What is the US Conflict Mineral Policy and Regulation?

The Dodd-Frank Wall Street Reform and Consumer Act of 2010's Section 1502 is the United States’ legislation on conflict minerals. The US Department of State works to increase support on a global scale for due diligence recommendations designed to assist businesses in developing a responsible trade in minerals from conflict-affected and high-risk regions in the African Great Lakes Region. To encourage the development and usage of supply chains for gold, tin, tantalum, and tungsten free from conflict, the department collaborates with various domestic and international partners, including governments, the corporate sector, and non-governmental organizations.  

As part of a comprehensive effort to implement Section 1502 of the Wall Street Consumer Reform and Protection Act, the Department of State also helps other U.S. government agencies encourage the DRC and neighboring nations to increase transparency and regulatory reform in the mining industry.

The Securities and Exchange Commission (SEC) is the government agency responsible for managing conflict mineral reporting under the Conflict Minerals Rule. Under this regulation, companies that are listed on US stock exchanges and manufacture or contract to manufacture products that contain tin, tantalum, tungsten, or gold must submit a conflict minerals report to the SEC annually. The information must include a description of the company's due diligence efforts to determine the origin of the conflict minerals in their products and the measures taken to mitigate the risks of sourcing conflict minerals.

The SEC provides guidance and resources to help companies comply with the Conflict Minerals Rule, including a Small Entity Compliance Guide and frequently asked questions. The agency also reviews and evaluates the conflict minerals reports submitted by companies to ensure compliance with the regulation.

Companies that are subject to the Conflict Minerals Rule in the US must take the following steps to comply with the regulation:

• Conduct a reasonable country of origin inquiry (RCOI): Companies must determine whether the conflict minerals used in their products originated from the Democratic Republic of Congo (DRC) or adjoining countries. To do this, companies must conduct an RCOI, which is a good-faith effort to determine the origin of the conflict minerals.

• Perform due diligence: If the company determines that the conflict minerals used in their products may have originated from the DRC or adjoining countries, they must conduct due diligence on their supply chain to determine the source and chain of custody of the minerals. The due diligence involves tracing the conflict minerals back to their original source and assessing the risks of sourcing minerals from conflict-affected areas.

• Prepare and submit a conflict minerals report: Companies must prepare and submit a conflict minerals report to the Securities and Exchange Commission (SEC) that includes a description of their due diligence efforts, the results of their due diligence, and the measures they have taken to mitigate the risks of sourcing conflict minerals.

• Obtain an independent private sector audit: If the company determines its products contain conflict minerals that may have originated from the DRC or adjoining countries. The conflict minerals are necessary to the functionality or production of the product; they must obtain an independent private sector audit (IPSA) of their conflict minerals report. The IPSA provides an independent assessment of the company's due diligence efforts and the accuracy of its conflict minerals report.

If the SEC determines that a company has not complied with the Conflict Minerals Rule, it may take enforcement action against the company, including fines, penalties, or legal action. Therefore, companies need to ensure that they comply with the regulation and submit accurate and complete conflict minerals reports to the SEC.