RAPAPORT... The U.S. Securities and Exchange Commission (SEC) voted to adopt a rule implementing the conflict minerals provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 1502. The rule will soon be available on the SEC website http://sec.gov/news/press.shtml.
The Jewelers Vigilance Committee (JVC), which has been monitoring the bill's evolution since December 2010, noted that there are some differences in the new provisions. Notably, in response to comments filed by the public, including those submitted jointly by JVC and other associations, companies covered by the law that use recycled or scrap conflict minerals are not automatically required to conduct due diligence of their supply chain. They are also not automatically required to file a conflict minerals report, according to the JVC.
The industry group explained that in enacting the conflict minerals law it was Congress’ intention to further the humanitarian goal of ending the violent conflict in the Democratic Republic of the Congo (DRC). That conflict has been partially funded by conflict minerals, including gold and tungsten, widely used by the jewelry industry. The law directed the SEC to implement a rule requiring covered companies to disclose their use of conflict minerals from the DRC and adjoining countries. The rule approved today by the SEC requires that a company covered by the law must determine whether it uses conflict minerals and if so, the company must conduct a reasonable inquiry regarding the origins of its conflict minerals, the JVC explained. If this inquiry indicates that the conflict minerals originated, or may have originated, in the DRC or an adjoining country, or may not be recycled or scrap, the company must perform due diligence on its supply chain. The purpose of the due diligence examination is to determine if the conflict minerals financed or benefited armed groups in the region.
Although the rule only covers companies that have reporting obligations with the SEC, its impact will be felt by every entity in the gold or tungsten supply chain. JVC will closely review the rule once it is publicly available, and will prepare guidance to help all those affected to comply with the new requirements.