Recent “Conflict Minerals” Legislation Requires Disclosure for the Use of Gold, Tin, Tantalum and Tungsten
As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Financial Reform Act) that was signed into law on July 21, 2010, companies that use conflict minerals must submit a disclosure report to the U.
As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Financial Reform Act) that was signed into law on July 21, 2010, companies that use conflict minerals must submit a disclosure report to the U. S. Securities and Exchange Commission (SEC) detailing whether these materials originated in the Democratic Republic of the Congo (DRC) or adjoining countries. The conflict minerals include gold, tin, tantalum and tungsten mined in these areas that provide revenue to rebel groups committing atrocities.
Human rights groups and non-governmental organizations (NGOs) have been taking actions to address the continued funding of violence and atrocities through the illegal mining of tin, gold, and tantalum ores. The primary purposes of this legislation are to provide transparency on the sourcing of these materials and eliminate the source of funding for the rebel groups.
Pursuant to the Financial Reform Act manufacturers and their customers must disclose whether their products contain conflict minerals and what steps they are taking to ensure that their products do not contain "conflict minerals.”
Sec. 1502 of the Financial Reform Act requires companies whose manufactured goods contain gold, tin, tantalum and tungsten that are financing conflict in the DRC or adjoining country (as determined by the U. S. Secretary of State). Specifically, the legislation states that companies must report annually to the SEC whether the conflict minerals that are necessary to the functionality or production of a product originated from the DRC or adjoining countries.
If the conflict minerals used by the company did originate from the DRC or adjoining countries, then the company must submit a report that includes:
- a description of the measures taken to exercise due diligence on the source and chain of custody of such minerals (the measures shall be subject to an independent private sector audit as part of the report),
- a description of the products manufactured that contain the conflict minerals,
- the entity that conducted the independent private sector audit
- the facilities used to process the conflict minerals,
- the country of origin of the conflict minerals, and
- the efforts to determine the mine or location of origin with the greatest possible specificity.
Within nine months of the law’s enactment, the SEC is required to promulgate regulations to implement these requirements. The SEC has announced that it intends to issue a proposed regulation in December 2010 and a final rule within an April to July 2011 timeframe. These regulations will determine the scope and reach of the disclosure requirement on companies that use gold, tin, tantalum and tungsten. These new reporting requirements could substantially impact surface finishing operations and suppliers that use or sell gold, tin, tantalum or tungsten.
Impacts on Supply Chains Using Gold, Tin, Tantalum and Tungsten
Many targeted companies are not waiting for the legislative and regulatory requirements to be in effect and are already working to address the issue. Although reporting requirements will only apply to companies required to report to the SEC, these requirements will likely be imposed throughout the entire supply chain. For example, efforts are currently being made to trace the origin of minerals and to ensure that those entering the supply chain are not sourced from rebel-controlled mines. Eventually mines may be required to comply with social and environmental performance standards.
For additional information on this new requirement for the use of gold, tin, tantalum and tungsten, contact Christian Richter or Jeff Hannapel with NASF at email@example.com or firstname.lastname@example.org.