The stringent new legal approach to mining transparency in the UK could well begin reverberating through the mining world generally.

Issues such as the banking scandals have led to calls for greater transparency and it is against that background that the Reports on Payments to Governments Regulations 2014 came into force last December, carrying up to two-year jail sentences for noncomplying company directors.

London-based Cordery compliance counsel Patrick O’Kane spells out that, under new UK law, companies that make payments to governments over the threshold of £86 000 are expected to file a report that provides the full details of the destiny of that money, which must also be publicly available to citizens across the globe and subject to online scrutiny.

The media will, of course, also be keen to see just how much companies have been paying governments around the world and what those governments have been doing with the money.

Each financial year has to be covered and if a report is not made, the new law targets not only the errant company but also all of its directors, who could find themselves charged, prosecuted, convicted of a criminal offence and jailed for noncompliance.

The UK government has promised stringent enforcement, with UK-registered companies also subject to the new legislation even if they are foreign owned.

The law covers UK-registered companies in activities including mining, oil, gas, quarrying, logging and sand extraction.
The UK clampdown comes at a time of poor enforcement of Dodd Frank legislation in the US.

When Section 1502, known as the conflict minerals clause, of the Dodd Frank Act came into force in 2010, hopes were high that global minerals supply chains would be cleaned up, particularly in the Democratic Republic of Congo (DRC) but the analysis by two human rights groups shows that noncompliance is widespread, with well-funded industry groups contesting the conflict minerals law at every step.

Amnesty International and Global Witness have revealed in Digging for Transparency that nearly 80% of US public companies analysed are failing to check and disclose adequately whether their products contain conflict minerals from Central Africa.

The DRC is an important source of conflict minerals like tungsten, tantalum and tin that are used in modern electronic devices, such as smartphones and laptops.

But 79 of the 100 companies analysed failed to meet the minimum requirements of the US conflict minerals injunction.

Most companies in the sample were found to be doing too little to map out the supply chain of the minerals they purchased and only 16% were going beyond their direct suppliers to contact the smelters and refiners that processed the minerals.

More than half did not even report to senior management when they identified a supply-chain risk.

The human rights groups believe the one in five that do comply defeat the argument of implementation being too difficult and too expensive.