On August 22, 2012, the U.S. Securities and Exchange Commission ("SEC") adopted a final rule requiring SEC reporting companies to disclose annually whether any "conflict minerals" necessary to the functionality or production of their manufactured products originated in the Democratic Republic of Congo ("DRC") or an adjoining country (together with the DRC, the "Covered Countries").

The term "conflict mineral" is defined to mean columbite-tantalite (colton), cassiterite, gold, wolframite, and their derivatives (which currently are limited to tantalum, tin and tungsten, often referred to as the "3Ts").1 Because these minerals are widely used in many industries, including jewelry, health care devices, automotive and aerospace components, electronics, lighting and heating products, communications equipment and industrial manufacturing, the rule will have a very broad application.

As stated in Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"), the origin of this rule lies in Congress' concerns regarding the exploitation and trade of conflict minerals originating in the DRC and adjoining countries. To further the humanitarian goal of ending the violent conflict in the region, which has been partially financed by the exploitation and trade of conflict minerals, Congress "chose to use the securities laws disclosure requirements to bring greater public awareness of the source of the issuers' conflict minerals and to promote the exercise of due diligence on conflict minerals supply chains."2

The rule was adopted by a 3-2 vote following extensive public comment and deliberations on a proposed rule published in December 2010. The rule imposes potentially burdensome diligence and disclosure obligations on all domestic and foreign issuers required to file reports under the Securities Exchange Act of 1934, as amended (the "1934 Act"), including Canadian reporting companies that file reports under the U.S. Multijurisdictional Disclosure System (MJDS). The first reporting period under the rule for all issuers will be from January 1, 2013 through December 31, 2013, and the first specialized disclosure report must be filed with the SEC on or before May 31, 2014. Issuers subject to the rule must also make their disclosures publicly available on their Internet websites.