SEC Conflict Minerals Rule Partially Kiboshed by Appeals Court

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The free speech issue has made its presence felt in the SEC’s conflict minerals rule as a U.S. appeals court struck down parts of the regulation attributed to public companies being required to reveal if their products contain minerals from the Democratic Republic of Congo – a particularly combat-heavy part of Africa.

Minerals from that part of the world, referred to as “conflict minerals,” have been a point of emphasis among human rights groups everywhere that had previously urged Congress to include tin, tungsten, tantalum and gold (3TG) in the 2010 Dodd-Frank Wall Street reform law. The reasoning being that this would aid consumers who would like to consciously avoid products that support mining in parts of the world consumed by rebellion and conflict.

The parts of the regulation struck down by the U.S. Court of Appeals for the District of Columbia Circuit were primarily related to violation of free speech. According to a report from Reuters, the appeals court did not strike down the conflict minerals rule altogether.

The Securities and Exchange Commission rule mandates that publicly-traded manufacturers reveal to their investors whether any gold, tungsten, tin or tantalum used in their products may have come from the Democratic Republic of Congo, according to the Reuters report.

“What I wonder is whether the rule could be amended to eliminate the product-level classifications from the disclosure and simply have the disclosure reflect the company as a whole,” said Lawrence M. Heim, CPEA, and director of The Elm Consulting Group International LLC/Elm Sustainability Partners LLC.

The Conflict Minerals Approach in Europe

Last month, the European Union proposed legislation regarding conflict minerals that was wholly different from the rule in place in the United States. The EU called for voluntary participation from importers only as it relates to conflict minerals at the smelter level.

In comparing the two standpoints on conflict minerals, it’s apparent that Europe is going even further than the U.S. as it is proposing legislation affecting minerals sourced from areas afflicted by conflict across the world, not just in the Democratic Republic of Congo, which was the SEC’s primary area of focus with its regulations.

However, it’s important to note that the EU rule applies to far fewer companies than its U.S. counterpart.

While the U.S. appeals court decided to overturn parts of the SEC regulation, Jonathan Kaufman, co-counsel for Oxfam America and staff attorney at EarthRights International, is confident that this will not affect the SEC’s ability to deliver strong mandates for “transparency in the extractive industries.”

But what will this decision mean for manufacturers moving forward? Check back in with MetalMiner for more analysis…

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