Companies around the world are anxiously waiting for the US Securities and Exchange Commission (SEC) to issue its conflict minerals rule. It is the rule that will require companies to determine whether their products contain metals sourced from mines located in conflict areas of the Democratic Republic of the Congo and adjoining countries.
The SEC issued a proposed rule in late 2010, but they have yet to issue a final rule.
Why the delay and when can companies expect a final rule?
The SEC was forced to delay their final rule after it became apparent the rule would be difficult to implement and that some rule-making flexibility was required. The authorizing legislation doesn’t allow the SEC much wiggle-room and that has frustrated companies and slowed regulators.
Here are some key issues that the SEC is still pondering:
Companies want the SEC to take into account the lack of transparency in the electronics supply chain and the challenges faced by manufacturers in tracing conflict minerals. They want the SEC to allow companies making a good faith but unsuccessful effort to trace the source of their conflict minerals to report their status as “indeterminate.”
The US Securities and Exchange Commission is not providing a lot of information on what the final rule will look like or when we can expect it, but statements made by SEC chairman Mary Schapiro during a March 6, 2012 congressional budgeting hearing provide some insight:
- The commission is working to finalize the adoption [of a final rule] and I’m hopeful in the next couple of months, it will be done… We will have a phase-in period, I don't know how long, that will… give sufficient time for some of the supply chain due diligence mechanisms to be developed and put in place… I don't believe a de minimis exception is possible under the statute. But the rule will try to give latitude and flexibility in some areas that I think will be helpful to different kinds of businesses in order to comply.
The earliest expected date for a final conflict minerals rule is June 2012. The industry hopes the delay provides the SEC the time it needs to consider how to best handle key industry issues and concerns. Human rights groups point out that the problem of rebel-controlled mines continues. They want a rule as soon as possible.
How do you feel about the delay?
Click here for more information on conflict minerals and other legislation requirements affecting the electronics industry.