Here are the author's conclusions (PDF).
Our model contends that affected companies in the U.S. would need to carry out three principal actions in order to be in a position to comply with the new law: (1.) strengthening internal management systems in view of performing due diligence, (2.) instituting the necessary IT systems, and (3.) commissioning CMR audits. We estimate that the cost of implementing these actions comes to $7.93 billion. However, almost half of the total cost – $3.4 billion – would be met with in-house company personnel time, and the rest – $4.5 billion – would comprise outflows to 3rd parties for consulting, IT systems and audits. Comparing the costs to the issuers vs. the suppliers, the bulk of the total costs – $5.1 billion or 65% – would be incurred by the suppliers (the group not included in SEC‟s analysis), while the smaller portion of the total – $2.8 billion or 35% – would be carried by the issuers. These implementation costs would however be borne by thousands of individual firms in lucrative industries such as the industrial, aerospace, healthcare, automotive, chemicals, electronics/high tech, retail and jewelry industries.The paper (PDF) has two significant findings. First, the total cost for implementation will be $8 billion as compared to the SEC estimate of $71.2 million. The difference is in the math. the writers of the paper argue that all of the 5,994 publicly traded companies will be affected by some way or another as opposed to the SEC estimate of only 20% of that number. Second, it raises questions about how the law will be applied. Right now, the focus of campaigning has been on electronic devices. However, the use of 'conflict minerals' is much farther reaching.
This white paper estimates the economic impact of the law to the issuers and 1st tier suppliers, and thus focuses on the impact to companies and their suppliers operating within U.S. jurisdiction. Yet costs will also be incurred throughout the upstream and smelter supply chain links. While promising traceability initiatives – such as the ITRI's Tin Supply Chain Initiative (iTSCi) and the Conflict Free Smelter (CFS) program – demonstrate market viability, law enforcement and customs protocols in affected central African countries would need to be significantly strengthened to make such schemes truly viable.
As this economic impact analysis demonstrates, transparency and disclosure in the mineral / metal sector will come at a significant cost. As a sweeping law affecting a multitude of industries in the U.S., we regard Section 1502 as a “major” rule as its effect on the economy will exceed $100 million per year. The challenge facing the SEC is to fashion regulation that enforces the spirit of transparency and disclosure as envisioned by Dodd-Frank Section 1502, yet promulgate circumspect regulation that prevents undue burden being placed on the industries involved in the mineral / metal sector, and so avert whole industries extricating themselves from DRC originating minerals.
Conflict minerals are as omnipresent as the ballpoint pen – and that is not just a metaphor. Tungsten, particularly resistant to deforming, is used to manufacture the ball in the ballpoint pen.What does this then mean for the campaign? The certification scheme should theoretically cover the tungsten in a ballpoint pen. The gap between the SEC estimate and the one by the Tulane researchers is far too great to ignore. Some might say that it is a way to defend the mineral companies and protect the status quo. I would argue it protects the miners. The perceived burden could drive away companies. It is impossible to make this assertion without evidence, but there is no doubt that there is a big difference between $71 million and $8 billion.
David Aronson argues that this money could be better spent writing, "To think of what one-tenth of that amount would do for the people of eastern Congo! Consider that when Hilary Clinton, the world's most powerful feminist, visited eastern Congo two years ago she promised $18 million to help rape victims. That's less than one four-hundredth what DF-1502 may cost." He makes an valid point, but even that money would not address the issues of governance and security.
Tim Worstall's take on the issue in Forbes and is quite harsh.
That’s Motorola, one of the companies trying to sort out this appalling mess created by Dodd Frank and the Enough Project and Global Witness. I’ve had more personal communications telling me that up to 100,000 people in North Kivu alone are now without any method of making a living at all. Because, while all of this might have been done with the very best of intentions it was done so badly that near no one is willing to purchase any minerals from the area. Thus all miners are unemployed: in a country not exactly known for the generosity of its welfare state and unemployment pay. Not in fact known for the existence of either.As the evidence and concerns mount, it is becoming hard to support Dodd-Frank 1502 as it stands today. That is not to say that legislation on conflict minerals should not exist. Rather, it is to assert that what was crafted may have some serious problems. If the research holds up, there is a good chance the law will be successfully knocked down. Then what is next? How will the next version of the law be written so that it prevents a de facto embargo and does not put an immediate burden upon every person in the process. The aim is to make it harder for rebel groups to make money off the mineral trade. Nobody will disagree with that as being a good end, but the means to doing so matter just as much if not more.
I think we could argue, in fact I do argue, that the Enough Project and Global Witness are multinational enterprises and are therefore covered by this.
The essence of which is the Pottery Barn principle: you broke it, you bought it. These two NGOs have, with quite possibly the very finest of intentions, reduced hundreds of thousands of Congolese from poverty to destitution. Those two NGOs are directly responsible for miners across Central Africa simply not being able to sell their product because for all the joy and glory of stopping militias from selling stuff, those two NGOs have created a system which stops anyone from selling their stuff.
And I think we should be asking what they’re going to do about it. What are they doing about it? And how are they going to compensate those whose lives they are currently affecting so grievously?
No, you don’t get out of these responsibilities just because you were trying to do right. You’ve broken it, it’s your problem now, you fix it.
I worry that the people who are asking questions are becoming too hawkish with their calls. Worstall dances around it a bit, but he does his best to pain Enough and Global Witness in as poor of a light as possible. That does not do anything to foster dialog. In fact, it probably helps to entrench positions. Both organizations are not bad for rallying support for 1502. It appears that they may have made a few mistakes with how the legislation was crafted. What can be done, is to take a second and much harder look at all aspects of the law. More independent research is desperately needed on some serious questions. This is all while the lives of families and miners are being affected (for better or for worse) by the law.