Senate Passes Finance Bill with Conflict Minerals Provision
On May 20, 2010, the Senate passed H.R. 4173, a financial reform bill that contains a provision on gold and certain minerals from the Democratic Republic of the Congo and adjoining countries.
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(The House passed its version of H.R. 4173 on December 11, 2009, which does not contain a conflict minerals provision. The next step for this legislation is a House-Senate conference to resolve the differences between the two measures. The conference version would then have to be passed by Congress and sent the President for his approval to become law.)
Certain Minerals, Derivatives Would be Affected
This measure would affect gold, columbite-tantalite, cassiterite, and wolframite (collectively “minerals”) and their derivatives (such as metals).
Annual Disclosure to SEC Would be Required
Persons (e.g. corporations) required to file reports with the Securities and Exchange Commission, for whom such minerals, or their derivatives, are necessary for the functionality or production of a product they manufacture, would be required to annually disclose to the SEC whether the minerals used originated or may have originated in the Democratic Republic of the Congo or an adjoining country.
The disclosure would also include a description of the measures taken by the person, such as an independent audit, to exercise due diligence on the source and chain of custody of such minerals and derivatives, in order to ensure that the activities of that person did not directly or indirectly finance or benefit armed groups in the Democratic Republic of the Congo or an adjoining country.
In addition, this disclosure information would be required to be available to the public on the internet website of the person.
Rules to implement these disclosure requirements would be required to be promulgated within 180 days of enactment.
Termination, Extension, and Waiver of Disclosure Requirement
These disclosure requirements would terminate 5 years after the date of enactment; however they could be extended for one year periods if the Secretary of State certifies that armed parties in the Democratic Republic of the Congo or adjoining countries continue to be directly involved and benefiting from commercial activity involving these minerals.
This disclosure requirement could be temporarily waived by the SEC, if the President determined that doing so would be in the public interest.
In addition, a report to Congress would be required two years after the date of enactment that evaluates the implementation, impact, and makes recommendations regarding these provisions.
Conflict minerals provision (as adopted on May 18, 2010) available at http://thomas.loc.gov/cgi-bin/query/R?r111:FLD001:S53865-S53866