At first blush, the Securities and Exchange Commission’s proposed “conflict minerals” rule seemed fairly esoteric. After all, it applied to companies that use such rare metals as cassiterite, columbite-tantalite, and wolframite. But as they take a closer look, many companies in various industries are finding that the rule could place a hefty compliance burden on them.
Consider Kraft Foods, hardly the type of manufacturing company that Congress likely had in mind when it put the rule into the Dodd-Frank Act last year. Kraft recently discovered that some of its packaging, promotional materials, and factory equipment contain trace amounts of the four metals named in the rule. As the rule is currently proposed, Kraft says it will be obligated to track as many as 100,000 suppliers for thousands of products to comply with the law. “We had no idea this legislation was going to be covering companies like us,” said Kraft’s Irma Villarreal, chief securities counsel and assistant corporate secretary, during an SEC forum on the proposed rule. “Respectfully this is not something we can turn on a dime and start doing in 2012. It is going to take us some time. We don’t have the ability to talk to 100,000 suppliers to ensure what and who has conflict minerals,” she said.
