Update on Securities and Exchange Commission Rulings on Conflict Metals

By Fern Abrams, IPC

The SEC has officially delayed its issuance of the regulation to implement the conflict minerals provision of the Dodd-Frank legislation.  It is now listed as an “Upcoming Activity” in the January-June 2012 time frame on its website.   SEC had previously indicated it would publish the rule before the end of 2011.  This means companies that report on a calendar year basis should have an additional year before having to report on their use of conflict minerals.

This welcome development was in large part due to the of IPC and its industry colleagues’ efforts – our comments to the SEC, meeting with the Commissioners, and calling on Congress to ask the SEC all played a key role in making sure the Commission and Congress understood the difficulties in complying with the regulations proposed by the SEC.  Of course, we will continue to urge the SEC to include the measures we proposed, such as an interim indeterminate origin category and a phased implementation, among others, in its final regulation.  A legal brief, filed by WilmerHale® on behalf of IPC, outlined the SEC’s authority to adopt a phase-in approach, by both virtue of the statutory text of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Commission’s general exemptive power under the Securities Exchange Act of 1934.

An October Tulane University economic analysis, which drew heavily on an IPC survey of the electronics industry, assessed the costs of implementing the Dodd-Frank conflict minerals regulation to be $7.93 billion — more than one hundred times greater than the estimate prepared by the U.S. Securities and Exchange Commission (SEC) of $71.2 million. The study, “A Critical Analysis of the SEC and NAM Economic Impact Models and the Proposal of a Third Model in View of the Implementation of Section 1502 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act,” was prepared at the request of U.S. Sen. Dick Durbin of Illinois, a co-sponsor of the conflict minerals provisions included in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

According to Tulane graduate student Chris Bayer, “Evidence is the best guide, and our economic impact analysis of Dodd-Frank Section 1502 relies on findings from IPC’s 2011 survey.  The new law calls for transparency in the mineral sector supply chain and our paper suggests that its implementation will require significant effort on the part of affected companies.”

IPC’s report, “Results of an IPC Survey on the Impact of U.S. Conflict Minerals Reporting Requirements,” was part of a set of extensive comments submitted by IPC for the SEC’s Notice of Proposed Rulemaking. The survey, which was conducted by IPC’s market research department, collected data from 60 electronics manufacturing services companies, printed circuit board manufacturers, electronics materials suppliers and equipment suppliers.

IPC wishes to make clear that we share the world’s concerns about the human rights atrocities in the Democratic Republic of the Congo and supports efforts to bring peace and stability to the region. Unfortunately, due to the law of unforeseen consequences, we believe that the conflict minerals portion of Dodd-Frank will only increase the poverty and misery of the local people.

There was — and maybe still is — a responsible solution to the issue of conflict metals. Over the last three years, electronics industry groups and global metals associations have been working to “bag and tag” minerals from artisanal mines in the DRC. The DRC government supports this action as do other countries in the Great Lakes Region of Africa.

It’s not a perfect system, but it can work if it’s given time to be implemented. Unfortunately, the rush to source “conflict free” immediately can only serve to worsen the situation in the DRC. Right now, the only smelters that can be certified as “conflict free” are those that are not sourcing in the DRC or adjacent countries. We need to give these certification systems time to work.

The Tulane University economic analysis may be viewed at http://tinyurl.com/3bl8ntg. For more information about the IPC survey and IPC initiatives in the area of conflict minerals, visit www.ipc.org/minerals.  We also suggest reading our earlier post, Conflict Metals: Good Intentions Gone Tragically Bad.

Learn more: Steven McEuen, director of purchasing, Epic Technologies, Fern Abrams, director, government relations/environmental policy, IPC, Christopher Schwarz, associate, Canyon Snow Consulting LLC, and John Plyler, supply chain social responsibility program manager, will provide the latest information on the SEC regulations, guidance, and industry tools to help you meet legal and customer requirements at IPC APEX EXPO in a free session on Wednesday, February 29, in San Diego.

4 Comments

  1. Posted February 29, 2012 at 9:46 pm | Permalink

    Thank you this information i will share it to my friend working in steel corporation in our place, i hope it can help.

  2. Posted March 8, 2012 at 7:12 pm | Permalink

    Great blog, very informative. Keep on posting mate. I learned a lot in your blog.

  3. Posted March 9, 2012 at 3:45 pm | Permalink

    I hope the government will take a look and give time on this. It can help to the people around it.

  4. Posted March 9, 2012 at 4:40 pm | Permalink

    Here in our place our government made a bad decision by turning the metal corporation in privacy. Now our city is not good as before.


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