Conflict Minerals – Final Rules Approved: How does it affect you? Where can you go for help?

Conflict Minerals – Final Rules Approved: How does it affect you? Where can you go for help?

On August 22, 2012 the final rules for Section 1502 (Conflict Minerals) of the Dodd-Frank Wall Street Reform and Consumer Protection Act were published. This 356 page document defined the companies under scope, the requirements for compliance, and established a time-line for implementation.

Companies fall under the Scope of Section 1502 if they meet all three of the following criteria:

  • They are publicly traded in the US (including foreign companies)
  • They manufacture or contract to manufacture
  • Conflict minerals are necessary to functionality or production of their product(s)

Conflict minerals are often referred to as 3TGs. The 4 minerals currently covered under Dodd-Frank are (this list may grow):

• Tin (Cassiterite Ore)

• Tungsten (Wolframite)

• Tantalum (Coltan Ore)

• Gold

The Conflict Minerals Rule passed by Congress (17CFR parts 229 and 249) and established by Section 1502 declares that the Democratic Republic of Congo and the adjoining countries listed here are the potential producers of conflict minerals:

  • Central Africa Republic
  • Sudan
  • Zambi
  • Angola
  • Congo Republic
  • Tanzania
  • Burundi
  • Rwanda
  • Uganda


Companies within scope have obligations that I will outline shortly but the larger impact will be felt by suppliers who will be requested to perform due diligence and provide compliance documents per customer requests. A supplier’s inability or unwillingness to supply the requested information may result in the loss of business.

The principle requirements for companies under scope of Section 1502, as part of their SEC filing, are:

  • To conduct and document a Reasonable Country of Origin Inquiry (RCOI)
    • To trace back of all 3TGs to country of origin
  • If all 3TGs did not originate in DRC Countries:
    • Disclose the determination (where they are from)
    • Disclose the process (how you determined Country of Origin)
    • Disclosure on Issuer Internet website
      • Disclose that the information is available on its website
      • Disclose the internet address of the site
    • Maintain reviewable records of the investigation and determination
  • If any 3TGs did originate in DRC Countries OR Issuer cannot identify the Country of Origin (i.e., Unknown origin):
    • All the above tasks plus
      • Create Conflict Minerals Report
      • Add an Exhibit to your annual report
      • Make the report available on the Internet website
    • All of the above must be audited by a 3rd party
      • 10K/20F audited as a part of overall SEC filing
      • Conflict Minerals Report, if required, must be audited separately

The first reports are due on May 14, 2014 and will cover the calendar year of 2013, from January 1 – December 31, 2013. So there isn’t much time to prepare. Most companies are in the Compliance Development Phase, but many have not begun. So here are the basic steps to follow:

Companies under scope

  • Develop a compliance strategy
  • Plan to start compliance process now (January 1, 2013 is pretty soon)

Component suppliers

  • Establish a compliance plan
  • Execute on plan
  • Prepare EICC-GESI declarations for products

General recommendations

  • Leverage specialized expertise
  • Leverage EICC-GESI / Conflict Free Smelter program
    • Do not wait until the end and risk
      • Cost of inventory
      • Cost of poor public ranking by NGOs
      • Unknown future liability (which may require 10K reporting)

Other aspects of the legislation that you should be aware of include:

  • 3TGs smelted or otherwise processed before January 31, 2013 are out of scope
  • There are exemptions available for Resellers and Generic Products
  • Form SD should be used to report to the SEC
  • Due diligence must conform to an internationally recognized framework, if available, i.e., OECD Due Diligence Guidance
  • Supply chain mapping, risk assessments, corrective actions, and long term goals should be part of your internal documentation that should be retained as part of reviewable records if investigated.

Obviously, there are many specifics that you need to know that were not covered in this brief overview. Tanzco Management Consulting can provide assistance in establishing and executing your compliance plans, or conducting 3rd party audits. Contact us at or (914) 475-2955 to request a free Final Rules Flow Chart or to schedule an appointment.

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