7 Things You Gotta Know To Comply With SEC's Conflict Minerals Rule

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Businesses – and especially manufacturers – face a major challenge today in compliance with the Conflict Minerals Law passed via Dodd-Frank in 2010 and enacted by the SEC.

As per this law, companies are now encouraged to examine their mineral sources and ensure that they do not buy these from the Democratic Republic of Congo, an area known for its rich mineral deposits and an environment of extreme crime and violence.

While companies listed with the Securities and Exchange Commission (SEC) must undergo the annual audits without fail, other companies associated with them through the supply chain network will also feel the effects of these stringent regulations and face untoward losses.

Not complying would be damaging to a company’s brand image in the long run – not to mention illegal.

What Are Conflict Minerals?

The conflict minerals include cassiterite, columbite-tantalite (coltan), wolframite and gold. [Ed. Note: tin, tungsten, tantalum and gold – or 3TG, as they’re commonly known – are the practical forms of the above manufacturers must know.] They are used in numerous products and form the basis of production processes across industries.

RELATED: Download MetalMiner’s Definitive Guide to Conflict Minerals Compliance for Manufacturers – free!

From circuit board solders, paint manufacturing, capacitors, airbags, hearing aids and pacemakers, laptops, mobile phones, cameras and video game consoles, to heavy industrial tools, they are present everywhere.

Gold of course needs no introduction, but apart from jewelry it is also widely used in dental and electronic products like semiconductors and chips. Businesses that make or use any of these minerals are now bound by law to examine their sources and scrutinize the supply chain network thoroughly so that they can prevent sourcing from the troubled Congo region and prevent further violence.

While conflict minerals compliance issues and related problems are reigning in everyone’s mind, experts have come up with certain methods that can help businesses prepare for the SEC’s conflict minerals provision. A brief look at seven of them:

1. Examination of Sources

The first step is to go deep into the supply chain network and uncover the sources of all the relevant minerals used in the production process.

While the immediate next supplier in the loop might be a legitimate dealer, delving deep within will reveal multiple middlemen across the globe and can (in most instances) be traced back to the DRC.

Companies should be more circumspect about all sources published prior to August 2012, before the SEC regulations came into active effect. For this rule there is a no de minimis exception, which means that even if you are using these minerals in trace amounts you are still subject to the rule.

Next up: Looking at exempting minerals and careful acquisition rules.

FREE Download: MetalMiner’s Definitive Guide to Conflict Minerals Compliance for Manufacturers

MetalMiner welcomes Patrick Hunter as a guest contributor from MFG.com, which offers LiveSource – a cloud-based eSourcing tool that combines the power of advanced supplier management with the global reach of the world’s largest manufacturing marketplace. LiveSource helps companies discover, collaborate and work with qualified global suppliers, resulting in smarter spending, reduced product costs, shorter delivery times, and a more flexible supply chain, all without adding IT infrastructure costs.

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