The deadline for filing conflict mineral reports with the Securities and Exchange Commission (SEC) is May 31, 2014, and many companies still have a lot of digging to do before they get from here to there.
The rule requires publicly held companies to disclose their use of conflict minerals that include tantalum, tin, gold or tungsten originating in the Democratic Republic of the Congo (DRC) or an adjoining country — if the minerals are "necessary to the functionality or production of a product" manufactured by those companies.
Compliance is likely to be onerous, especially for companies that are just getting started now. They must first determine whether they are subject to the rule. If so, they must then examine bills of materials, purchase contracts, safety data sheets (SDS), product specifications, statements of work, etc. — to determine what minerals are included in their products and where they came from. This will be especially burdensome for companies with long and complex supply chains.
The SEC allows companies a grace period of two to four years, during which they may characterize conflict mineral audit results as "undeterminable." Even then, however, companies must submit evidence sufficient to prove they made a "good faith" effort to find the source of its minerals.