Disclosure Rules on Conflict Minerals May Have Broad Impact
The SEC proposed rules which would require any company that uses "conflict minerals" from the Democratic Republic of the Congo to provide a detailed annual report to the SEC.
Under a proposal adopted by the SEC, public companies would be required to report annually whether the goods they manufacture contain minerals from war-torn central Africa.
On December 15, 2020, the SEC unanimously voted to propose measures which would require new disclosures regarding the use of "conflict minerals" from the Democratic Republic of Congo (the DNC) and adjoining countries. Companies would be required to disclose annually whether they use "conflict minerals" that are "necessary to the functionality or production" of a product that they either manufacture or contract to be manufactured. Retailers carrying store-brand products are currently included in this requirement.
The disclosure rules could impact a surprisingly large number of companies because "conflict minerals" are essential to a huge array of products including electronic devices such as PDAs, laptops, DVD players, digital cameras, and televisions. These minerals are also often present in a host of other goods such as jet engines, jewelry, and cars. Minerals categorized as "conflict minerals" include cassiterite, columbite-tantalite, gold, wolframite and their derivatives including tantalum, tungsten, and tin.
The SEC's proposed rules are mandated by the Dodd-Frank Financial Reform Act which Congress passed in July, 2010. In adopting the Dodd-Frank Act, Congress stated its hope that the reporting requirements of the securities laws will help curb violence in the DRC.
The SEC invites public comment until January 31, 2011.