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What does Conflict-Free Materials mean?

When discussing the term "conflict-free materials" in the jewelry industry, this refers to the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in 2010, which includes a provision known as Section 1502, which addresses the issue of conflict minerals. Conflict minerals, as defined by the Dodd-Frank Act, refer to specific minerals sourced from the Democratic Republic of the Congo (DRC) and adjoining countries. The four minerals covered by this legislation are:

Tin: Often used in the soldering process for electronic components.
Tantalum: Commonly used in the production of capacitors in electronic devices.
Tungsten: Used in various industries, including electronics, aerospace, and manufacturing.
Gold: Widely used in the electronics industry and jewelry.

These minerals have been linked to funding armed conflict in the DRC and surrounding regions, contributing to human rights abuses and environmental degradation. The intent of Section 1502 is to address the issue of "conflict minerals" by requiring companies to trace and disclose the origin of these minerals in their supply chains.

Key provisions of Section 1502 include:

Disclosure Requirements:

  • Companies that use tin, tantalum, tungsten, or gold in their products must disclose whether these minerals originated from the covered countries. If the minerals are sourced from these regions, the companies are required to submit reports outlining their due diligence efforts.

Due Diligence:

  • Companies are expected to exercise due diligence in their supply chains to determine the source of these minerals. This may involve conducting audits and assessments to trace the minerals back to their origins.

Conflict-Free Certification:

  • Companies are encouraged to source minerals responsibly from conflict-free smelters and refiners. If a company can demonstrate that its products do not contain minerals that directly or indirectly finance armed groups in the covered countries, it can be designated as "DRC conflict-free."

Reporting to the SEC:

  • Companies subject to the rule are required to annually file reports with the U.S. Securities and Exchange Commission (SEC) disclosing the presence and source of conflict minerals in their supply chains.

The intent of Section 1502 is to address the humanitarian and environmental issues associated with conflict minerals. Companies in various industries, particularly those involved in electronics manufacturing and jewelry, can implement processes to comply with these regulations and ensure that the minerals they are sourcing are not funding armed conflict in the DRC. For more information on conflict-free materials visit the United States SEC Government website page on conflict-free materials here.

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