FROM: U.S. SECURITIES AND EXCHANGE COMMISSIONRequiring Disclosure to Increase Transparency Regarding the Sourcing of Conflict Minerals
by Commissioner Luis A. Aguilar
U.S. Securities and Exchange Commission
SEC Open Meeting
Washington, D.C.
August 22, 2012
The Dodd-Frank Act requires that the Commission adopt rules to implement Section 1502 of the Act. Pursuant to this statutory mandate, these rules require companies covered by the rule to disclose whether certain minerals contained in their products – specifically, tin, tantalum, tungsten and gold, often referred to as "conflict minerals" – originated in the Democratic Republic of the Congo ("DRC") or an adjoining country.
The DRC is the largest country in sub-Saharan Africa, with a population of 74 million people and vast natural resources. The facts demonstrate that armed groups use force, violence and intimidation to exploit that country’s mineral wealth for revenue and power, particularly in the Eastern portion of the country. These armed groups are responsible for serious and widespread abuses of human rights, including murder, disappearances, torture, mutilation, rape and forced labor, as well as the recruitment and abduction of child soldiers. The United States government has determined that this humanitarian crisis profoundly affects our national interest.
To address these concerns, Section 1502 of the Dodd-Frank Act added Section 13(p) of the Exchange Act, which requires us to adopt the regulations we consider today.
Senator Richard J. Durbin of Illinois, a strong proponent of Section 1502, described the provision as follows:
Following the enactment of Dodd-Frank, the Commission began a rulemaking process characterized by extensive public outreach, thoughtful deliberation, and rigorous economic analysis. The Commission received a number of comment letters from corporations, industry and professional associations, human rights and public policy groups, institutional investors, investment firms, United States and foreign government officials, and other interested parties and stakeholders. In addition, the Commission also held a public roundtable, at which stakeholders discussed their views and provided input on issues related to our required rulemaking.
Moreover, SEC Commissioners and staff have held over 140 separate meetings with external stakeholders. This robust, public, and interactive debate has allowed the Commission to more fully consider how to develop our final rules. In that connection the Commission engaged in an extensive cost/benefit analysis with respect to this rulemaking. The Commission has sought to address concerns about compliance costs while implementing Congress’ objectives. The Commission also considered the effects of the rule on efficiency, competition and capital formation.
Today’s rulemaking is the culmination of a careful and comprehensive process and a clear Congressional directive. The Commission has faithfully administered its judgment and expertise, as the independent agency tasked by Congress to implement Section 13(p). The rule under consideration today is in the interest of investors and the public interest.
Today’s rule will bring clarity to the various stakeholders that have already developed initiatives to conduct due diligence and trace supply chains.
I support the rule, and would like to take this opportunity to thank the staff for their work in connection with this rulemaking. In particular, I would like to recognize the Division of Corporation Finance; the Division of Risk, Strategy and Financial Innovation; and the Office of General Counsel. I appreciate your hard work and effort in support of this rulemaking.
Thank you.
