Conflict Minerals: new rules and steps to take

Assisting you in becoming Conflict Minerals Compliant

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What should affected companies do?

If a company has not yet developed a program to meet compliance obligations concerning conflict materials or is not certain whether or not it is subject to Section 1502 of the Dodd-Frank Act, it is important to address the following questions:

  • Is the organization a SEC Registrant with formal disclosure requirements? Is the organization a Belgian supplier requested by SEC Registrants to provide information regarding minerals in their products?
  • Does the organization sell any products that have an electrical component? If it buzzes, blinks or beeps it is likely that the product has at least one conflict mineral in it.
  • Does the company contract to manufacture products? Just because the manufacturing of products that contain conflict minerals is outsourced does not mean a company is exempt.

If any of the questions above can be answered with “yes,” you need to take action.

The right people within the company need to be involved. This typically includes representatives from legal, supply chain, procurement, finance, sustainability and even IT professionals to help figure out which products may contain 3TG.

Next, the company should conduct a reasonable country of origin inquiry to determine whether there is “reason to believe” that conflict minerals in the company’s products have originated from outside the covered countries, or from recycled or scrap sources. In this regard SEC registrants may require suppliers to complete the EICC GeSI Conflict Minerals Reporting file. This may require suppliers to investigate their own suppliers to determine the source of conflict minerals used in their products.

A SEC Registrant that identifies that necessary conflict minerals originate from covered countries that are not from recycled or scrap sources then needs to conduct due diligence using a nationally or internationally recognized due diligence framework (e.g. OECD), and potentially provide a Conflict Minerals Report.

Conflict Minerals Report

If the issuer determines that its conflict minerals are from covered countries and are not from scrap sources or recycled, it must file a Conflict Minerals Report as an exhibit to an official Form SD. If determined that conflict minerals are not from covered countries or are from scrap sources or recycled, just the form SD is sufficient.

The Conflict Minerals Report must include the following information:

  • The country of origin of those conflict minerals
  • Any efforts made to determine the mine or location of origin with the greatest possible specificity
  • The facilities used to process those conflict minerals, such as the smelter or refinery through which the issuer’s minerals pass
  • A description of any products that are not “DRC conflict free.” The form of this description is not prescribed and can be determined by the issuer, depending on its industry and individual circumstances

An issuer must obtain an independent private sector audit of its Conflict Minerals Report and include a statement in the report to this effect.

More details of the required reporting and disclosures can be found in the related Publications and Presentations to which a link is provided in the menu on the right.

Companies that have not addressed conflict minerals in 2013 and feel that they may be subject to the rule, may want to consider enlisting a third party for assistance.