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Issuers file conflict minerals reports, most say sourcing is unclear

Reporting companies filed Form SDs with the SEC Monday, and most said its not fully clear if their products contain conflict minerals from Africa’s Congo region.

Tuesday’s print edition of the Wall Street Journal said nearly 1,300 U.S.-listed companies have filed their first audit results about whether their products are made from tin, gold, tungsten or tantalum sourced from the region.

Companies such as Walt Disney & Co., Sony Corp., Barnes & Noble, and Office Depot said they haven’t determined if they or their suppliers used the materials. Only a few said their goods were free of conflict minerals.

A dozen companies, including Google, J. Crew Group Inc., and Deere & Co., acknowledged that they or their suppliers may have obtained metals sourced from mines used to fund armed militias.

“We’re actively engaging with our suppliers and continuing to educate them on our program’s expectations,” Johnson & Johnson said in a statement.

The SEC has estimated that producing these conflict-minerals reports for the first time will cost companies collectively up to $4 billion in the first year, and drop to between $200 million and $600 million in later years.

Companies were projected to spend 480 hours on completing their reports, on average.

In April, a federal appeals court ruled that the SEC  violated the First Amendment by requiring reporting companies to disclose if any of their products had “not been found to be DRC conflict-free.” 

The court said that requirement violated First Amendment guarantees of free speech. But the opinion let stand the rest of the conflict minerals rules.

The SEC issued guidance in late April that issuers don’t need to declare that any products were “not found to be ‘DRC conflict-free'” or were “DRC conflict-undeterminable.”

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Julie DiMauro is the executive editor of FCPA Blog and can be reached here. 

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