Conflict Minerals: new rules and steps to take

Assisting you in becoming Conflict Minerals Compliant

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By requiring companies using conflict minerals in their products to disclose the source of such minerals, Section 1502 of the US Dodd–Frank Act and similar EU legislative initiatives aim at dissuading companies from continuing to engage in trade that supports regional conflicts.

In recent years, there has been an increasing international focus on conflict minerals emanating from mining operations in the Democratic Republic of the Congo (DRC) and adjoining countries.

Armed groups engaged in mining operations in this region are believed to subject workers and indigenous people to serious human rights abuses and are using proceeds from the sale of conflict minerals to finance regional conflicts.

In July 2010, in response to these concerns, the United States Congress enacted legislation that requires certain public companies to provide disclosures about the use of specified conflict minerals emanating from the DRC and nine adjoining countries, also called covered countries.

Section 1502 of the Dodd–Frank Act requires companies using conflict minerals in their products to disclose the source of such minerals. On 22 August 2012, after much public comment and a year and a half after issuance of its proposed rule, the US Securities and Exchange Commission (SEC) issued a final rule to implement the new disclosure requirements required by Dodd–Frank. The first filing deadline to comply with SEC conflict minerals disclosure requirements covering calendar year 2013 is 31 May 2014.

In March 2013, also the European Commission began collecting input from interested parties on a potential EU initiative for responsible sourcing of conflict minerals. The scope of the consultation was much broader than Dodd-Frank, and looked for input on mineral sourcing from all conflict-affected areas, not just those in and around the DRC.

In June 2013, a conference was held in Brussels on the EU’s “imminent” legislative proposal on conflict minerals. According to the European Commissioner for Trade, Karel De Gucht, a clear idea of the EU strategy could be expected soon.

In a latest update in February 2014 it was stated by EU Trade spokesman John Clancy that “work is currently underway to prepare a proposal for a comprehensive EU framework on responsible mineral sourcing in line with international guidelines.” The proposal, once published, will not yet be final, as it still will need to undergo approval from EU lawmakers and governments.

The geographic scope of the EU legislative initiative will almost certainly include additional countries next to these DRC countries, possibly from Myanmar to Afghanistan to Latin-America. The minerals to be covered by an EU rule however is not likely to be expanded beyond the 3TG explained above covered by the US rule.