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Conflicts Start Early on Minerals Rule; 'Absolutely Insane'

Joe Mont | August 28, 2012

The intent may be noble, but the new rule enacted by the Securities and Exchange Commission mandating disclosure of “conflict minerals” in a company's supply chain is likely to be an expensive, frustrating compliance challenge for years to come.

The SEC approved the rule on Aug. 22 by a 3-2 vote, as required by Section 1502of the Dodd-Frank Act. It will require a large swath of Corporate America to disclosure the use of several minerals mined in the Democratic Republic of Congo and adjoining countries and often used to finance militia groups there.

The final rule applies to public companies that use four specific minerals—tantalum, tin, gold, or tungsten—where the minerals are “necessary to the functionality or production” of an item the company either makes itself, or contracts a third party to make on its behalf. Companies will need to conduct “a reasonable inquiry” into the origins of those minerals, and disclose any use of them on a new Exchange Act filing, Form...

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