By the Securities and Exchange Commission’s (SEC’s) own estimates, a last-minute addition buried in the Dodd-Frank Wall Street Reform and Consumer Protection Act is set to affect an estimated 6,000 SEC registrants when it takes effect Jan. 1, 2012. Compliance is estimated to cost companies billions, and many are starting to come to terms with what it will require of them.
But at an Oct. 18 SEC roundtable on the rule in question, it became clear that many companies have been caught off guard by the U.S. Conflict Minerals Act in Section 1502 of Dodd-Frank, which requires public companies to disclose any use in their products of conflict minerals—tin, tungsten, tantalum and gold that originate from the Democratic Republic of the Congo (DRC) and surrounding countries.
Indeed, the conflict minerals rule is broader than many people would think. Kraft is among the affected because, while it doesn’t produce tungsten-containing computer processors or gold necklaces, the packaging it uses—a can, say, or a Capri Sun pouch—may contain conflict minerals. Kraft also is affected because it markets its products with promotional materials such as branded USB drives and flashlights, which may contain the minerals. The rule’s effects go beyond publicly traded companies because private and foreign companies will have to perform their own inquiries. And at this point, the rule provides no de minimis exemption for trace amounts.