Section 1502 of the Dodd Frank Act was enacted to address the exploitation and trade of 3TG by armed groups, which is partially financing conflict in the Democratic Republic of Congo (DRC) and contributing to a humanitarian crisis.
Section 1502 is a 2010 amendment to the US Exchange Act. It requires that companies it applies to determine whether any of the 3TG used in their products are financing or benefiting illegal armed groups in the DRC or an adjoining country. Companies that are listed with the Securities and Exchange Commission (SEC) and use 3TG in the products they manufacture or contract to manufacture are directly affected and must make specific public disclosures on their due diligence. Companies with products that ultimately are sold to the US market are likely to be indirectly affected by the legislation, whether or not they sell directly to a US‐listed company.
On August 22, 2012 the US Securities and Exchange Commission (SEC) released the final rule for Section 1502 on Conflict Minerals in the Dodd-Frank Act. The final rule endorses the OECD Due Diligence Guidance on Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas as a “nationally or internationally recognized due diligence framework” for fulfilling Dodd-Frank requirements of conflict mineral due diligence.
Mining is not considered to be manufacturing, thus 3TG mining companies are exempt from the SEC reporting obligations. 3TG mining is part of the global supply chain, so reasonable inquiries as to origin and any necessary conflict-sensitive due diligence will continue to apply.
Under the SEC rule, a “reasonable” country of origin inquiry can accept the representations of a supplier of 3TG if those representations are reliable and are believed to be true. A company would have reason to believe a processing facility’s (e.g., a SOR) representations if the facility received a “conflict-free” designation from a recognized industry group that requires an independent private sector audit. CFSP meets the SEC description of a recognized industry group and can thus provide assurance to support a facility’s representations. SORSs are eligible to achieve CFSP validation via an independent third party audit.
The RMAP requires CoC verification for mined material and identify the country of origin of the mined material.
The SEC final rule can be found at: http://www.sec.gov/news/press/2012/2012-163.htm
In June 2013, the SEC published an FAQ document, which can be found here http://www.sec.gov/divisions/corpfin/guidance/conflictminerals-faq.htm
Statement on the Effect of the Court of Appeals Decision on the Conflict Minerals Rule
