Leading US Companies Query "Conflict Minerals" Reporting

Dec. 9 -- Top US retailers are seeking to be excluded from proposed reporting rules relating to “conflict minerals” in their own-brand products, Dow Jones reports. The requirement, part of the Dodd-Frank financial law passed in July, aims to pressure companies to spurn "conflict minerals" blamed for fuelling violence in eastern DR Congo. Public companies using tin, tantalum, tungsten or gold from the Democratic Republic of Congo or neighbouring countries in their products must report each year what steps they have taken to verify the minerals weren't taxed or controlled by rebel groups. The Securities and Exchange Commission has the power to define who is considered a manufacturer under the law and forced to comply with it, and this could include retailers who contract out production of own-brand goods.

Some of the largest US retailers argue they shouldn't have to comply with the rule if they don't exercise direct control over the manufacturing of goods carrying their own brands. The Retail Industry Leaders Association sent a letter making that case to the SEC. Representatives from Best Buy Co, J.C. Penney Co., Costco Wholesale Corp., Lowe's Cos., Wal-Mart and Target met last month with SEC officials to air their concerns, according to SEC records and attendees. The SEC must write rules by April to put the law into practice.

Meanwhile other companies and organisations have questioned the impact and timing of the regulations. The Information Technology Industry Council argues that the requirement could backfire by forcing companies to drop all minerals from the region, even ones untouched by armed groups. "This is the only form of economic activity and subsistence for hundreds of thousands" of people, said Rick Goss, vice president of the Council, which represents high-tech companies. "The challenge is to allow our supply chains to continue sourcing from the region but to do it properly."

Under the law's timeline, some companies must begin reporting by mid-2012 whether products they made during their 2011 fiscal year contained conflict minerals. Companies say that is too soon. "Ford and a number of manufacturers are very concerned about being able to complete the due diligence in the time we have allowed," said Monique Oxender, who leads Ford Motor Co.’s supply-chain sustainability effort. A Ford spokesman said the company purchases $50 billion worth of goods and parts each year from about 1,600 suppliers to make its vehicles.