Essay: Conflict Minerals Reporting

– Disclosures and Reporting Requirements –

I. INTRODUCTION

Armed groups in Central Africa earn millions of dollars every year by trading minerals extracted from the armed conflict regions of the Democratic Republic of the Congo (DRC). Those minerals are called conflict minerals and are extracted for the use of funding for the conflicts in those zones. They are smuggled out of Congo by its nine adjoining, neighboring countries and then shipped to smelters around the world for refinement. Once the minerals are brought out this way, it is difficult to trace their origin.

Conflict minerals are generally defined as natural minerals that are extracted from those war zones in Central Africa. The four most common minerals that are mined from those areas are Cassiterite (for tin), Wolframite (for tungsten), Coltan (for tantalum) and Gold ore. Many multinational corporations are using such minerals in the manufacture of their products. These minerals are passed along many intermediaries before reaching those multinational corporations. Many companies were unaware and were indirectly playing a part in financing the conflicts in the DRC region. Therefore, it is important for companies to be conscious about where their products come from.

II. CONFLICT MINERAL RULINGS

In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed by the U.S. Congress requiring certain companies to ensure they disclose their use of conflict minerals if they are essential for the production of their products. Section 1502 of the Dodd-Frank Act addresses the requirement for companies to trace and audit their product supply chains to ensure they are not playing a role in financing those conflicts occurring in the DRC region.

Section 1502 is intended to make the financial interests that support the armed groups in the Covered countries region transparent. By requiring companies to disclose the source of their minerals, the law is dissuading them from trading practices that contribute to violence and civil rights abuses in Central Africa by funding those rebel forces that prey on innocent people.

On August 22, 2012, the Securities and Exchange Commission issued its final rule on conflict minerals pursuant to the Dodd-Frank Section 1502. This rule describes the assessment and reporting requirements for issuers whose manufactured products contain any conflict minerals that have come from the DRC or from any adjoining country and if so was funding provided for the armed groups in the conflict zones from the mining of those minerals. The SEC has required companies that file with them to publicly disclosure their use of conflict minerals originating from the covered countries if those minerals are ‘necessary to the functionality or production of a product’ manufactured by those companies. The laws do not prohibit corporations from sourcing the conflict minerals for their products; instead it aims to discourage U.S. companies from indirectly funding the armed groups in the DRC region when they source for their minerals.

III. DISCLOSURE REQUIREMENTS

When the SEC adopted the final rule mandated by the Dodd-Frank Act, they provided a three-step disclosure process as follows:

Step 1: Applicability Assessment
An issuer must determine whether its manufactured products contain conflict minerals that subject it to the requirements of Dodd-Frank Section 1502.
‘ If their products do not contain conflict minerals, the issuer will not be required to make any disclosures or submit any reports.
‘ If their products do contain conflict minerals, they move to step 2.

Step 2: Reasonable Country of Origin Inquiry (RCOI)
An issuer needs to determine whether its necessary conflict minerals originated from the DRC region.
‘ If the conflict minerals did not come from the DRC region, the company is to provide an annual disclosure and include in it a discussion of its process of inquiry on a new form called ‘Specialized Disclosure’ (SD).
‘ If the conflict minerals originated from the DRC region, then a move to step 3 is essential.

Step 3: Due Diligence
An issuer is required to carry out due diligence on its supply chain to determine whether its minerals are DRC conflict-free, which means the conflict minerals in the product did not benefit armed groups in Central Africa, even if those minerals originated from the DRC region.
‘ If the issuer determines, through its due diligence that its conflict minerals are not from the DRC region, it is required to report on its due diligence when it files the SD Form but not required to file a Conflict Minerals Report.
‘ If the issuer discovers that its minerals are from the DRC region, it must file a Conflict Minerals Report as an exhibit to the SD Form and also obtain an independent private sector audit of its Conflict Minerals Report.

Source: Essay UK - http://muslimschristians.com/essays/miscellaneous/essay-conflict-minerals-reporting/


Not what you're looking for?

Search our thousands of essays:

Search:


About this resource

This Miscellaneous essay was submitted to us by a student in order to help you with your studies.



Word count:

This page has approximately words.


Share:


Cite:

If you use part of this page in your own work, you need to provide a citation, as follows:

Essay UK, Essay: Conflict Minerals Reporting. Available from: <http://muslimschristians.com/essays/miscellaneous/essay-conflict-minerals-reporting/> [19-01-19].


More information:

If you are the original author of this content and no longer wish to have it published on our website then please click on the link below to request removal:


Essay and dissertation help


Latest essays in this category:


Our free essays:

badges