safety violations. These rules should also apply to mines in other countries for those companies trading on U.S. stock markets.

All of these rules have great potential to yield important disclosure and potential for changes in the practices of mining companies and companies in the gold business. These changes could improve conditions for communities, workers, and the environment where mining is planned or happening. I certainly hope that the SEC will ignore recalcitrant industry groups and make that happen by adopting strong rules.

More information:

Tagged with: sec, rio tinto, freeport mcmoran, ethical metalsmiths, drc, dodd-frank, blood gold, anglogold ashanti

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