US firms unprepared for upcoming conflict minerals rule enforcement
With only weeks remaining until publicly traded US component manufacturers are forced by law to disclose their usage of conflict minerals to the federal government, a fair number of companies are set to miss the deadline for complying with new rules.
According to the latest survey, conducted by PricewaterhouseCoopers, only 4% of the 700 companies surveyed across 15 industries said they have completed a draft of their SEC conflict minerals filings.
A staggering 90% said is not even close to have a finished, the study shows, and they believe conflict minerals compliance "has proven more intensive" than anticipated.
Conflict minerals are defined as those mined in locations of armed conflict and human rights abuses. They —mainly tin, tantalum, tungsten and gold—are used in a wide range of components across the electronics supply chain.
A major supplier of such minerals is the war-torn Democratic Republic of the Congo (DRC), which holds reserves of such elements worth about $24 trillion.
The SEC rules took effect in August 2012, with initial reporting required beginning May 31.
Even if a company does not use conflict minerals in its products, the regulation forces it to demonstrate it has conducted due diligence in making that determination.
Some data in the survey backs up the arguments of human rights groups that support the rule and say it is needed.
For instance, the extensive amount of compliance and the business risks from the SEC's rule have led more companies to try and source their minerals elsewhere, the survey said.
Forty-five per cent of the respondents told PWC they plan to be conflict-free so their revenue does not take a hit.