New U.S. logistics management challenge: sourcing raw materials

According to the American Resources Policy Network – a non-partisan education and public policy research organization – recent legislation may discourage responsible development of U.S. mineral resources. At the same time, supply chains for sourcing minerals and other raw materials may be severely effected if the U.S. Environmental Protection Agency has its way.

Among the miscellaneous provisions contained in the Dodd–Frank Wall Street Reform and Consumer Protection Act is one mandating disclosures on “conflict materials” in or near the Democratic Republic of the Congo.

“Initial analysis of Dodd-Frank (Section 1502), indicates that it contains too many loopholes to have a meaningful impact,” said Dan McGroarty, American Resources Policy Network president.

McGroarty said Section 1502 – the conflict metals legislation – is well-intended and certainly aims at a worthy goal, however.

“Everyone should stand for protecting human rights doing all we can to ensure that mining operations employ responsible labor practices,” he said. “But taking a metal and establishing the mine of origin is difficult, and in a conflict zone, the difficulties are multiplied.  The people overseeing the conflict mines have a vested interest in merging their metals into the market stream of legitimate metals trading.”

He added that companies are in “a tough spot” doing this sort of detective work, and the new 1502 rules acknowledge this, by granting an extension of 2 years (4 years for smaller commercial entities) to sort out how they can confirm provenance and comply with the law.

In an interview with our sister publication— Supply Chain Management Review—McGroarty also noted that the legislation brings to the fore America’s growing mineral dependence on nations with abysmal labor practices and human rights violations in countries like China, Russia, and Kazakhstan.

“America has significant mineral resources – including those we need for dozens of clean-tech innovations. Yet, instead of working to ensure mining companies can responsibly and efficiently develop these resources, the EPA is taking unprecedented steps to shut down and even preemptively block mining projects,” he said.

McGroarty said that this only deepens our mineral dependence on unstable countries. It also increases raw material costs for American manufacturers – including green-tech industries – stifling domestic investment and job creation.

“The number one thing we can do as Americans to stop the scourge of ‘blood minerals’ is to develop a vibrant mining industry here at home, based on our strong environmental, labor and human rights standards,” he said.