Question

The Dodd-Frank financial reform bill contains a provision that prohibits companies from buying conflict minerals (minerals which are mined for profit to finance wars in Africa). Explain how this provision impacts the demand for conflict minerals

Answer 1

With the enactment of the Dodd-Frank financial reform bill, the companies were prohibited from buying the conflict minerals from Congo so as to reduce the profit earned from mining that was then used to finance wars. The move was intended to reduce the wars. however, the end results turned out to be quite different. The decline in taxes that were used by militias in the wars made them loot the locals for their livelihood. The official estimates say that the crime has ever increased since then.

Another problem with the Bill was that the law was only applied to big corporations or the corporations of a certain size. This has reduced down the demand for the conflict materials reducing their price in Congo, but these minerals being very important from the economy then, increased their demand from other sources. A report by ITIC says that there are only 20 major tin, tungsten and tantalum processors. The very low supply of these minerals has increased their price and make it quite expensive for America to use them. Along with, the provision has only affected the firms of a certain size thus affecting the firms working legitimately. The compulsory reporting of how the minerals have reached them through the supply chain though make the bill successful but difficult in terms of profitability.