U.S. federal legislation which affects the electronics and other manufacturing industries will need to comply, or help their customer's comply, with the law and forthcoming regulations.
Under the Dodd-Frank Wall Street Reform Act, which was finalized in August 2010, publicly traded companies whose products contain metals derived from minerals defined as conflict minerals, which include (3TG) tantalum, tin, tungsten, and gold, are required to report annually to the Securities and Exchange Commission (SEC).
The new reporting requirements are based on concerns that revenues obtained from mining and transport of conflict minerals finance the ongoing conflict in the Democratic Republic of Congo (DRC) and surrounding countries and the resulting humanitarian crisis.
The SEC published conflict minerals regulations in August 2012. These regulations state all companies registered on the US stock exchange will be required to report annually on conflict minerals in their products, beginning in the first full fiscal year after the regulations are published. For example, if the regulation is finalized in February 2012 and an affected companies’ fiscal year begins on July 1st, it will have to file a conflict minerals report on its use of conflict minerals from July 1, 2012 – June 30, 2013. The requirements will apply equally to U.S. and non-U.S. suppliers. Although reporting requirements only apply to publicly traded companies required to report to the SEC, it is expected that these requirements will rapidly be passed through the entire electronics industry supply chain.
Information required by the SEC or our customers is expected to include identifying the country of origin for any tantalum, tin, tungsten, and gold in our products and determining whether the conflict minerals from the DRC are “conflict free” (that is, they do not directly or indirectly finance armed groups through mining or mineral trading in the DRC region). Additionally, we expect to be asked to provide details about how we obtained and verified that information (due diligence).
Suppliers will be asked about the presence of conflict minerals in the products they provide so that publicly traded companies can all be better prepared for compliance when a final regulation in published.
Meeting these requirements will be challenging and potentially costly to comply with for everyone involved in the tracking of materials' origin. Cooperation will be needed to get information from smelters/refiners in the supply chain as to whether products contain conflict minerals that originate from conflict mines in the DRC or adjacent countries. Only by working together will everyone able to comply with the forthcoming regulations.
We are working with our customers and suppliers, to develop tools to support efficient data sharing and compliance for the entire supply chain. Some of these tools will include due diligence guidance, a data exchange standard, template communications, and model supplier policies.
To prepare for these requirements there are some activities to start implementing now, including, but not limited to:
· Determine parts/assemblies that incorporate one or more of the identified conflict minerals.
· Communicate the information about the forthcoming SEC requirements to your suppliers of those parts/assemblies so that they in turn can forward to their suppliers and on down the supply chain.
· Begin to develop your company policy on conflict minerals and management systems with respect to conflict minerals and require your suppliers to adopt similar policies and systems.
