The largest industry group representing global gold miners said a proposed U.S. rule aimed at cutting funds to armed rebels in the Democratic Republic of Congo (DRC) will jeopardize Africa's gold mining and economic activities.
The World Gold Council (WGC) said the provision of the Dodd-Frank legislation requiring disclosure should not start from the perspective of labeling all gold as a conflict mineral.
We are absolutely supportive of the need to eradicate conflict gold coming out of the DRC, Aram Shishmanian, CEO of the WGC, said in an interview. The proposed legislation, we believe, has the high risk of stigmatizing gold.
In fact, it means that gold is guilty of being conflict-produced, unless proven innocent across the world, he said.
The WGC is funded by the gold mining industry to market the metal.
Shishmanian said that only 0.6 percent of global gold output is from the DRC.
Also, the majority of global gold operations are owned by producers practicing responsible mining, with the exception of a tiny percentage of small-scale mines being controlled by artisanal miners or local militia, he said.
'We've been working very carefully to find a credible standard, Shishmanian said.
However, he said the WGC cannot currently propose an alternative to the U.S. regulator's proposal, as the trade group did not have an opportunity to engage the issue in 2010 after the SEC added the provision at the eleventh hour.
Origin authentication can be difficult for gold because of the metal's complicated supply chain process from mining to refinery to manufacturing, Shishmanian said.
The conflict mineral provision was put into the Dodd-Frank Wall Street Reform and Consumer Protection Act by a number of senators, including Dick Durbin, who has said he witnessed first-hand atrocities of horrific and inhumane proportions.
Under the SEC's proposal, companies annually reveal whether they are sourcing tantalum, tin, gold and tungsten from the war-torn region. A company would have to disclose the source of the conflict mineral if that mineral is needed to make the product work.
So-called conflict minerals from DRC, still torn by a 1998-2003 war and battling rebels across its territory, are used in nearly every device in the modern household.
(Reporting by Frank Tang; Editing by David Gregorio)