Conflict Minerals Compliance: How to Prepare Your Report?
The SEC Conflict Mineral Rule Applicability: – Applies to a company that uses minerals including tantalum, tin, gold or tungsten if: – The company files reports with the SEC under the Exchange Act. – The minerals are necessary to the functionality or production of a product manufactured or contracted to be manufactured by the company.
– The requirements apply to both foreign and domestic issuers. – Companies that use only trace amounts of these conflict minerals have to comply with this rule.
The Conflict Minerals Report Report Filing: – File the disclosure with the SEC using the Form SD http:// www.sec.gov/about/forms/formsd.pdf – Include the required information for the calendar year in which it completes the manufacture of a product that includes conflict minerals. – Report to be filed on May 31 every year. • Report to be filed after Reasonable Country of Origin Inquiry (RCOI) carried out.
• Description of inquiry should also be included in Form SD and made available on the internet. • Conflict Minerals Report should be published on company website after due diligence measures.
Due Diligence Outcomes There are four possible outcomes from the due diligence process: • DRC Conflict Free • Not Been Found to Be DRC Conflict Free • DRC Conflict Undeterminable • Recycled or Scrap Due Diligence
What to Include in the Report DRC Conflict Free • In case the result is DRC Conflict Free, the company should: – Obtain an independent private sector audit of its Conflict Minerals Report – Certify that it obtained such an audit. – Include the audit report as part of the Conflict Minerals Report. – Identify the auditor.
Not Been Found to Be DRC Conflict Free • In case the result is that the product has not been found to be DRC conflict free, the report must provide details of such products, the facilities used to process the conflict minerals in those products, the country of origin of these minerals and the efforts to determine the mine or location of origin with the greatest possible specificity.
DRC Conflict Undeterminable • In the report, describe the products manufactured or contracted to be manufactured that are “DRC conflict undeterminable.” • The facilities used to process the conflict minerals in those products, if known. • The country of origin of the conflict minerals in those products, if known. • The efforts to determine the mine or location of origin with the greatest possible specificity.
Recycled or Scrap Due Diligence • Currently, gold is the only conflict mineral with a nationally or internationally recognized due diligence framework for determining whether it is recycled or scrap. • For the other three minerals, the company is required to describe the due diligence measures it exercised in determining that its conflict minerals are from recycled or scrap sources in its Conflict Minerals Report.
Want to learn more about SEC Conflict Mineral Rule, its requirements and best practices to comply with them? ComplianceOnline webinars and seminars are a great training resource. Check out the following links:
• Conflict Minerals Program - Responsible Sourcing a Act
• Understanding SEC Conflict Minerals Disclosure Re
• Conflict Minerals 2014: Looking Back and Looking