September 20, 2013 – September 27, 2013

The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Sanders (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.

Detroit Regional Chamber May Ask Michigan Legislature to Appeal Conflict Minerals Rule

It was reported this week in Crain’s Detroit Business that the Detroit Regional Chamber is contemplating asking the Michigan state legislature to appeal the SEC conflict minerals rule.

Mr. Dustin Walsh (Crain’s Detroit), in his article titled, Auto Industry Steels itself for “Conflict Minerals” rule, stated that Crain’s obtained a draft of the letter to the Michigan state legislature. The letter says, “Michigan’s auto-related manufacturing companies, and the Detroit Regional Chamber, believe that these new reporting requirements are much too strenuous and costly.”

Despite the letter, Mr. Walsh notes in his article that the auto industry is continuing its push to comply with May 2014 initial reporting deadline. Ford Motor Co., as an example, uses iPoint to assist in gathering information about its supply chain and has sent a reporting template to its suppliers. 

Although an action to “repeal” the conflict minerals rule by the Michigan legislature would have little effect, such repeal would stress the importance to industries within the region of repealing the rule. We will update you on further activity on this resolution.

Conflict Minerals Rule a Cause of Concern for Defense Industry

Mr. Zachary Fryer-Biggs, in his article published in Defense News and titled, New Conflict Minerals Certification Causing Industry Concern, highlights the concern of the defense industry in the disproportionate cost and number of companies affected by the conflict minerals rule in comparison with other industries.

In addition, Mr. Micah Edmond, assistant vice president for industrial base policy at Aerospace Industries Association, notes in the article that many defense suppliers are between a “rock and a hard place” because a lot of defense supply chains are private for security reasons. He elaborates, “When they ask those questions, a lot of the supply chain is private, so how do you compel those individuals to supply that information when they’re not required to?”

Defense News Editorial: “Rethink Conflict Minerals Rule”

The editorial staff at Defense News recently wrote an op-ep titleddav, Rethink Conflict Minerals Rule, in which they argue that the conflict minerals rule is “costly, less than effective and onerous.” As for a solution, they state, ”the solution lies in collective international action, such as sanctions and other mechanisms, not legislation that yields red tape and higher costs — and that fails to deliver on the law’s intent.”

To read the entire op-ed, please see Rethink Conflict Minerals Rule.

NGOs Call on European Union to Include Key Elements in EU Conflict Minerals Law

Fifty-nine (59) non-governmental organizations (NGOs) are signatories to a paper titled, Breaking the Links Between Natural Resources and Conflict: the Case for EU Regulation, which “calls on the European Commission to adopt legislation requiring European business entities to conduct supply chain due diligence in order to ensure that they do not contribute to conflict financing or human rights abuses in the production and trade in natural resources.”

Among other things, the NGOs urge the EU to adopt legislation that:

  • applies to all natural resources originating in any conflict-affected and high-risk area,
  • is based on relevant international instruments, including the International Bill of Human Rights, the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Conflict-Affected and High-Risk Areas,
  • takes a risk-based approach that considers impacts on individuals and communities, and
  • complements existing EU initiatives and legislation to promote transparency and sustainable development and forms part of a comprehensive approach to prevent environmental destruction, reinforce governance and encourage security sector and mining reform in natural resource-rich developing countries.

Source: Press Release, Global Witness, New EU Law Could Help Stop Natural Resource Trade Fuelling Conflict, dated September 16, 2013, http://www.globalwitness.org/library/new-eu-law-could-help-stop-natural-resource-trade-fuelling-conflict.

Tim Worstall points out in his Forbes op-ed titled, Global Witness’ Latest Silly Suggestion About Conflict Minerals, that the NGOs appear to propose that all European Union companies, not merely listed public companies, should be subject to the EU conflict minerals law.