HardAssetsInvestor

Written by Tom Butcher  |

July 31, 2012

‘Conflict Minerals’ Gold, Tin & Tungsten Face New Layer Of Regulation

Details

How Will It Work?

Nobody yet knows precisely how this will work. The SEC, the regulatory body required by the act to codify the law, has yet to outline the process. The act essentially forces public companies to disclose their use of any conflict minerals that “are necessary to the functionality or production of a product manufactured” or “contracted to be manufactured” by that company.

If a product “does not contain conflict minerals that directly or indirectly finance or benefit armed groups in the Democratic Republic of Congo or an adjoining country” it can be labeled “‘DRC conflict free.’’’

While Dodd-Frank may not ban companies from using conflict minerals, it does  force them to identify, verify and audit the source; outline the chain of custody; and make a public disclosure, not least on their websites, of their use.

Under current SEC proposals, this disclosure would be on at least an annual basis and the act would affect an estimated 6,000 companies, both U.S. and foreign, that file reports with the SEC.

Some Mineral Context

The DRC has vast natural resources, but as a supplier to the global market of conflict minerals—based on figures for 2010 from the U.S. Geological Survey—it is a very small player, supplying just 1 percent of the global market for gold and tungsten. There are two exceptions: tantalum (21 percent of the global market); and tin (3 percent).

Tantalum – Global Production of Mineral Concentrates (2010)

Source: USGS

Tin – Global Mine Production (2010)

Source: USGS