December 28, 2012 – January 4, 2013

F5: Conflict Minerals Policy

F5, an application delivery networking company, recently uploaded its conflict minerals policy on its website. Excerpts from the policy follow:

F5 is committed to doing business in a way that enables people to live healthy, prosperous lives. Sourcing minerals that fund conflict in the Congo and surrounding region is not in line with that mission. F5 will work with its suppliers to determine the source of materials of concern, in particular Tin, Tantalum, Tungsten, Gold and Cobalt and the ores from which they are produced. F5 will work to phase out any minerals coming from illegitimate sources; however, F5 wants to support development of legitimate industry in the Congo so its plan does not include phasing out all minerals from the region.

F5 has taken the following steps:

  • In 2012, F5 began asking all suppliers to provide a conflict minerals statement and full material declarations of components purchased by F5. F5 is using the information gathered to work with its supply chain partners to phase out any minerals coming from conflict-region smelters not proven to be DRC Conflict Free.
  • F5 has notified its supply chain of this position on conflict minerals.

F5 recognizes this is an ongoing process and F5 will continue to perform due diligence to ensure all products are free of conflict minerals. As its suppliers are in the process of auditing their supply chains, F5 currently declares its products DRC Conflict Undetermined. F5’s goal is to declare all products DRC conflict free by the first SEC reporting deadline in May 2014.

Sager Electronics: Conflict Minerals Customer Letter

Sager Electronics is a North American electronic component distributor. In a letter from Sager Electronics’ Vice President of Operations, dated September 2012, Sager Electronics states that as of the date of the letter, it cannot identify and verify the origin of each product it sells. Instead, Sager Electronics relies on its authorized manufacturers to provide it with this information. Sager Electronics is in the process of surveying all of its component manufacturers to determine their compliance and asking them to notify Sager Electronics of any product that it suspects may be at risk of containing conflict minerals. Sager Electronics intends to provide access to its manufacturers’ conflict mineral statements via the internet.

If any of its authorized manufacturers notify Sager Electronics that a part contains conflict minerals, Sager Electronics will send a product alert to any customer who has purchased the product in the past five years and/or has open purchase orders for this part. At that time Sager Electronics will determine whether additional corrective action should be taken with the supplier to prevent future occurrences.

SEC Defends Rule Forcing Oil, Mining Payment Transparency

In a brief filed this week, the SEC defended its new rule requiring oil, mining, and gas companies to disclose payments they make to foreign countries. The SEC adopted the resource extraction rule on the same day that it adopted the conflict minerals rule. Similar to what has happened with the conflict minerals rule, several business groups have challenged the resource extraction rule, arguing that it goes beyond the intent of Congress and puts US based companies at a competitive disadvantage. The SEC defended the rule, responding that the legislative history of the law made it clear that Congress intended to address the issue of resource riches leading to corruption in poor countries. Also, in response to the business groups’ claim that the First Amendment would protect reporting companies from having to make certain affirmative statements, the SEC stated that reporting companies are subject to other disclosure requirements and that the First Amendment claim is meritless. Many of the arguments made by the business groups in the resource extraction rule challenge mirror the arguments made in the conflict minerals rule challenge. The SEC’s brief provides insight into the responses the SEC may give in the conflict minerals rule challenge.