SEC Adopts Rules Implementing the Dodd-Frank Requirement for Conflict Minerals Reporting (Morgan Lewis)

The Final Rules differ from the proposed rules in the following significant ways:

• The Final Rules exclude conflict minerals that come from recycled or scrap sources, that is, minerals that are derived from metals that come from reclaimed end-user or post-consumer products, or scrap-processed metals created during product manufacturing.
• The Final Rules exclude conflict minerals that were smelted or fully refined or were outside the DRC prior to January 31, 2013, that is, they were “outside the supply chain.”
• The Final Rules exclude registrants that mine or contract to mine conflict minerals unless the registrant also engages in manufacturing.
• The Final Rules revise the trigger for when a registrant would be required to conduct due diligence and provide a Conflict Minerals Report. The proposed rules would have required such due diligence and the provision of a Conflict Minerals Report when the registrant determined that its conflict minerals originated in the DRC or came from recycled or scrap sources or when the registrant was unable to determine that its conflict minerals did not originate in the DRC. Under the Final Rules, a registrant is required to exercise due diligence if the registrant determines, based on a “reasonable country of origin inquiry,” (i) that its conflict minerals originated in the DRC and did not come from recycled or scrap sources; or (ii) that it has reason to believe that its conflict minerals may have originated in the DRC and may not have come from recycled or scrap sources. A registrant that determines, based on this due diligence, that its conflict minerals did not originate in the DRC or that its conflict minerals did come from recycled or scrap sources does not need to provide a Conflict Minerals Report. …..

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