Sourcing Requirements For Complying with New Dodd-Frank US Conflict Minerals Law Part One

MetalMiner is pleased to welcome Mr. Lawrence Heim, Director of The Elm Consulting Group International, LLC, an independent environmental, health, and safety consulting practice, as a guest contributor. According to their website, Elm was engaged by a leading US-based electronics manufacturing industry association to conduct the first independent third-party Conflict Minerals supply chain traceability audits, supporting the association’s “Conflict-Free Smelter” designation for tantalum.

Supply Chain Traceability Auditing Under the US Conflict Minerals Law

Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (signed into law by President Obama on July 21, 2010) establishes what has become known as the Conflict Minerals Law. This series of articles focuses on Section 1502(b), which mandates supply chain due diligence and public disclosure related to the source of the minerals.

Fundamentally, the US Conflict Minerals Law contains two closely connected requirements: independent third-party supply chain traceability audits, and reporting of audit information to the public and the Securities and Exchange Commission (SEC). However, even companies not directly regulated by the SEC will be directly impacted by the audit requirements (we will explore this issue as part of a follow-up post).

The Secretary of Commerce and by extension, the SEC is empowered with the authority for implementation, oversight, enforcement and Congressional reporting of the Law. This is critical in understanding the importance and visibility of and risks related to the supply chain traceability audits. These audits, or at least their summaries, are to be incorporated into SEC regulatory filings in some manner. (The form of the SEC regulatory disclosure is not yet known. The full supply chain traceability audit report may only need to be made publicly available on a company’s website rather than being directly incorporated into SEC filings.)

Definitions are set forth in Section 1502(e). The term “Conflict Minerals is defined as:

  • Tantalum and columbite-tantalite (coltan);
  • Tin and cassiterite;
  • Tungsten and wolframite;
  • Gold;
  • Their derivatives; and
    • Any other mineral or its derivatives determined by the Secretary of State to be financing conflict in the Democratic Republic of the Congo (DRC) or an adjoining country (Angola, Burundi, Central African Republic, Congo Republic [a different nation than the DRC], Rwanda, Sudan, Tanzania, Uganda and Zambia).

Companies regulated by the SEC must disclose annually whether conflict minerals originated from the DRC/adjoining country and, where that is the case, submit a report conducted by an independent private-sector auditor that includes:

  • a description of due diligence/audit process conducted;
  • the name of the auditor;
  • the facilities used to process the conflict minerals;
  • country or countries of origin of the conflict minerals; and
  • efforts undertaken to determine the mine or location of origin with the greatest possible specificity.

How can the presence of conflict minerals be identified in products? Companies can use general knowledge of their products and processes, as well as material identification/tracking systems like Bill of Materials (BOMs), Reduction of Hazardous Substances (RoHS) and Material Safety Data Sheets (MSDS). A basic understanding of common uses of conflict minerals is also helpful.

Metal Ore, Common Intermediates Common Products, Uses
Tin Cassiterite; tetrabutyl tin; tetraoctyl tin Solder, sheet metal, electrical conductors.  A component of chemicals in biocides, fungicides.  Used in PVC and high performance paint manufacturing.
Tantalum Columbite-tantalite (“coltan); tantalum pentoxide; potassium tantalum fluoride (KTaF) Powder, capacitors, resistors.  In carbide form, used in jet engine/turbine blades and drill bits, end mills and other tools.
Tungsten Wolframite; ammonium paratungstate Weights/counterweights, electronics, ammunition, welding equipment.  In carbide form, used in tools, drill bits, end mills and other tools.
Gold __ Jewelry, electronics, dental products. Also present in chemical compounds in certain semiconductor manufacturing processes.


Is there an amount of conflict minerals considered de minimis or that otherwise exempts products from this requirement? No.

Can internal resources be used to satisfy this requirement? No, the law specifically mandates the use of independent private sector auditors who must themselves operate and be in accordance with standards established by the Comptroller General of the United States. More discussion on audit standards and where internal resources can be used will be included in a follow-up post.

What form will the disclosure and audit take? While specifics are not yet known concerning the form or content of reporting to the SEC, the full audit report must be made publicly available on the company’s website. The law does not define what is considered an appropriate due diligence effort for the audits. Instead, this is left to individual companies to take into account unique aspects of their materials and supply chains. This approach has benefits and risks. While allowing companies flexibility in meeting the requirements, audit processes may be designated by the Secretary of Commerce as unreliable. If this happens, reports based on such processes will be deemed invalid and will not satisfy the reporting requirements.

Is the audit required if conflict minerals are used as a manufacturing aid but where the end product doesn’t contain conflict minerals? The intent is aimed at conflict materials that are incorporated into a product necessary to the functionality or production of a product. An example used in the SEC-proposed regulation is if conflict minerals are present in a hand tool that is used to assemble an automobile, that tool would not trigger the audit/disclosure requirement for the automaker.  This point is likely to be subject to future clarification and interpretation.

If the disclosure is required annually, does that mean new audits of the same sites/suppliers must be conducted annually? At this point, the answer appears to be “yes.

Our next post will discuss the audit aspects of implementing regulations that are currently in proposal/public comment status.

–Lawrence Heim

Click Below to Read More Posts in the Series:

Part 2

Part 3

Part 4


No Comments

  • Mr Heim’s article conveniently ignores one small point – the World Bank says there are 10 million people in the Congo who have already been negatively affected companies like Elm who are focused simply on making money from traceability.

    Our company works with Congolese tribes to help them export without a dime going to conflict groups. Dodd-Frank has been disastrous for them.

    Supporters are quoting the UN, large NGOs and other organizations who support the bill, but we are quoting chiefs, tribes and hundreds of thousands of locals on the ground who have been devastated by it. Doesn’t this say something very powerful to us?

    I challenge the supporters to take a poll of those they are supposedly trying to protect. Of course they won’t, because the response would tell them that, while Dodd-Frank was well-meaning, it is an unmitigated disaster in practice. COCABI, COMIMPA and COMIDER represent 20,000 miners in the conflict area and 100,000 people affected by this legislation. They all say they’ve never even been contacted to see how this might affect them.

    There are six regions from which Dodd-Frank minerals are mined, and only one of them has ever had anything to do with conflict. Dodd-Frank has put them all out of business before it is even enacted. The World Bank says it has negatively affected 10 million people in the Congo.

    I’m was in Tanzania last week to help a chief export his coltan using a visible, well-documented process that ensures not a dime goes to conflict. That chief and his people will go hungry because the smelters, citing Dodd-Frank, have vanished. The chief is devastated, as are the nearly 1 million honest people who find their meager livelihoods destroyed by this over-reaching act.

    The issue with Dodd-Frank is that it is a nuclear option that demonizes minerals instead of criminals. It’s no different than burning down every house in town to stop a burglar from stealing, who will simply steal from somewhere else. Ludicrous.

    Dodd-Frank has burned down the entire mining industry in the Congo in hopes that their scorched earth policy will catch a militia group in its path. They are willing to take down every innocent man, woman, and child in the Congo who live off mining. Such massive collateral damage is not acceptable under any circumstance.

    Remove mining from the equation and the militia will exact its pound of flesh from the locals by other means. This should be handled by targeting militias, not mining. Dodd-Frank takes the route of universal collateral damage, which, before the bill is enacted, has already destroyed the livelihoods of the innocents who depend on it.


  • Mr. Blakeman, Thank you for your thoughtful comments. I’d like only to clarify that The Elm Consulting Group did not lobby for this legislation. But now that the law is here and on the books, companies will need to comply with it.

    Your anger should be directed at those NGO’s that lobbied for this legislation in the first place. They were the ones requesting this broad-brush requirement, certainly industry never did. We would be happy to write a follow-up post on the unintended consequences of this legislation. We certainly sympathize with your concerns. I will follow-up with you directly. LAR

  • A follow up note. In response to the admin note above, to my knowledge no one from Metal Miner ever attempted to contact me or anyone involved with our Congolese business.

    I would also be curious as to whether Metal Miner or Elm Consulting Group ever sent letters to the SEC opposing (or supporting) Dodd-Frank legislation.

  • Chuck,
    My apologies for not reaching out to you. I’d be happy to discuss this with you further. Please feel free to get in touch with me at lreisman (at) ag metalminer (dot) com and we can arrange a time to speak.

    MM never sent any materials to the SEC opposing or supporting the Dodd-Frank legislation though I understand that one of our posts was submitted and is in the Federal Register regarding the scrap loophole.
    Best Regards,
    Lisa Reisman


Leave a Reply

Your email address will not be published. Required fields are marked *

Scroll to Top