Dodd-Frank Act on Conflict Minerals
Background
In August 2012, the United States Securities and Exchange Commission (SEC) approved the Final Rule regarding the sourcing of conflict minerals as defined in the Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 1502. This rule applies to publicly traded US companies, and requires these companies to report their usage of conflict minerals originating from the Democratic Republic of Congo (DRC) to the SEC on an annual basis.
The US Congress passed the Dodd-Frank Act because of concerns that the exploitation and trade with minerals from the DRC and neighbouring countries was financing armed groups, and thereby fuelling the ongoing conflict in the area. It is widely reported that armed groups fight for control of mines and use forced labour to mine and transport minerals. The income from these illegal activities funds conflicts in the DRC region and contributes to an emergency humanitarian crisis.
The conflict minerals within the scope of the SEC Final Rule are tin, tantalum, tungsten and gold (3TG), both in the form of ore and as refined materials. The countries concerned include: the Democratic Republic of Congo (DRC), Republic of Congo, Central African Republic (CAR), South Sudan, Rwanda, Uganda, Zambia, Angola, Burundi, and Tanzania.
The Dodd-Frank Act is only applicable to US-listed companies, but their suppliers will also be involved in ensuring compliance with the Act as a contractual obligation.
What is required by a US-listed company?
US-listed companies that use any of the 3TG’s in their products are required to perform a ‘Reasonable Country of Origin Inquiry’ (RCOI). The enquiry must be performed in good faith, and must be designed to determine whether any of the conflict minerals originated from the covered countries, or are from scrap or recycling sources. US-listed companies must submit an annual Conflict Minerals Report to the SEC, with a description of the RCOI process and results.
US-listed companies must undertake due diligence on the source and supply chain of its conflict minerals, if there is reason to believe that the minerals have originated in the covered countries and the minerals are not from scrap or recycling sources.
The SEC classifies the US-listed companies’ products as “DRC Conflict Free”, “Not DRC Conflict Free”, “DRC Conflict Undeterminable”, or “Recycled, or Scrap Due Diligence”. US-listed companies filed their first Conflict Minerals Report to the SEC on 31 May 2014 (for the 2013 calendar year) and must conduct the reporting annually hereafter.
What is the impact on the supply chain of US-listed companies?
US-listed companies are required to provide full disclosure of the content and origin of conflict minerals in their products, and will therefore require their suppliers to declare the content and origin of conflict minerals in supplied products, or maybe even to declare that all products delivered to the customer are “DRC Conflict Free”.
Although the Dodd-Frank Act only applies to US-listed companies, suppliers to the US-listed companies will be required to conduct RCOI and due diligence on conflict minerals.
LINAK® activities concerning conflict minerals
LINAK is working actively towards full disclosure of the origin of 3TG in our products. However, due to the size and complexity of our global supply chain, it will take some time before we are fully able to provide our US customers all the information required to fulfil their disclosure obligations.
LINAK has taken the following actions:
- We have created a policy outlining our principles and commitment to conflict-free sourcing.
- We are implementing a Reasonable Country of Origin Inquiry (RCOI) process to identify tantalum, tin, tungsten, and gold (3TG) in our supply chain and to determine, to a reasonable extent, the country of origin of these metals. The purpose of these processes is to identify the smelters in our supply chain to be able to conduct due diligence, and thereby facilitate DRC conflict-free sourcing.
- We are incorporating the principles of this policy into our Purchasing Terms and we are working with our suppliers to increase the transparency of our supply chain. We are communicating our policy to suppliers, and we support relevant industry initiatives to stop the possible inclusion of conflict minerals in our products.
LINAK is supportive of applicable international database systems providing relevant disclosure of origin, including the use of the Conflict Minerals Reporting Template (CMRT). LINAK is using the ComplianceMap portal to collect CMRT’s from our supply chain.
Click here to read the LINAK policy on conflict minerals
Customers seeking information from LINAK about conflict minerals are welcome to contact the Conflict Minerals Compliance Team at conflictminerals@linak.com.
Supplier requirements
LINAK requires suppliers who provide components or materials containing 3TGs to actively work towards DRC conflict-free sourcing. LINAK suppliers must perform their own RCOI and due diligence processes in order to facilitate valid and reliable DRC conflict-free sourcing. We expect our suppliers to work with their own suppliers in the same way, to ensure traceability of conflict minerals to the originating smelters.
All suppliers are required to provide LINAK with a CMRT trough the ComplianceMap portal. If this is not possible, LINAK requires CMRT reports to be sent directly to the Conflict Minerals Compliance Team at conflictminerals@linak.com.
