Last week we caught up with our friends at Elm Consulting Group International (you may recall a series of posts published on MetalMiner written by Lawrence Heim of Elm Consulting relating to the conflict minerals provision recently enacted under the Frank-Dodd banking reform bill) to hear about the progress made by SEC in terms of publishing the final rules (and hence requirements) for companies sourcing tin, tantalum, gold and tungsten. Lawrence Heim attended the EICC Extractives Supply Chain Workshop VI (EICC “promotes an industry code of conduct for global electronics supply chains to improve working and environmental conditions.) The organization has also developed an audit program for companies that need to comply with the legislation.
Heim suggests via his blog that a rift exists between policy-makers that include governmental and quasi-governmental organizations and the companies that need to implement the legislation. Not surprisingly, industry has raised concerns around several issues that policy-makers do not appear to have considered. The primary issues involve industry not accepting the recommendations of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict Affected and High-Risk Areas and the Supplement on Tin, Tantalum and Tungsten specifically for its lack of “actionable, specific implementation steps/detail and the uncertainty about how the Guidance will comply with SEC requirements, and from a sourcing perspective, companies remain concerned about the confidentiality of supplier information as well as the fact that the supply chain for gold appears quite distinct from the other metals. Industry has raised concerns that compliance with Frank-Dodd will require a customized solution for that supply chain.
It should come as no surprise that the early interpretations of the legislation have lacked specificity. In fairness to the policymakers, the final rules have yet to be released by the SEC. Regardless, consulting firms and software providers will need to ensure the right balance of cost-to-comply, risk mitigation and actionable solutions.
We will continue to provide updates on this legislation, particularly when the SEC announces the final rules later this summer.