TiCranium: The Brains Behind Conflict Mineral ComplianceSM

Dodd-Frank Section 1502 has been in effect since January 1, 2013. It requires all companies that file reports with the SEC under Sections 13(a) and 15(d) of the Exchange Act to file yearly reports on the source of any conflict minerals used in the manufacture of their goods. If you have not started your due diligence you have been out of compliance for

TiCranium provides manufacturers with due diligence programs, regulatory compliance, monitoring, audits, mitigation, and defense under the new Dodd-Frank Section 1502 regulations concerning conflict minerals. We can provide the independant audits necessary for compliance at a lower cost than the big legal and accounting firms. We have expertise in manufacturing, government regulations as both prosecutors and defense counsel, international law generally and specifically dealing with conflicts in Africa, and auditing.

Manufacturing with Conflict MineralsWho is affected by the new Dodd-Frank Section 1502 regulations regarding conflict minerals?

Any company that is required to file reports with the SEC and uses conflict minerals in the production of their products is required to file yearly reports.

The regulations state that "[e]very registrant that files reports with the Commission under Sections 13(a) (15 U.S.C. 78m(a)) or 15(d) (15 U.S.C. 78o(d)) of the Exchange Act, having conflict minerals that are necessary to the functionality or production of a product manufactured or contracted by that registrant to be manufactured, shall file a report on Form SD within the period specified in that Form disclosing the information required by the applicable items of Form SD as specified in that Form (17 CFR 249b.400)." Title 17, CFR, Section 240.13p-1.

What do affected companies need to do?

Companies need to perform a due diligence in order to determine the source of any conflict minerals used in their manufacturing and report the results annually on their website and to the SEC. Companies must also perform continuous monitoring of the source of their conflict minerals.

"The final [SEC] rule requires any reporting issuer for which conflict minerals are necessary to the functionality or production of a product manufactured or contracted to be manufactured by that issuer to disclose annually in a separate specialized disclosure report on a new form the results of its reasonable country of origin inquiry into whether its conflict minerals originated in the Covered Countries or came from recycled or scrap sources." See 17 CFR PARTS 240 and 249b, p. 329.

"The final rule will add to the annual disclosure requirements of issuers with necessary conflict minerals, including small entities, by requiring them to comply with the disclosure and reporting obligations under Section 13(p) and provide certain additional disclosure in their new specialized disclosure reports on Form SD that certain issuers will be required to file annually. Among other matters, that information must include, as applicable:

  1. disclosure in the body of the specialized disclosure report as to whether such issuer knows or has reason to believe that conflict minerals necessary to the functionality or production of a product manufactured or contracted by an issuer to be manufactured originated in the Covered Countries or may have originated in the Covered Countries and may not have come from recycled or scrap sources;
  2. if not, or if the issuer knows or has reason to believe that its necessary conflict minerals came from recycled or scrap sources, disclosure in the body of the specialized disclosure report and on the issuer’s Internet website of that determination and a brief description of the reasonable country of origin inquiry used in making that determination and the results of the inquiry it performed, and disclosure in the body of the specialized disclosure report of the address of the issuer’s Internet website where that information is publicly available;
  3. Due Diligence is time consuming if so, and the issuer is able to determine whether its conflict minerals directly or indirectly financed or benefited armed groups in the Covered Countries
    • a Conflict Minerals Report filed as an exhibit to the specialized disclosure report, which includes a certified independent private sector audit report, a description of the nationally or internationally recognized due diligence framework the issuer used to determine the source and chain of custody of its conflict minerals, a description of the issuer’s products that have not been found to be “DRC conflict free,” and a description of the facilities used to process the necessary conflict minerals in those products, the country of origin of the necessary conflict minerals in those products, and the efforts to determine the mine or location of origin with the greatest possible specificity;
    • disclosure in the body of the specialized disclosure report that a Conflict Minerals Report is filed as an exhibit to the specialized disclosure report and is publicly available on the issuer’s Internet website, and disclosure within the body of the specialized disclosure report of the address of the issuer’s Internet website on which the Conflict Minerals Report is publicly available;
    • posting of the Conflict Minerals Report on the issuer’s publicly available Internet website.
  4. if so, but the issuer is unable to determine that its conflict minerals did not directly or indirectly finance or benefit armed groups in the Covered Countries, if the issuer has reason to believe that its conflict minerals may have originated in the Covered Countries but is unable to determine the origin,
    • a Conflict Minerals Report filed as an exhibit to the specialized disclosure report that includes a description of the nationally or internationally recognized due diligence framework the issuer used to determine the source and chain of custody of its conflict minerals, a description of the facilities used to process the necessary conflict minerals in those products, if known, the country of origin of the necessary conflict minerals in those products, if known, and the efforts to determine the mine or location of origin with the greatest possible specificity, and, for a temporary period, a description of the issuer’s products that are “DRC conflict undeterminable” (for the temporary period, such issuers are not required to have their Conflict Minerals Report audited regarding such minerals);
    • disclosure in the body of the specialized disclosure report that a Conflict Minerals Report is filed as an exhibit to the specialized disclosure report and is publicly available on the issuer’s Internet website and the address of the issuer’s Internet website on which the Conflict Minerals Report is publicly available;
    • posting of the Conflict Minerals Report on the issuer’s publicly available Internet website.
  5. if there is reason to believe that the conflict minerals may not be from recycled or scrap sources and there is a nationally or internationally recognized due diligence framework for those particular conflict minerals,
    • a Conflict Minerals Report filed as an exhibit to the specialized disclosure report, which includes a description of the nationally or internationally recognized due diligence framework the issuer used to determine that those conflict minerals were or has reason to believe may have been from recycled or scrap sources, which includes a certified independent private sector audit report regarding those minerals;
    • disclosure in the body of the specialized disclosure report that a Conflict Minerals Report is filed as an exhibit to the specialized disclosure report and is publicly available on the issuer’s Internet website and the address of the issuer’s Internet website on which the Conflict Minerals Report is publicly available.
  6. if there is reason to believe that the conflict minerals may not be from recycled or scrap sources but there is no nationally or internationally recognized due diligence framework for those particular conflict minerals,
    • a Conflict Minerals Report filed as an exhibit to the specialized disclosure report, which includes a description of the due diligence the issuer used to determine that those conflict minerals were or has reason to believe may have been from recycled or scrap (until a nationally or internationally recognized due diligence framework is available for those conflict minerals from recycled or scrap sources, such issuers are not required to have their Conflict Minerals Report audited regarding such minerals);
    • disclosure in the body of the specialized disclosure report that a Conflict Minerals Report is filed as an exhibit to the specialized disclosure report and is publicly available on the issuer’s Internet website and the address of the issuer’s Internet website on which the Conflict Minerals Report is publicly available."
Id. at pp. 335-39.

Conflict Minerals are used to support fighting in Central AfricaWhat are conflict minerals?

Conflict Minerals include the ore from which Gold, Tin, Tungsten, and Tantalum are extracted.

  • Gold - used in: jewelry, electronics, communications and aerospace
  • Cassiterite (Tin) - used in: plating and solders for joining pipes, electrical circuits, and consumer packaging
  • Wolframite (Tungsten) - used in: metal wires, electrodes and contacts in lighting, electronics
  • Columbite-tantalite (Tantalum) - used in: electrical components such as mobile phones, computers, videogame consoles, medical devices, and aircraft

Where are the Covered Countries?

The Covered Countries are the Democratic Republic of the Congo (DRC) and the countries in Central Africa that border the DRC.

  1. Democratic Republic of the Congo (DRC)

  2. Angola

  3. Burundi

  4. Central African Republic

  5. Congo Republic

  6. Rwanda

  7. Uganda

  8. Southern Sudan

  9. Tanzania

  10. Zambia

Where can conflict minerals be obtained other than from Covered Countries?

According to data from the United States Geological Survey the following are the primary exporters of conflict minerals into the United States excluding Covered Countries:

  • Gold - Mexico, Canada, Colombia, and Peru
  • Cassiterite (Tin) - Peru, Bolivia, Indonesia, and China
  • Wolframite (Tungsten) - China, Bolivia, Canada, and Germany
  • Columbite-tantalite (Tantalum) - Brazil, Canada, and Germany

How Can TiCranium Help?

  • We will perform an independent audit that includes legal analysis and complies with federal regulations and national and international standards and provide a report that can be filed with the SEC and posted on your website.
  • We will recommend alternatives should you not be in compliance, and can assist with mitigation or defense from liability.
  • We will continue to monitor for compliance.
  • TiCranium has the experience to navigate the new rules and reporting requirements, letting you concentrate on your business.
  • We provide high quality, hands-on legal assistance and representation that is more personable and less expensive than large firms
  • We have both global, large private law firm, and federal regulatory government experience which includes federal investigations, audits, defense, and prosecutorial experience.
  • We have experience with armed conflicts in Africa.
  • TiCranium: The Brains Behind Conflict Mineral Compliance

Resources

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Dodd-Frank Act SEC Regulations OECD Guidelines
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