Senate Passes Conflict Minerals Provision in Finance Bill

May 21, 2010

On May 20, 2010, the Senate passed H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009. Contained in the 1600-page bill is a provision that would affect gold, columbite-tantalite, cassiterite, and wolframite and their derivatives (such as metals) from the Democratic Republic of the Congo and adjoining countries.

Under the provision, corporations would be required to file reports with the Securities and Exchange Commission (SEC), for whom such minerals, or their derivatives, are necessary for the functionality or production of a product they manufacture, would be further required to annually disclose to the SEC whether the minerals used originated or may have originated in the Democratic Republic of the Congo or an adjoining country.

The disclosure would also include a description of the measures taken by the corporation, such as an independent audit, to exercise due diligence on the source and chain of custody of such minerals and derivatives, in order to ensure that the corporation did not directly or indirectly finance or benefit armed groups in the region.

Rules to implement the disclosure requirement described above would be required to be promulgated within 180 days of enactment. However, before the bill can be enacted, the legislation must pass through a House-Senate conference to resolve differences developed in the Senate since the House passed H.R. 4173 in December of last year.