In short, the rules require all SEC-reporting companies to perform the following three-step process:
- determine whether conflict minerals are necessary to the functionality or production of a product manufactured or contracted to be manufactured by the company;
- if so, conduct a reasonable country of origin inquiry to determine if the company knows or has reason to believe that such minerals may have originated from the DRC or an adjoining country and are not from scrap or recycled sources, and, if as a result of such inquiry, (i) the company determines that the necessary conflict minerals did not originate in a covered country, or has no reason to believe that its necessary conflict minerals may have originated in a covered country, or (ii) determines or reasonably believes that the necessary conflict minerals came from recycled or scrap sources, the company must disclose, on its publicly available Internet website and in a Form SD report (described more fully below) to be filed not later than May 31 of the following calendar year, its determination and briefly describe the reasonable country of origin inquiry it undertook in making its determination and the results of the inquiry it performed; and
- if, as a result of step two above, the company determines (or has reason to believe) that such minerals may have originated from the DRC or an adjoining country and are not from scrap or recycled sources, conduct supply chain due diligence and prepare and file a conflict minerals report (described more fully below) as an exhibit to a Form SD report, which must include a report prepared by an independent private sector auditor that expresses an opinion or conclusion as to whether the design of the due diligence measures set forth in the conflict materials report is in conformity with, in all material respects, the criteria set forth in the due diligence framework used by the company, and whether the company’s description of the due diligence measures it performed is consistent with the due diligence process that the company undertook.
Reporting companies must comply with the rule for the calendar year beginning January 1, 2013, with the first reports due May 31, 2014.