The longer the SEC delays adoption of a final conflict minerals rule, the worse the situation becomes for global manufacturers voluntarily trying to keep conflict minerals out of supply chains.
RENO (MINEWEB) – A performance audit by the U.S. General Accounting Office (GAO) has found the continued delay of the SEC to issue a final conflict minerals rule has contributed to “a lingering uncertainty among industry and other stakeholders” who have tried to implement voluntary conflict minerals supply chain initiatives.
In a recent report to the U.S. Congress, the GAO noted “the uncertainty regarding SEC’s reporting and due diligence requirements” has complicated the efforts of industry associations, multilateral organizations, and others who have developed global and in-region sourcing initiatives to help companies comply with future rules regarding conflict minerals.
Congress has pressured the SEC on two fronts to adopt rules relating to conflict minerals and resource extraction. In a June 22 letter to the SEC, 58 members of Congress urged the commission to implement Sections 1502 and 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which require public companies to make disclosures relating to the use of conflict minerals and payments made for mining of resources.
“Final rules will take the issues of non-transparent payments [made by mining companies] and conflicts minerals out of the shadows and into the open, making it possible to fight corruption, increase government accountability and end the resource curse,” said the representatives. “They will also provide material information for investors to reduce their risk and increase the choices of ethical investment.”
The lawmakers argued continued delay “undermines efforts in the DRC to make the mining industry more transparent and to diminish the link between minerals and the funding of the brutal violence carried out by warlords. If the rules are not released soon, some companies will not have to file their first reports until summer 2014, four years after Dodd-Frank was passed.”
In a Jul 2, 2012 notice, the SEC said it would consider adoption of the rules regarding disclosure and reporting obligations with respect to the use of conflict minerals on August 22.
A recent Wall Street Journal article suggests the SEC may toughen its proposed conflict minerals rules. “Compared with the original proposal, a final draft circulated to SEC commissioners would outline a series of items for companies to review before they can assume their goods don’t contain minerals from the area, people familiar with the document said.”
“The reports require companies to say what steps they took to verify whether the minerals were taxed or controlled by rebel groups,” said the WSJ. “For some companies, the report may require scouring supply chains made up of hundreds or even thousands of suppliers and vendors.”
The newspaper said the SEC would give companies a two-year period to determine if their goods contain conflict minerals.
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