SEC Conflict Minerals Disclosure Requirements

Comprehensive guide to understanding and complying with SEC Section 1502 disclosure requirements

Quick Reference

Filing Deadline: May 31st annually
Form Required: SEC Form SD
Covered Minerals: Tantalum, Tin, Gold, Tungsten (3TG)
Covered Countries: DRC and adjoining countries
Who Must Comply with the Rule
Understanding if your company falls under SEC conflict minerals requirements

The Rule Applies If:

Your company files reports with the SEC pursuant to Exchange Act Sections 13(a) or 15(d)
The minerals are "necessary to the functionality or production" of a product manufactured by your company or contracted by your company to be manufactured

Contracting to Manufacture

A company is considered to be "contracting to manufacture" a product if it has some actual influence over the manufacturing of that product. This determination is based on the company's facts and circumstances, taking into account the degree of influence the company exercises over the product's manufacturing.

You are NOT deemed to have influence if you merely:
  • • Affix your brand, marks, logo, or label to a generic product manufactured by a third party
  • • Service, maintain, or repair a product manufactured by a third party
  • • Specify or negotiate contractual terms with a manufacturer that do not directly relate to the manufacturing of the product

Note: The requirements apply equally to all reporting companies, including small entities and domestic and foreign reporting companies.

Reasonable Country of Origin Inquiry
First step in determining your disclosure obligations

A company that uses a conflict mineral is required to conduct a reasonable country of origin inquiry that must be performed in good faith and be reasonably designed to determine whether the conflict mineral originated in the Covered Countries or are from recycled or scrap sources.

If Your Inquiry Shows:

  • (a) Conflict minerals did NOT originate in Covered Countries OR came from recycled/scrap sources
  • (b) No reason to believe minerals may have originated in Covered Countries OR may not be from recycled/scrap sources

Required Actions:

  • • Disclose determination in Form SD
  • • Provide brief description of inquiry and results
  • • Post information on public website
  • • Provide website address in Form SD

If Your Inquiry Shows:

  • (a) Minerals may have originated in Covered Countries AND
  • (b) Minerals may not be from recycled/scrap sources

Required Actions:

  • • Undertake due diligence on source and chain of custody
  • • File Conflict Minerals Report as exhibit to Form SD
  • • Make report publicly available on website
  • • Provide website address in Form SD
Conflict Minerals Report Requirements
What must be included when filing a Conflict Minerals Report

Due Diligence Framework

Due diligence measures must conform to a nationally or internationally recognized due diligence framework, such as the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.

"DRC Conflict Free" Products

If products are "DRC conflict free" (minerals may have originated from Covered Countries but did not finance or benefit armed groups), you must:

  • • Describe due diligence measures taken
  • • Obtain independent private sector audit
  • • Certify that audit was obtained
  • • Include audit report in Conflict Minerals Report
  • • Identify the auditor

Products NOT Found to be "DRC Conflict Free"

In addition to the requirements above, you must describe:

  • • Products manufactured that have not been found to be "DRC conflict free"
  • • Facilities used to process the conflict minerals
  • • Country of origin of the conflict minerals
  • • Efforts to determine mine or location of origin with greatest possible specificity

"DRC Conflict Undeterminable" Products

For a temporary period (2 years for all companies, 4 years for smaller companies), if unable to determine origin or armed group financing, products are "DRC conflict undeterminable." You must describe:

  • • Due diligence measures taken
  • • Products that are "DRC conflict undeterminable"
  • • Facilities used to process minerals (if known)
  • • Country of origin (if known)
  • • Efforts to determine mine/location of origin
  • • Steps taken or planned to mitigate risk of benefiting armed groups

Note: Independent audit not required for "DRC conflict undeterminable" products.

Recycled or Scrap Sources
Special rules for minerals from recycled or scrap sources

If You Reasonably Believe Minerals are Recycled/Scrap

You are NOT required to exercise due diligence or file a Conflict Minerals Report. However, you must:

  • • Disclose reasonable country of origin inquiry determination in Form SD
  • • Provide brief description of inquiry and results
  • • Post information on public website
  • • Provide website address in Form SD

If You Cannot Reasonably Conclude Recycled/Scrap

You must undertake due diligence and obtain audit of Conflict Minerals Report.

Gold:

Has nationally recognized due diligence framework (OECD Gold Supplement)

Tantalum, Tin, Tungsten:

Until framework is developed, describe due diligence measures exercised. Independent audit not required.

Important: If conflict minerals are derived from recycled or scrap sources rather than newly-mined sources, products containing such minerals are considered "DRC conflict free."

Independent Private Sector Audit
Requirements for third-party auditing of Conflict Minerals Reports

Audit Standards

Must be conducted in accordance with Government Accountability Office (GAO) standards. Either Performance Audits or Attestation Engagements standards may be used.

Audit Objective

The audit must express an opinion or conclusion on:

  • • Whether the design of due diligence measures is in conformity with the nationally or internationally recognized due diligence framework used
  • • Whether the company's description of due diligence measures is consistent with the due diligence process undertaken

Note: Performance Audit standards allow auditors other than certified public accountants to perform audits, unlike Attestation Engagement standards.

Form and Timing of Disclosure
When and how to file your conflict minerals disclosure

Form SD Filing

  • • Use new SEC Form SD
  • • All companies file for same calendar year period
  • • Regardless of fiscal year end
  • • First filing: May 31, 2014 (for 2013 calendar year)

Annual Deadline

May 31

Every year thereafter

Additional Requirements

  • • Make disclosures publicly available on company website
  • • Provide website address in Form SD filing
  • • If filing Conflict Minerals Report, include as exhibit to Form SD