The Securities and Exchange Commission (SEC) today ruled that under the Dodd-Frank Wall Street Reform and Consumer Protection Act companies must publicly disclose their use of conflict minerals originating in the Democratic Republic of the Congo or adjoining countries.
Companies must disclose their use of tantalum, tin, gold, and tungsten if those minerals are “necessary to the functionality or production of a product” manufactured by those companies, the ruling states.
“Congress intended to further the humanitarian goal of ending the extremely violent conflict in the DRC, which has been partially financed by conflict minerals originating in the DRC,” said SEC Chairwoman Mary Schapiro. “Congress chose to use the securities laws disclosure requirements to accomplish its goal.”
First disclosure reports must be filed on May 31, 2014 for the 2013 calendar year and annually on May 31 every year thereafter.
The two-part disclosure consists of a form which must show that a “good faith” inquiry has been conducted into the source of minerals and that the company in question knows that the minerals did not originate in the covered countries, or has no reason to believe that they may have originated there.
Scrap or recycled sources do not count under the new ruling.
Companies must also file a Conflict Minerals Report which should prove a “due diligence” investigation into source and supply chain. Both documents must be made public and posted online.
If a company wants to claim that it is “DRC Conflict Free” it must show that the minerals it uses are not financing or benefiting armed groups and undertake an independent private sector audit to prove it.
Companies who don’t pass the DRC Conflict Free litmus test are required to disclose the facilities used to process the conflict minerals in their products and make efforts to determine the mine or location of origin with the greatest possible specificity.