The mining industry was making headlines again last month. People around the world breathed a collective sigh of relief when rescue workers located miners trapped underground in a copper mine near Copiapo, Chile. Our hearts and prayers go out to those miners and their families and we wish the rescuers God speed. The Big Australian made a hostile bid for PotashCorp and the business community, for the first time it seems, connected the dots between mining for fertilizer and agriculture. Naomi Campbell testified at the Hague war crimes trial of former Liberian President Charles Taylor, casting the spotlight on blood diamonds once again. Conflict minerals also surfaced in recent legislation in the U.S.
Last month, E&MJ covered some of the recent legislation in the U.S. that will affect mining with an eye toward safety, but some rules toward mining activities abroad have been enacted as well. One component of the Dodd-Frank Wall Street Reform and Consumer Protection Act establishes conflict mineral provisions. U.S. President Barack Obama signed the reform package into law on July 21, 2010. The conflict minerals provisions mandate the creation of a chain-of-custody auditing process in respect of conflict minerals and require disclosure in SEC filings regarding the origin of conflict minerals used in products produced by publicly-held companies. The Democratic Republic of Congo (DRC) and its bordering countries were cited specifically in the legislation.
According to the new law, companies that file reports with the U.S. Securities and Exchange Commission (SEC) will now be required to disclose in annual reports any payment made to any government (taxes, royalties, fees, etc.) for the commercial development of minerals; companies that use conflict minerals will now be required to determine whether the minerals originated in the DRC or any country bordering the DRC and if so, to file a report with the SEC including, among other things, a description of the measures taken by the company on the source and chain-of-custody of the minerals.
The Act defines conflict minerals as columbite-tantalite (coltan), cassiterite, gold, wolframite or their derivatives, and any other mineral or its derivatives determined by the U.S. Secretary of State to be financing conflict. Although the Dodd-Frank Act seems not to require mining companies themselves to include new conflict mineral disclosures, they can expect to become involved in, and perhaps be affected by, the chain-of-custody certification processes. To implement the conflict minerals provisions, the U.S. Secretary of State is required to produce and make available to the public a map of mineral rich trade zones, trade routes and areas under the control of armed groups in the DRC and countries bordering the DRC. Mines located within areas under the control of armed groups in the DRC and bordering countries as shown on that map will be designated as conflict zone mines.
The SEC is mandated to issue final rules setting out the new disclosure requirements by April 17, 2011. The rules will take effect one year after they are published in final form, and the new disclosures must be included in annual reports relating to fiscal years ending on or after the date of that one year anniversary.
As a result of the large number of regulations the Dodd-Frank Act requires the SEC to prepare, the SEC is allowing the public to provide comments on all such regulations before they are published. Anyone who is interested in providing comments to the SEC as to the form the regulations should take can access the SEC’s public comment page at www.sec.gov/spotlight/regreformcomments.shtml.