JVC publishes guide to ‘conflict’ mineral act
New York--A guide to complying with the “conflict” minerals provision of the Dodd Frank Act is now available online free of charge from the Jewelers Vigilance Committee (JVC).
Though the act applies only to companies listed with the Securities and Exchange Commission (SEC), i.e., public companies, the JVC notes that the legislation will have far-reaching effects on the jewelry industry, as all companies in the supply chain of SEC-listed entities will have to investigate their own mineral sources if they want to continue doing business with SEC-listed companies.
Passed in 2010 as an add-on to the Dodd Frank Wall Street Reform and Consumer Protection Act and approved by the SEC in August, the law was created to address trade in minerals--specifically gold, tungsten, tantalum and tin--produced in the Democratic Republic of the Congo and the nine neighboring countries where violence occurs around the transportation and production of these minerals.
The law dictates that companies that are listed with the SEC and use any of these minerals in products they manufacture or contract to manufacture must conduct an inquiry into the source of their minerals.
Depending on the results of the inquiry, the companies also might be required to conduct “supply chain due diligence” to determine if the minerals they handled benefitted armed groups in one of the 10 covered countries, and to report publicly if their products are not “conflict free.” The due diligence must be conducted using a separately published national or internationally recognized framework or system, and the only system that meets the SEC’s criteria is the framework from the Organization for Economic Co-operation and Development (OECD).
The law contains exemptions for existing stockpiles of the four conflict minerals that can be verified as produced before Jan. 31, 2013. Recycled and scrap minerals also are exempt from Dodd Frank provided they can be verified as such.
The JVC notes that while relatively few companies in the jewelry industry are SEC listed, these companies, which include both manufacturers and retailers, deal with hundreds of suppliers and will not be able to fulfill their Dodd Frank obligations without the cooperation of the other businesses in their supply chain.
Companies that aren’t SEC listed but are in the supply chain of SEC-listed companies should expect to be questioned about their sourcing and will need to take certain steps in order to answer these questions.
These include, but are not limited to:
--Communicating with customers to see what they need regarding the conflict minerals provision of Dodd Frank;
-- Implementing due diligence procedures, such as the OECD’s, for supply chains;
-- Sourcing from suppliers that meet accepted supply chain due diligence standards, such as those published by the OECD;
-- Carefully managing inventory, establishing non-conflict sources of supply and segregating materials as necessary; and
--Requiring and providing necessary assurances on commercial documents, such as invoices.
The complete guide is available free of charge online in PDF form.