The SEC will meet at 10:00am August 22 to vote on the final conflict minerals regulation in addition to conducting other business. Read the announcement here.
Read more →As has become habit with SEC, the highly publicized June timeframe for publication of the Commission’s final rule on conflict minerals (Section 1502 of the Dodd-Frank Act) will pass by without action. SEC Chair Mary Shapiro stated in a budgetary hearing last March that she anticipated the final rule in June, establishing yet another informal deadline and setting some expectations in the regulated community. The Commission did not meet this week, nor is a meeting scheduled for today, Monday or anytime in the next 7 days. Rules are voted on in Commission meetings for adoption, then publication. Federal law requires public notice of Commission meetings at least 7 days in advance (except for emergency meetings, which typically involve enforcement actions, not rule making). There is talk in some circles of an August publication timeframe. Of equal interest is how – or perhaps whether – Shapiro responds to this week’s letter from 58 members of Congress demanding July 1 action on the rule or a June 29 written response explaining the Commission’s reason for the inaction/delays. We have heard that the letter could possibly go completely unanswered. With the government’s attention on yesterday’s Supreme Court decision on health care, and politicians
Read more →On June 21, 2012, The UN Security Council released the interim report on DRC (document number S/2012/348). As stated in the report, “the Group’s primary role is to investigate and document evidence regarding the procurement of military equipment, including weapons and ammunition, by armed groups active in the Democratic Republic of the Congo, as well as their related financial networks and involvement in the exploitation and trade of natural resources” [Paragraph 5]. Therefore, the majority of the report details the existence and activities of armed groups in DRC and adjoining countries, including April’s defection from FARDC lead by General Bosco Ntaganda. But the report also “evaluat[es] the impact of its due diligence guidelines for importers, processing industries and consumers of Congolese mineral products…” [Paragraph 7]. Regarding those findings, The Group has established that market uncertainty resulting from the lengthy delay in the publication of the [US Securities and Exchange] Commission rules, together with the fear of potential 100 per cent “conflict free” demands in [the companies’] reporting obligations, has led most industry actors to pull out of the market in the eastern Democratic Republic of Congo rather than conduct due diligence on their supply chains. [Paragraph 151]. Last August, we
Read more →A letter to SEC Chair Mary Shapiro was filed by 58 House Democrats on Friday June 22 concerning the delay in finalizing rules on conflict minerals and disclosures of payments made to governments by extractive industries. The letter expressed disappointment that “the Commission has exceeded the statutory deadline for final [conflict minerals] rules by more than a year” and that “there is no sign that a final version of either rule will be published soon.” The group admonished the Commission by stating “there is no clear reason for the delay” and that “the Commission has had more than enough time to consider and respond to all of the substantive comments.” The letter closes with “We urge you to schedule a vote on the final rules to implement Sections 1502 and 1504 by July 1, 2012. If a vote cannot be scheduled by this date, we request you respond to this letter with an explanation regarding the extended delay and provide us with a definitive date for a vote on these two rules.” The deadline for the response to the Congressmen is June 29, 2012.
Read more →OECD recently released its second interim progress reports (called “Cycle 2″) on its pilot program for implementation of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High Risk Areas, and the Supplement on Tin, Tantalum and Tungsten. Our Client Alert reviewing the Cycle 2 Report can be downloaded free of charge below. NOTE – We have had some reports of errors encountered in downloading this document. We believe the problem has now been fixed, but please email lheim@elmgroup.com with any problems and we will send you the document directly. Download the Client Alert Please enter your contact information to download the document. Thank you.
Read more →Two recent news items from the UK’s International Business Times illustrate interesting developments in the area of conflict minerals. The group known as Anonymous (referred to as “hacktivists” for their use of hacking as a tactic to promote their activist causes) targeted semiconductor manufacturer Intel and European metals trader Traxys in attacks yesterday and today. The first article highlights Anonymous’ attacks of Intel that claim “mining companies that provide coltan to Intel are working in DR Congo”. The article did not indicate what evidence Anonymous relied on in making the accusation. According the article, Anonymous dumped personal information such as usernames, password, emails as well as a heap of emails and payments database on [an activist website] as part of Operation Green Rights, which Anonymous launched last year against major oil companies… The second article offers more details on the Traxys attack, including text from emails that Anonymous claims support their position that the company is engaged in trading illegally-sourced materials. The article only includes excerpts from emails received by Traxys, and does not mention responses to those by Traxys. We note this because we ourselves occasionally receive unsolicited emails from traders offering to sell a variety of ores, metals and recyclables.
Read more →The House Committee on Financial Services, Chaired by Congressman Spencer Bachus has announced a series of hearings on various aspects of the Dodd-Frank Act, including Section 1502 on conflict minerals. The public notice is available on the Committee website and includes: May 10 at 10 a.m. The International Monetary Policy and Trade Subcommittee will hold a hearing on the consequences of requiring Securities and Exchange Commission (SEC) registrants to provide disclosures about the use of minerals from the Congo region.
Read more →Based on our ongoing dialogs with clients and other companies, and our attendance at last week’s EICC-GeSI Conflict Minerals Workshop in Philadelphia, we have a few predictions about the upcoming second report on OECD’s downstream pilot program on the implementation of their due diligence guidance. The report was originally scheduled for release last month, but is not yet available and we don’t know when it will be published (although we would expect in advance of the next meeting the first week of May). As our client base consists more of heavy industry, hard metals and non-electronics consumer products, some of our predictions stand in contrast to “conventional wisdom.” Especially for US companies subject to DF1502, there is an increasing recognition that the makeup of the downstream pilot participants is heavily skewed toward the electronics industry, and the results of the pilot are therefore not representative of heavy manufacturing or other non-electronics sectors. At the same time, we expect an increased awareness of conflict minerals (CM) issues in pilot participants which means a related increase in uptake of basic program elements such as company policies on conflict minerals. Many companies (arguably most companies (a) outside the electronics industry and (b) not
Read more →The highly-touted Solutions for Hope (SfH) Project in the DRC has received global publicity as a potential model for future conflict-free mineral sourcing within the DRC. As part of the project, an independent audit of the operations was conducted to evaluate conformance of the operation to the OECD Due Diligence Guidance. This work was conducted by Gregory Mthembu-Salter, a consultant to the United Nations Group of Experts. This audit document, which forms the basis of SfH’s conflict-free mine claims, is available on the SfH website. (NOTE: When we began writing this piece, the link to this audit report functioned properly. At the time of our publication, the link appears to have become corrupted, therefore we include the document in its exact form as originally downloaded from the SfH website on April 5, 2012. SfH OECD audit report) With the world carefully watching the SfH project, one expects the highest attention to detail and scrutiny at each step in the process. However, with all due respect to Mr. Mthembu-Salter (whom Elm will be meeting at the end of this month at the ITRI Conflict Minerals Programme in Cape Town South Africa), it is unlikely that an SEC Conflict Minerals Report (CMR)
Read more →The World Gold Council (WGC) has released the exposure draft, dated March 2012, of its Conflict-Free Gold Standard. According to the press release, The objective of the Standard is to create absolute trust that the gold produced under its guidelines neither fuels armed conflict, nor funds armed groups, nor contributes to human rights abuses associated with these conflicts. The WGC press release, which contains a link to the draft, is available here.
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