The Congo, minerals, and the electronics industry

Something that industry is going to hear more about is the “Dodd-Frank Wall Street Reform and Consumer Protection Act,” which was signed into law by President Obama on July 21, 2010.

The Act includes a raft of measures arising out of the recent financial crisis and runs to 2,300 pages!

Last year there was a bill in the US Senate known as the “Congo Conflict Minerals Act of 2009,” which was similar.

The Congo conflict mineral issue has been heavily debated on both sides and has now made it in to the Dodd-Frank Act.

The section on conflict minerals requires that companies, principally US listed, that are Securities and Exchange Commission (SEC) registered disclose annually whether it has used relevant minerals from the Democratic Republic of the Congo or an “adjoining country,” so-called conflict areas.

If a company did use conflict minerals from such countries, it will also have to submit a report to the SEC describing how it exercised due diligence on the source and chain of custody of such minerals, including an “independent private sector audit” of such a report, as well as a description of the products manufactured that contain such conflict minerals. This information would have to be made available on the company’s Web site.

The minerals covered are: columbite-tantalite (coltan), cassiterite, gold, wolf-ramite, or their derivatives, or any other mineral determined by the Secretary of State. The electrical products industry has a major use for materials covered by this legislation and many of the components will come from China where one source of the raw materials will be the Congo. National security applications have an exemption limited to two years.

It is worth noting that very few of the Act’s provisions take effect immediately. The vast majority require various regulatory agencies to issue implementing regulations with specified periods. The section dealing with conflict minerals refers to regulations being produced not later than 270 days after the Act was passed. While the SEC has not yet published any posed rules under the Dodd-Frank Act it must promulgate the regulations within approximately nine months (April 2011).

However, before that they need to publish a draft proposal, possibly in December or January, allowing for public comment. Such periods of review are typically 60 or 90 days. In the meantime the SEC has started soliciting unofficial public comment through its Web site.

So the Dodd-Frank Act will create yet another data collection requirement for an industry already struggling to cope with REACH, ROHS, and other such electronics supply chain legislation.

Premier Farnell, the company I work for, has been asking its suppliers for confirmation of use of conflict materials for a while as there is little doubt that customers down the electronics supply chain will seek reassurance that no metals are sourced from the conflict areas or if a product is labelled “conflict mineral free” that it does not contain any of the conflict minerals that directly finance or benefit armed groups in the Congo.

What do you think of this Act? Share your comments below.