Definition, Regulations and Relevance for Companies - Responsible Sourcing, Due Diligence and Reporting along the entire Supply Chain.
Conflict Minerals - Definition
What are conflict minerals?
Conflict Minerals refer to raw materials or minerals that come from a particular part of the world where conflict is occurring and affects the mining and trade of those materials and resources.
These conflict minerals (3TGs) are tin, tantalum, tungsten and gold which are mined in eastern Congo (DRC) or adjoining countries.
These minerals are essential to the production of a wide range of devices, including consumer electronics such as smartphones, tablets and computers, as well as in products from the jewelry, automotive, aerospace, medical equipment and many other product groups and industries.
Central problem of conflict minerals?
In a resource-rich country without sufficient state control, armed groups create a financial basis for themselves by exporting raw materials.
Their systematic exploitation can lead to serious human rights violations, violations of international humanitarian law or the realization of international criminal law.
A major difficulty is obtaining the necessary information on conflict commodities in supply chains, components, and products to effectively prevent their trafficking.
- Cassiterite is the main ore for the extraction of tin, which is essential for the production of tin cans and for the solder on the circuit boards of electronic devices.
- Coltan is the metal ore from which the element tantalum is extracted.Tantalum is mainly used for the production of tantalum capacitors (GPS, anti-lock braking systems, laptops, etc.).
- Wolframite is an important source of the element tungsten. It is widely used, for example, for fishing weights, dart tips and golf club heads.
- Gold is used for jewelry, electronics and dental products, among others.
Legislative regulations - Relevance for Companies - The RMI Reporting Framework
In 2010, Congress passed the Dodd-Frank Act, which directs the Commission to issue rules requiring certain companies to disclose their use of conflict minerals if those minerals are “necessary to the functionality or production of a product” manufactured by those companies. Under the Act, those minerals include tantalum, tin, gold or tungsten.
Congress enacted Section 1502 of the Act because of concerns that the exploitation and trade of conflict minerals by armed groups is helping to finance conflict in the DRC region and is contributing to an emergency humanitarian crisis. Section 1502 of the Act amends the Securities and Exchange Act of 1934 to add Section 13(p).
The final rule 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 final rule requires a company to provide the disclosure on a new form to be filed with the SEC (Form SD). To learn more, please visit information in the links below:
Which companies are affected?
Companies that are publicly traded in the USA (called „issuers“ under the law) need to disclose whether or not conflict minerals that are necessary to the functionality or production of a product they manufacture originated in the Democratic Republic of the Congo. If they did, they must submit a report to the Securities and Exchange Commission (including due diligence specification and an independent third party audit).
Reporting requirements are passed down the supply chain
Companies not publicly traded in the USA are not directly affected by the Dodd-Frank Act, which means they are not legally required to proactively deal with conflict minerals reporting. However, any company which is a supplier of publicly traded US companies will be indirectly affected, because the reporting requirements are passed down the supply chain. This means that requests from customer companies need to be dealt with.
Mining is an intensive process that poses potential social and environmental risks that can have lasting negative impacts if not managed in a responsible way.
Conflict Minerals is a term used to describe critical raw materials and resources that are mined in conditions of violent conflict in the Democratic Republic of Congo (DRC) or adjoining countries. To get more background information about the situation in the Congo, please visit: www.enoughproject.org