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Conflict Minerals

3 Posts tagged with the legislation_comments tag
VictoriaJones
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conflict_mineral_congo.jpg

 

A letter has been sent to the US Securities and Exchange Commission (SEC) Chairman, Mary Schapiro, from six lawmakers in the US Senate arguing against the use the of the term ‘furnishing’ in draft conflict mineral guidelines.

 


Senator Patrick Leahy, who co-wrote the letter, argues that if companies are allowed to ‘furnish’ rather than ‘file’ disclosures on their use of the six identified ‘conflict minerals’, it could reduce the liability of a company under securities law that undermines the purpose of the Dodd-Frank Act.


The letter says ‘We are very concerned about the outlines of the final rule, in particular, that the Commission will approve a rule that contravenes Congress’ legislative intent’.

 


The congressional intent is to require companies to file annual reports describing due diligence measures taken to identify the source of the conflict minerals used in products and the chain of custody of those materials. The report should be audited by an independent auditor and should include:

 


• description of the products are aren’t Democratic Republic of Congo conflict-free,
• identification of the independent authors of the report,
• identification of the facilities used to process conflict minerals,
• the country of origin of the conflict minerals,
• your efforts to determine mine or location of the origin of the conflict minerals, and
• a certification statement.

 

 

The essential difference is that to ‘file’ a disclosure is the formal submission of a document (often in a specific format) to the SEC, for which a company would be liable under the Exchange Act if it was untrue/negligent etc. ‘Furnishing’ on the other hand is essentially providing information, through a press release for example, and this does not therefore carry the same level of legal obligation to be accurate as a SEC filing would.

 


Would the obligation to furnish rather than file conflict mineral information undermine the intentions of Section 1502 of the Dodd-Frank Act? Would a more simplified method of submitting conflict mineral information be welcome for the final guidelines? How would such a difference affect your business?

 

 

Source: Bloomberg Business Week

 

 

 

 

 

 

 

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VictoriaJones
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conflict_minerals_dodd_frank_act_congo.jpg

A year and a half after the Dodd-Frank Act became law and we still don’t have any hard and fast rules explaining how to convert law into practice.

 

A recent meeting held by The Brookings Institute and Global Witness brought together various stakeholders from across industries to discuss the issue of conflict minerals.

 

This is an overview of their key findings:


• A U.N. expert group has found that since the signing of the Dodd-Frank Act, there has been a reduction in the amount of mined minerals that is funding armed conflict. By denying financing to the armed groups that perpetuate violence in the region, the provision can contribute to increased stability and improved human rights.


• No one is sure how much implementing measures will cost. The SEC estimated $71.2 million. The National Association of Manufacturers’ (NAM) estimated $9-$16 billion. The most recent estimate produced independently by Claigan Environmental predicted costs to be less than $815 million.

 

• The Electronics Industry Citizenship Coalition and the Global e-Sustainability Initiative have partnered with firms to develop the "Conflict Free Smelters Program", which allows companies performing due diligence to trace their mineral supply chain down to the smelters who are certified as being either conflict free or not. Efforts are being made to 'certify smelters in the DRC region under this program to help preserve access to the international markets for impoverished artisanal miners. However, only a minority of companies has signed up so are burdening themselves with much higher costs than expected. Once rules are issued and regulations implemented, this cost would be spread among a larger proportion of firms'.


• Some parties have talked of unintended consequences resulting from Section 1502, including the outright boycott of materials from the DRC regardless of whether they are ‘conflict free’ or not. at Section 1502 will have negative unintended consequences on citizens in the region. However, alternative reports suggest that since April 2010, when the DRC-government-imposed six-month minerals embargo ended, the trade in minerals has been on the rise.


• CREDDO have suggested that much of the talk of unintended consequences was 'akin to fear mongering;... mineral trade in that region is a relatively recent activity and citizens had (and continue to have) other sources to support their livelihoods;... (and) the benefits of increased security and reduced violence and instability are too great to dismiss Section 1502 outright'.


• The success of Section 1502 of Dodd-Frank is dependent on ‘effective implementation’.

 

• Publication of the SEC guidelines will allow for a greater chance of ‘maximising the benefits to global transparency, accountability and governance’.

 

• Whilst the SEC should ‘carefully weigh potential benefits and costs in the implementation of Section 1502 and 1504, the balance should be in favour of transparency’.

 

 

To read the full article:  http://www.brookings.edu/opinions/2011/1220_debating_dodd_frank_kaufmann.aspx

 

 

 

 

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VictoriaJones
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Ken Manchen, Corporate Director, Safety, Health & Environmental Affairs, for Newark (part of the Premier Farnell group) discusses the issues surrounding the Dodd-Frank Act and the potential impact on businesses.

 

 

"Companies in the United States are waiting for Security and Exchange Commission (SEC) clarification on their conflict minerals disclosure responsibilities. The SEC issued proposed rules in December and accepted public comments through March. The agency has stated it will evaluate the comments before finalizing the rules later this year.

 

What are conflict minerals? They are minerals being sourced from rebel-controlled mines in the Eastern region of the Democratic Republic of the Congo (DRC), where armed conflicts are resulting in thousands being killed. Horrific human rights violations are occurring, and profits from inhumanely-run mines are helping fuel these conflicts.

 

Conflict minerals include columbite-tantalite (coltan), cassiterite, wolframite, and gold. Four derivatives of these materials (tantalum, tin, tungsten, and gold) are used in the electronics industry. The US enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, and a provision in the act requires all US public companies that use any of four minerals -- tin, tantalum, tungsten, and gold -- to trace the supply back to their source. If they come from the DRC region, the company must file an audited report with the SEC declaring whether the minerals they used came from a mine that directly or indirectly financed or benefited armed groups in the region.

 

While this law is an historic attempt to address a serious problem, there is debate about whether it will help resolve the conflict in the DRC. Some believe the task is too daunting (only smelters know the source of their raw materials), and the reporting timetable too aggressive (companies must start reporting beginning January 2012), that it will cause companies to stop sourcing minerals from the Congo. This could lead to economic hardship for millions of innocent people who make their livings from the mining and minerals trade.

 

All of this is weighing on the SEC as it carefully reviews the comments it has received before issuing its final rules. In the meantime, the electronics industry is gearing up to comply. The Electronics Industry Citizenship Coalition and the Global e-Sustainability Initiative have rolled out encouraging programs to assist the electronics industry by certifying DRC smelters as conflict-free.

 

While we advise electronics companies to take action as soon as possible, some are waiting until final SEC clarification is provided."

 

 

What is your company doing about conflict minerals - choosing to wait and be safe or trying to establish a lead?

 

 

 

 

 

 

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