I am willing to bet that there are less than a handful of policyIQ blog readers out there right now who haven’t heard of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).  Dodd-Frank has been a news-worthy item before it was even signed into law in 2010 for both the regulation that it now imposes on companies doing business in the United States, as well as the regulations that it has so far failed to implement.

But how much do you know about the Conflict Minerals Provision of Dodd-Frank that requires public companies to provide transparency around where specific minerals in their products or production process originate from?  Even if you think you aren’t affected, keep reading.  The impact may be larger than you think.

What are Conflict Minerals – and what does the “Conflict” refer to?

Conflict Minerals is a term that refers to gold, tin, tungsten and tantalum – and any of their derivatives.  These specific minerals are identified as “conflict” minerals, because it is widely recognized that profits from the primary sources of these minerals go to support violence and repression in the Democratic Republic of the Congo (“DRC”) and some neighboring countries.  The materials may not all be common names, but they are widely found in consumer products and they are frequently used in the manufacturing process.  Electronics, jewelry, solder, wires – even packaging and promotional materials – often contain these minerals.

The goal of the Conflict Minerals Provision of Dodd-Frank is to minimize the use of these minerals from the DRC or find “conflict-free” sources from which to purchase.

So what does Dodd-Frank’s Conflict Minerals Provision require?

The Conflict Mineral Provision aims to create a more transparent supply chain – to require companies to disclose their use of Conflict Minerals and from where those minerals originate.  The details have not been finalized, but essentially all public companies will be required to a.) determine if they use the conflict minerals in their products or production process (even in trace amount), and if so, b.) follow the supply chain back to the source.  If a company does use minerals sourced from the DRC (or if they cannot determine the source), that company will be required to provide an audited Conflict Minerals Report within their Annual Report.  Companies who do not source minerals from the DRC can include a simple disclosure (along with their methods of making that determination) within the Annual Report.

There are no penalties or requirements for an organization to discontinue the use of minerals sourced from the Democratic Republic of the Congo, but by requiring that a company expose their supply chain and disclose the source, the expectation is that there will be pressure from various stakeholders for a company to be “conflict free”.

What does this mean to you? 

If you are an SEC filer and you produce or sell a product that contains these conflict minerals – or uses these conflict minerals as a part of your production process – you will be impacted.  These minerals might be found in packaging for your product.  They might be in promotional materials for your product.  They might be found in trace amounts, but in critical parts of your production process, such as the soldering of parts or wiring of components.  The bottom line is this:  If you produce or sell a physical product, you need to be educated on the Conflict Minerals Provision.

Get up to speed and plug into Resources Global Supply Chain Practice

There are lots of online sources of information, but if you need to learn more about how the Conflict Minerals Provision affects your businesss – and what you can do to prepare today – let us put you in touch with experts from the Resources Global Professionals’ Supply Chain Practice.  This team recently published a Client Alert, which can be found on our Resources’ website, with lots of great information about Conflict Minerals – and they will continue to provide updates and guidance as the SEC refines the details.  If you are not already receiving updates from Resources Global, let us know and we’ll introduce you to our colleagues in your local Resources’ office.  They will make sure that your contact information is included on the mailing list for future alerts!

We’ve also recently launched a Facebook page for our Supply Chain Practice, so that our experts can update and interact with supply chain professionals across the globe.  Check out the page, “Like” it to see updates in your own feed, and join the conversation!