July 21, 2010
Conflict Minerals Legislation: President Obama signs the bill today
Only Publicly-Traded Manufacturers Covered by New Law
The "Dodd Frank Wall Street Reform and Consumer Protection Act" was signed into law today by President Obama. The bill includes a provision addressing "conflict minerals," requiring certain disclosures by publicly-traded manufacturing firms to the Securities and Exchange Commission (SEC) as to the source of gold used in manufacturing processes.
While the regulations implementing the bill are yet to be drafted, only companies traded on a U.S. stock exchange will be implicated by the legislation and required to file reports on gold sourcing with the SEC.
The primary intent of the new law is to overhaul the nation's financial regulatory system. An added provision took aim at "conflict minerals," including gold, from the Democratic Republic of Congo (DCR) and bordering countries. This provision requires publicly-traded gold manufacturers to file annually with the SEC disclosing whether gold used in their products originated in any of the designated countries. If so, the reporting company must provide information on the due diligence it exercised to ensure that the gold did not benefit armed groups.
As made clear in Conference Report accompanying the legislation, prepared by the U.S. House of Representatives, disclosure to the SEC on the issue of conflict-minerals is only required of those companies that are "otherwise required to file with the SEC." One of the original co-sponsors of the provision, U.S. Senator Russ Feingold, states on his website that it applies only to "companies on the U.S. stock exchanges for which these minerals constitute a necessary part of a product they manufacture."
The purpose behind the conflict-mineral provision is to prevent the trade of these substances to fund conflict in the DRC and the nine countries adjoining it. The bill defines conflict minerals to include gold, coltan, cassiterite, wolframite or their derivatives. As written, publicly traded manufacturers that are covered by the legislation will need to determine whether gold in their inventory originated in the DRC.