MITIGATING THE RISK OF MOUNTING CONFLICT MINERAL SOURCING REGULATIONS

The US and EU conflict minerals and responsible sourcing laws can put a corporation’s reputation at risk – but they may also create opportunities for a business to open new markets. While some companies have struggled to meet even the basic demands of the US law, others that have met the requirements achieve an advantage – suppliers that can give evidence of compliance with these regulations may solidify contracts and secure new business partners more easily than those that fall behind in their ability to procure information from their supplier networks.

What exactly are conflict minerals?

As defined in the US Dodd Frank Wall Street Reform and Consumer Protection Act of 2010, ‘conflict minerals’ are the minerals from which tin, tantalum, tungsten or gold are extracted or obtained as a by-product and directly or indirectly fund or benefit armed groups in the Democratic Republic of the Congo (DRC) region of Africa. These minerals are essential to the manufacture of products such as consumer electronics, cars, clothing, aerospace equipment, medical devices and jewellery. US law requires that public companies discover and publicly report on the presence and source of these minerals when present in the company’s manufactured products.

New guidance from the US Securities and Exchange Commission (SEC) on the US law, issued on 29 April 2014, highlighted the dynamic nature of regulations that can affect a business’s supply chain. The changes also underscored the importance of having a supplier engagement system that is flexible and adaptable to meet evolving obligations and demands. The two major conflict minerals initiatives – in the US and the EU – create obligations and opportunities for enhanced risk management, reputation protection and a bolstered bottom line.

Jul-Sep 2014 Issue

3E Company