Apple Inc. (AAPL), Boeing Co. (BA) and thousands of other U.S.-listed manufacturers must scrutinize their purchases of four metals to make sure they don’t help fund human-rights abuses in Africa, according to a Securities and Exchange Commission rule adopted yesterday.
The regulator is instructing companies that build products with tin, tantalum, tungsten and gold — metals contained in virtually any device with an on switch — to make “reasonable” attempts to find out if the materials came from Democratic Republic of Congo mines supporting violent armed groups.
The final rule eased a requirement in the agency’s 2010 proposal that would have required companies to prove their metals didn’t come from the mines. Instead, the firms may report they found no evidence of a link.
“Issuers that are required to file reports with us will need to determine if they manufacture, or contract to manufacture, products that contain conflict minerals,” SEC Chairman Mary Schapiro said before the vote. Schapiro said the agency made several changes to what it proposed 18 months earlier to “address concerns about the cost.”
The so-called conflict-minerals rule and another adopted yesterday requiring energy and mining companies to report payments they make to governments were inserted into the 2010 Dodd-Frank Act to support foreign-policy objectives. The conflict mineral disclosures, which the SEC said will cost as much as $4 billion for companies to establish procedures and deliver their first reports, are meant to undermine funding for armed groups terrorizing people in central Africa.
Under the conflict minerals rule, any company that makes — or pays others to make — products using the four metals must make “good-faith” efforts to determine where the materials were mined. Companies including retailer Wal-Mart Stores Inc. (WMT) that simply attach their logos to generic manufactured goods that include the metals are exempted from the requirement.
If the companies’ inquiries don’t show the metals might have been mined in the Democratic Republic of Congo or were exported from surrounding countries, they can stop looking and report that to the SEC. Also, if they find the metals were recycled or scrap, the firms need look no further.
Any indication the metals might come from the central African zone around the Democratic Republic of Congo requires the companies to pursue a deeper study on the origins and produce an audited report, the rule says. Either way, the findings must be reported once a year to the SEC, starting May 31, 2014.
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