November 8, 2013 – November 15, 2013
The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Sanders (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.
EU Conflict Minerals Law Delayed Until Next Year
In his latest articled titled, EU’s Conflict Minerals Law Will Be Delayed Until Next Year, Joe Mont of Compliance Week wrote “The European Commission’s legislative proposal on conflict minerals, expected any day now, has instead been put on hold until next year.”
Our very own Dynda Thomas, leader of the Squire Sanders conflict minerals practice area, was quoted in the article saying, “When the proposed rule does come out, it will be nearly final for all intents and purposes. The process will be unlike the U.S. process in which a proposed rule is often changed significantly after it is commented upon by interested parties. For the EU rule, the comment and lobbying is done at the front end. That underscores the importance of making concerns known now, before the proposed rule is issued.”
WSJ Highlights Conflict Minerals Software Tools
Joel Schectman of the Wall Street Journal, in his article titled Conflict Mineral Deadline Looms for Electronics Makers, reports that many companies are turning to software to aid them in understanding their supply chain. However, there is still a problem: many suppliers are not willing to disclose their suppliers. Bill Olson, Director of Sustainability and Stewardship at Motorola Mobility elaborates, “They are concerned that if people know where they get their ore from, their competitors will go to the source and cut them out of their supply chain.”
Accordingly, Mr. Olson predicts that in May 2014, Motorola will likely have to report their products as “conflict indeterminate.”
Enough Project Releases Report, Proposes Solution to Conflict Minerals Certification Process
In its report published on November 11, 2013, titled Coming Clean: A Proposal for Getting Conflict Minerals Certification on Track, the Enough Project urges the Democratic Republic of the Congo and surrounding states to complete their respective conflict minerals certification processes within the next few months. If they do not, the Enough Project states, “multinational companies may stop purchasing many minerals from the region that cannot credibly be certified as conflict-free.”
The Enough Project proposes that governments in the region fully implement the International Conference on the Great Lakes Region certification process, which has four main components:
- Mine Inspections and Traceability,
- Information database,
- Audits, and
- Independent Monitoring.
To review the entire report, please see Coming Clean: A Proposal for Getting Conflict Minerals Certification on Track.
Elm Consulting Group Discusses the Cost of the Independent Private Sector Audit of Your Conflict Minerals Report
If a reporting company knows or has reason to believe that conflict minerals originated from one of the “covered countries,” and after conducting due diligence, determines that its conflict minerals sourced from the “covered countries” financed or benefitted armed groups, it must include an independent private sector audit report with its conflict minerals report. [Note: For those falling into the “conflict indeterminable” category, the audit requirement is delayed for two or four years]. The independent private sector audit report must express an opinion or conclusion as to whether the design of a company’s due diligence measures is in conformity with the criteria set forth in the due diligence framework and whether the description of the company’s due diligence measures is consistent with the process undertaken by the company.
In its latest blog post, Elm Consulting discusses the anticipated cost of the independent private sector audit. It states, “[a]s stated in the proposal and final regulation, the SEC thinks the [independent private sector audit] should cost around $25,000. So what will [yours] cost? It depends on a number of factors, some of which are directly influenced by the audited entity. But based on the independent private sector audit report proposals we have submitted, SEC’s estimates may frequently be generally on-target – and in some cases, even high.”