Clifford Chance

SEC Proposes Rules to Require Disclosure Related to Conflict Minerals

5 January 2011

On December 15, 2010, the Securities and Exchange Commission released proposed rules to implement Section 1502 of the Dodd-Frank Act, which requires SEC-regulated issuers to report on their use of so-called "Conflict Minerals", the pejorative statutory term for cassiterite, columbite-tantalite, gold, wolframite, or their derivatives, wherever mined. In order to deter the use of Conflict Minerals supplied by armed groups operating in conflict zones within the Democratic Republic of the Congo ("DRC"), the rules would impose a reporting regime that could adversely affect mining operations throughout the DRC and the nine countries that adjoin it.

With the one exception of scrap metal, the SEC proposal appears to expand rather than restrain the reporting requirements, audit costs and other administrative burdens imposed on issuers by the Act. Affected companies would include those filing SEC Form 10-K (for a domestic issuer), Form 20-F (for a foreign private issuer) or Form 40-F (for an eligible Canadian issuer). The SEC has invited public comment on the proposed rules through January 31, 2011, with the final rules due by April 2011.

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