The 2006 film “Blood Diamond,” starring Leonardo DiCaprio, popularized international concerns about the role of gemstones in financing brutal warlord conflicts in central African countries. Four years later, while transforming regulation of the nation’s financial institutions, Congress inserted in the Dodd-Frank Wall Street Reform and Consumer Protection Act a sweeping provision that requires publicly traded companies to disclose in their Securities and Exchange (SEC) filings whether their products contain “conflict minerals.” Essentially, it is a “name and shame” scheme, providing investors with information about which companies’ metals cannot be proven to originate from mines outside the control of illicit forces, presumably creating substantial marketing disadvantages for these issuers’ stocks.

The specific focus of the new requirements is on four minerals – gold, tin, tantalum, and tungsten – mined in the Democratic Republic of the Congo (DRC) and adjoining countries. While the conflict metals section of Dodd-Frank is not well-known, its impacts loom very large to those who have read it and the SEC’s proposed implementing regulations. Uses for these metals are ubiquitous in the defense and aerospace industries, and in manufacturing a wide range of products, including electronics, automobiles, medical devices, capital goods, and jewelry, among others. The SEC estimates the cost impact of the new reporting requirements is on the order of $71 million, and expects that more than 1,200 companies will have to undergo independent audits. Comments are already streaming into the SEC’s docket, with several parties saying the impact estimates are low and the new rules will be difficult or impossible to implement.

Among numerous issues highlighted by the 71 questions the SEC specifically identified for comment or submissions in the docket are such matters as:

  • How issuers can identify which mines are “conflict mines” in the targeted DRC countries; the State Department is charged with posting a map (, but commenters worry that with constantly changing conditions in this war-torn area, the map will seldom be up to date.
  • How it will be possible to trace conflict metals through complicated supply chains all the way back to a particular mine, particularly when some of these metals are mined in many countries and all are handled as commodities, with no established tracking systems in place?
  • How recycled metals will be treated under this new regime; so far, the SEC favors making no exception to the reporting requirements for recycled materials, which some argue will create disincentives to their use and raise prices, particularly for gold, potentially with the perverse result of increasing profits for the bad actors the legislation was designed to deter.
  • Whether the SEC should adopt ameliorative measures to streamline due diligence, harmonize approaches with those of other countries and organizations, provide safe harbors and de minimis exemptions, and ease compliance for small entities.

Many companies, industry groups, and non-governmental organizations have already filed comments. Some observers believe the rule will inevitably be challenged in court. If so, it will be important to have submitted comments in order to preserve interested-party status for the litigation. The deadline is near, March 2, but comments need not be comprehensive to be effective. The SEC’s proposed rule can be found at and more information is available at In any event, this issue is one many will be watching with interest.