What are Conflict Minerals?
The US Congress passed the Wall Street Reform and Consumer Protection Act (the "Dodd Frank Act") in July 2010. Among other things it makes it binding for companies to document and publicise the presence of the so called conflict minerals when used in their products or in the manufacturing process. Coltan, gold, cassiterite (tin ore), wolframite and their derivates i.e. tin, tantalum or wolfram among others constitute conflict minerals.
As of 31st May 2014 all companies affected by this Regulation and listed in the US have to submit a report to the SEC (Securities and Exchange Commission) every year. This has to reveal whether the minerals used originate from the Democratic Republic of Congo (DRC) or its adjoining countries (DRC countries) and up to what extent they are actually "essential" for the products. Should this be the case the companies have to indicate the place of origin of the minerals precisely. This proposes to ensure a ban on the use of minerals that directly finance or back the armed conflict in the region.
If the minerals actually come from one of the DCR countries a Conflict Mineral Report has to be compiled. It must give a detailed account of the efforts undertaken to check the origin of the minerals and to make sure that the use of these minerals neither directly nor indirectly support armed groups. This report has also to be reviewed by an independent body. Affected companies have to independently account for the preceding year at the end of their financial year. Going by this the first report is due for 31st May 2014, which will be valid for the calendar year 2013 and thereafter on every 31st May for the preceding year.
The burden of proof will apply to all materials introduced into the recycling process from 1st January 2013 onwards. Materials that are "outside" the supply chain as of this date, i.e. holdings or ores already processed but not yet introduced into the value chain to end users, are exempt from this. A two-year transition period also permits minerals to be described as "Congo conflict not determinable" (instead of "Congo conflict-free"). For small-scale companies this transition period is valid for four years. Approximately 195,000 companies across the global supply chain are affected worldwide by this new burden of proof. For US companies the estimated costs incurred on account of this new Act are pegged at a minimum of three to four billion dollars annually.