An Introduction to the SEC Conflict Minerals Regulation

by Andy on January 24, 2012

Securities And Exchange Commission Logo While the environmental impact of producing electronic devices is a growing concern, there are many other problems with our current production methods. It can be hard to figure out the origins of electronic devices and how they are produced. One thing that is certain is that the mining and production of some of the minerals commonly found in electronics are used to fund conflicts in areas such as the Democratic Republic of Congo (DRC). Due to this, the Securities and Exchange Commission (SEC) is creating regulations that require companies to know and disclose, where their supplies come from so that manufacturers can purchase minerals from mines that do not fund violent conflicts.

The major requirement of the SEC’s conflict mineral regulation is that any companies that make products that contain conflict minerals should have their supply chain audited. This audit should look at the chain of custody of the minerals to certify that they are not being used to fuel armed conflict in the DRC or any of the surrounding areas. Each company that follows these regulations must show that they are doing their due diligence to ensure that the minerals in their products are free of any ties to armed conflict.

Currently the regulations are still taking shape, so the requirements are morphing as various groups try to find the best balance of cost and benefits. In a set of proposed rules from the SEC in December 2010 the minerals to be regulated are cassiterite, columbite-tantalite, gold, wolframite, as well as their derivatives and any other minerals funding conflicts, as determined by the Secretary of State. A notable derivative of cassiterite is tin, so any product that uses tin alloys, plating, or solders would be contained in this regulation.

While this regulation may seem straightforward to some, it would be a very large undertaking. Many companies are not set up to provide this chain of custody, especially larger companies that get their minerals from many different sources. This regulation could also have far reaching implications even outside of the electronics industry, as it covers minerals used in various industries. A wide array of companies will have to look into their supply chain as some of these minerals may be used in food packaging, jewelry, computers, mobile phones, digital cameras, jet engines, and many other products.

Even with the high cost of this regulation, the benefits could be great. Progress has been reported through a letter from the United Nations Security Council, showing that the preliminary regulations that are in place have hurt the financing of armed groups in the DRC area. While this will by no means dismantle these forces or stop conflict, it will certainly help slow their growth and continue to undermine their operations. It will also allow consumers to purchase products knowing that their money is not being used to fund armed groups that commit atrocities against the people in their area.

For more information on this regulation you can go to the Securities and Exchange Commission’s website as well as review information gathered by a committee established by the UN to look into conflicts in the Democratic Republic of the Congo.

Read Part 1 on RoHS here.

Read Part 2 on WEEE here.

Read Part 3 on REACH here.

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