It’s been about five years since Leonardo DiCaprio starred in the movie Blood Diamond, but the popular coffee-table discussion of mineral extraction (especially from Africa) only just made its way to the halls of government .
In the Dodd-Frank Wall Street Reform and Consumer Protection Act., section 1502 requires manufacturers to report any products that contain “conflict minerals” from the Democratic Republic of Congo.
“The proposed rules would require any issuer for which conflict minerals are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, by that issuer to disclose in the body of its annual report whether its conflict minerals originated in the Democratic Republic of the Congo or an adjoining country. If so, that issuer would be required to furnish a separate report as an exhibit to its annual report that includes, among other matters, a description of the measures taken by the issuer to exercise due diligence on the source and chain of custody of its conflict minerals. These due diligence measures would include, but would not be limited to, an independent private sector audit of the issuer’s report conducted in accordance with standards established by the Comptroller General of the United States.”
The SEC also asked for comments. And it got them. Lots of them. Individuals and organizations such as Amnesty International and the Extractive Industries Working Group lauded the effort and offered the SEC further guidance on what to monitor. Trade groups and industry representatives (National Association for Manufacturers, National Mining Association, American Gem Society, etc.) while applauding the effort to police extraction, cautioned against overregulation and the penalization of third parties. Still more groups, such as Outcry for Congo Campaign, warned the SEC against listening to such trade representatives.
Judging by the issue’s popularity among armchair politicians, it’s no surprise that the subject got a lot of play upon making it to the big leagues. The number of comments has left some question, however, over how similar the rule will be to its initial draft – what impact will the flood of comments have?
Law firms – always a step ahead – have nonetheless started counseling companies on the rule and how to respond to it.
An interesting issue certainly and one that merits circling back to when SEC has gone through the comments.