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CONFLICT MINERALS
FOCUS 20
What are conflict minerals?
The term ‘confl ict minerals’ covers four specifi c minerals mined in the Democratic Republic of Congo (DRC) and adjoining countries. The four minerals are Gold, Cassiterite (an ore required in the production of tin), Columbite-tantalite (the source ore for tantalum) and Wolframite (a source element of tungsten).
Tin, tungsten, tantalum and gold (referred to collectively as ‘3TG Metals’) are widely used in manufacturing, particularly in the automotive sector, and can be found in electronics and engine components, as well as in machining and tooling (Table 1. 3TG Metals).
What does the Act require? Section 1502 of the Dodd-Frank Act requires companies to:
• Determine if 3TG Metals are used in the manufacture of their products
• If so, determine whether they originated in the DRC and adjoining countries
• If the metals did not originate in the DRC and adjoining countries, companies must report how their origin was determined
• If the metals did originate from the DRC and adjoining countries, or if their source is unknown, companies are required to trace the supply chain for the source and produce an independently audited report on their due diligence efforts.
EVEN COMPANIES THAT ARE NOT REGISTERED WITH THE SEC BUT WHO SUPPLY SEC REGISTRANTS WILL NEED TO PUT PROCESSES IN PLACE TO TRACE AND PROVIDE EVIDENCE OF THEIR MATERIALS’ ORIGINS.
Who must comply?
The Act applies to any company that fi les an annual report with the US Securities and Exchange Commission (SEC), which means that it will affect almost 6,000 companies including those in the manufacturing, sector, from OEMs (original equipment manufacturers) to suppliers. However, the Act’s impact will be more widely felt as SEC registrants will need to gain assurances from their Tier 1 suppliers (whether or not they are SEC registered) about the source of minerals used in the manufacture of their products. In other words, even companies that are not registered with the SEC but who supply SEC registrants will need to put processes in place to trace and provide evidence of their materials’ origins.
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