OTTAWA, Oct. 17, 2013 /CNW/ - The following is an update on the current industry status regarding progress towards compliance with Section 1502 of Dodd-Frank and the related SEC final rules.
|1)||In September of 2013, approximately 2,946 companies were identified to have conflict minerals compliance programs. This likely only represents a subset of companies with conflict minerals policies, but does show a significant level of engagement by industry|
|2)||Compliance has been successfully completed by the first lead companies. The first companies with complete supply chain traceability, smelter due diligence, 3rd party auditing, and conflict free determination appeared in October of 2013. Honeywell Electronic Materials is a notable example.|
|3)||The number of conflict-free certified smelters according to the conflict-free smelter program should not be taken as the key metric of smelter engagement. Most smelters are asserting a conflict-free declaration by declaring that they are not sourcing from the DRC (and surrounding regions) according to pages 149 and 150 of the SEC final rules - and therefore do not require conflict-free certification. As a general rule of thumb, for every conflict-free certified smelter, there are approximately three smelters declaring themselves conflict-free due to non-sourcing from the DRC and surrounding regions.|
|4)||The bulk of the issuers affected by Section 1502 are still focused on their own supply chain and have not reached the due diligence phase. It is expected that the bulk of companies affected by Section 1502 will reach the due diligence phase in January and February of 2014. Any statistics on smelter engagement by industry will not be properly representative until at least February of 2014.|
|5)||Observed costs incurred by companies have been within approximately 25% of the costs originally projected in Claigan's submissions to the SEC on December 16, 2011. In a number of cases the cost for larger entities has been significantly lower than originally projected.|
Key issues related to conflict minerals compliance
|1)||Many affected companies are becoming overly focused on their own suppliers and have not transitioned to the smelter reasonable country of origin inquiry and due diligence phases.|
|2)||Not all service and consulting providers are providing effective information to their clients.|
|3)||The inconclusiveness of the appeals related to Section 1502 are depleting or confusing the focus for many companies leading to higher efforts and higher costs for these companies.|
|4)||One of the smelters, the Central Bank of the Democratic People's Republic of Korea was originally identified as being located in South Korea. This gold smelter is in North Korea which is an issue for companies importing their products into the US. The gold from this smelter has been anecdotally identified as being from before US sanctions, but industry is still working on the providing the necessary proof. Gold from this smelter has been identified in the supply chain of a significant percentage of electronics companies.|
SOURCE: Claigan Environmental Inc.
For further information:
Claigan Environmental Inc.
105 Schneider Road, Suite 211
Ottawa, ON, K2K 1Y3